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




     [X]          Quarterly Report Pursuant to Section 13 or 15(d) of the 
                  Securities Exchange Act of 1934
                  For the fiscal quarter ended September 30, 1997

     [  ]         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 33-32258
                             -----------------------


                          PLM EQUIPMENT GROWTH FUND II
             (Exact name of registrant as specified in its charter)


       California                                        94-3041013
(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>



                          PLM EQUIPMENT GROWTH FUND II
                             (A Limited Partnership)
                                 BALANCE SHEETS
               (in thousands of dollars, except per unit amounts)

<TABLE>
<CAPTION>


                                                                            September 30,          December 31,
                                                                               1997                   1996
                                                                           ---------------------------------------
   <S>                                                                     <C>                    <C>        
   Assets:

   Equipment held for operating lease, at cost                             $    63,861            $    82,856
   Less accumulated depreciation                                               (49,343 )              (62,114 )
                                                                           ---------------------------------------
     Net equipment                                                              14,518                 20,742

   Cash and cash equivalents                                                     3,272                  7,962
   Restricted cash                                                                 295                    295
   Investment in unconsolidated special-purpose entity                             659                  1,665
   Accounts receivable, net of allowance for doubtful accounts
         of $1,421 in 1997 and $882 in 1996                                      2,676                  1,765
   Deferred charges, net of accumulated amortization
         of $249 in 1997 and $197 in 1996                                          101                    157
   Prepaid expenses and other assets                                                 6                  1,009
                                                                           ---------------------------------------

    Total assets                                                           $    21,527            $    33,595
                                                                           =======================================

   Liabilities and partners' capital:

   Liabilities:
   Accounts payable and accrued expenses                                   $       496            $       412
   Due to affiliates                                                               176                    110
   Lessee deposits and reserve for repairs                                       1,757                  2,827
   Notes payable                                                                 5,783                 13,000
                                                                           ---------------------------------------
       Total liabilities                                                         8,212                 16,349
                                                                           ---------------------------------------

   Partners' capital  (deficit):
   Limited partners (7,381,805 depositary units, including
         1,150 depositary units held in the Treasury as of
         September 30, 1997 and December 31, 1996, respectively)                13,358                 17,434
   General Partner                                                                 (43 )                 (188 )
                                                                           ---------------------------------------
       Total partners' capital                                                  13,315                 17,246
                                                                           ---------------------------------------

   Total liabilities and partners' capital                                 $    21,527            $    33,595
                                                                           =======================================

</TABLE>










                       See accompanying notes to financial
                                  statements.


<PAGE>



                          PLM EQUIPMENT GROWTH FUND II
                             (A Limited Partnership)
                              STATEMENTS OF INCOME
         (in thousands of dollars, except weighted-average unit amounts)

<TABLE>
<CAPTION>



                                                        For the Three Months                For the Nine Months
                                                         Ended September 30,                Ended September 30,
                                                         1997          1996                1997            1996
                                                      --------------------------------------------------------------
   <S>                                                <C>            <C>                <C>             <C>       
   Revenues:

   Lease revenue                                      $   2,606      $  3,027           $   8,112       $  9,408  
   Interest and other income                                 51            98                 195            240
   Net gain on disposition of equipment                     336           100               1,363            267
                                                      --------------------------------------------------------------
       Total revenues                                     2,993         3,225               9,670          9,915
                                                      --------------------------------------------------------------

   Expenses:

   Depreciation and amortization                          1,014         1,433               3,387          4,358
   Repairs and maintenance                                  483           532               1,288          1,495
   Interest expense                                         140           489                 566          1,460
   Insurance expense                                         25            32                  98             69
   Management fees to affiliate                             119           130                 375            451
   General and administrative expenses
         to affiliates                                      157           169                 529            587
   Other general and administrative expenses                248           179                 740            702
   Provision for bad debt                                   310           159                 538            384
                                                      --------------------------------------------------------------
       Total expenses                                     2,496         3,123               7,521          9,506
                                                      --------------------------------------------------------------

   Equity in net income (loss) of unconsolidated
         special-purpose entities                            12         7,023              (1,029 )        6,599
                                                      --------------------------------------------------------------

   Net income                                         $     509      $  7,125           $   1,120       $  7,008  
                                                      ==============================================================

   Partners' share of net income:

   Limited partners                                   $     388      $  7,002           $     722       $  6,567  
   General Partner                                          121           123                 398            441
                                                      --------------------------------------------------------------

   Total                                              $     509      $  7,125           $   1,120       $  7,008   
                                                      ==============================================================

   Net   income per  weighted-average  depositary  
   unit (7,381,805 and 7,385,715 units,  including
   1,150 units held in the Treasury, as of 
   September 30, 1997 and 1996, respectively)         $    0.05      $   0.95           $    0.10       $   0.89  
                                                      ==============================================================

   Cash distributions                                 $   1,166      $  1,944           $   5,051       $  7,014 
                                                      ==============================================================
   Cash distributions per weighted-average
         depositary unit                              $    0.15      $   0.25           $    0.65       $   0.90 
                                                      ==============================================================

</TABLE>


                       See accompanying notes to financial
                                  statements.


<PAGE>



                          PLM EQUIPMENT GROWTH FUND II
                             (A Limited Partnership)
                 STATEMENTS OF CHANGES IN PARTNERS' CAPITAL For
             the period from December 31, 1995 to September 30, 1997
                            (in thousands of dollars)
<TABLE>
<CAPTION>


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

   <S>                                                          <C>                 <C>                <C>         
   Partners' capital (deficit) as of December 31, 1995          $   18,658          $    (462 )        $   18,196  

   Net income                                                        7,464                722               8,186

   Cash distributions                                               (8,509 )             (448 )            (8,957 )

   Repurchase of depositary units                                     (179 )                -                (179 )
                                                                ---------------------------------------------------

   Partners' capital (deficit) as of December 31, 1996              17,434               (188 )            17,246

   Net income                                                          722                398               1,120

   Cash distributions                                               (4,798 )             (253 )            (5,051 )
                                                                ---------------------------------------------------

   Partners' capital (deficit) as of September 30, 1997         $   13,358          $     (43 )        $   13,315 
                                                                ===================================================

</TABLE>


















                       See accompanying notes to financial
                                  statements.




<PAGE>



                          PLM EQUIPMENT GROWTH FUND II
                             (A Limited Partnership)
                            STATEMENTS OF CASH FLOWS
                            (in thousands of dollars)

<TABLE>
<CAPTION>


                                                                                          For the Nine Months
                                                                                          Ended September 30,
                                                                                       1997                 1996
                                                                                   -----------------------------------
   <S>                                                                             <C>                  <C>           
   Operating activities:

   Net income                                                                      $    1,120           $     7,008   
   Adjustments to reconcile net income to net cash provided
         by operating activities:
     Net gain on disposition of equipment                                              (1,363 )                (267 )
     Depreciation and amortization                                                      3,387                 4,358
     Equity in net (income) loss of unconsolidated special-purpose entities             1,029                (6,599 )
     Changes in operating assets and liabilities:
       Restricted cash                                                                      -                   133
       Accounts receivable, net                                                          (856 )                 393
       Prepaid expenses and other assets                                                1,003                    47
       Accounts payable and accrued expenses                                               84                  (161 )
       Due to affiliates                                                                   66                  (199 )
       Lessee deposits and reserve for repairs                                         (1,070 )                (983 )
                                                                                   -----------------------------------
           Net cash provided by operating activities                                    3,400                 3,730
                                                                                   -----------------------------------

   Investing activities:

   Proceeds from disposition of equipment                                               4,185                   909
   Liquidation distributions from unconsolidated special-purpose entities                   -                14,272
   (Additional investments in) distributions from unconsolidated special-
         purpose entities                                                                 (23 )               1,003
   Payments for capital improvements and other                                             16                    (7 )
                                                                                   -----------------------------------
       Net cash provided by investing activities                                        4,178                16,177
                                                                                   -----------------------------------

   Financing activities:

   Principal payments on notes payable                                                 (7,217 )              (9,000 )
   Cash distributions paid to limited partners                                         (4,798 )              (6,663 )
   Cash distributions paid to General Partner                                            (253 )                (351 )
   Repurchase of depositary units                                                           -                  (179 )
                                                                                   -----------------------------------
       Net cash used in financing activities                                          (12,268 )             (16,193 )
                                                                                   -----------------------------------

   Net (decrease) increase in cash and cash equivalents                                (4,690 )               3,714

   Cash and cash equivalents at beginning of period                                     7,962                 6,427
                                                                                   -----------------------------------

   Cash and cash equivalents at end of period                                      $    3,272           $    10,141  
                                                                                   ===================================

   Supplemental information:

   Interest paid                                                                   $      508           $     1,457  
                                                                                   ===================================

   Supplemental disclosure of noncash investing and financing activities:
     Sale proceeds included in accounts receivable                                 $       55           $        24 
                                                                                   ===================================

</TABLE>

                       See accompanying notes to financial
                                  statements.


<PAGE>



                          PLM EQUIPMENT GROWTH FUND II
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                               September 30, 1997

1.   Opinion of Management

     In the opinion of the  management  of PLM  Financial  Services,  Inc.  (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
     Fund II (the  Partnership)  as of September 30, 1997 and December 31, 1996,
     the statements of income for the three and nine months ended  September 30,
     1997 and 1996,  the  statements  of changes in  partners'  capital  for the
     period from December 31, 1995 to September 30, 1997,  and the statements of
     cash flows for the nine months ended  September 30, 1997 and 1996.  Certain
     information  and  footnote   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,  1996,  on file at the
     Securities and Exchange Commission.

2.   Reclassifications

     Certain amounts in the 1996 financial  statements have been reclassified to
conform to the 1997 presentation.

3.   Repurchase of Depositary Units

     In December 28, 1992, the Partnership  announced a plan to repurchase up to
     200,000  depositary  units.  As of September 30, 1997, the  Partnership had
     cumulatively repurchased 117,800 depositary units for $0.8 million.
     The General Partner may repurchase the remaining units in the future.

4.   Cash Distribution

     Cash distributions are recorded when paid and totaled $5.1 million and $7.0
     million  for  the  nine  months   ended   September   30,  1997  and  1996,
     respectively,  and $1.2 million and $1.9 million for the three months ended
     September 30, 1997 and 1996,  respectively.  Cash  distributions to limited
     partners in excess of net income are  considered  to  represent a return of
     capital.  Cash  distributions  to limited partners of $4.1 million and $0.1
     million  for  the  nine  months   ended   September   30,  1997  and  1996,
     respectively,  were  deemed to be a return of capital.  Cash  distributions
     related to the results from the third quarter of 1997 of $1.2 million,  are
     payable during November 1997.

5.   Investment in Unconsolidated Special-Purpose Entity

     The net  investment  in an  unconsolidated  special-purpose  entity  (USPE)
     consisted of a 50% interest in a trust  owning a Boeing  737-200A  aircraft
     (and related assets and liabilities) totaling $0.7 million and $1.7 million
     as of September 30, 1997 and December 31, 1996, respectively. This aircraft
     was off lease as of September 30, 1997 and December 31, 1996.



<PAGE>


                          PLM EQUIPMENT GROWTH FUND II
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                               September 30, 1997


6.    Equipment

     Components of owned equipment are as follows (in thousands):
<TABLE>
<CAPTION>

                                               September 30,        December 31,
                                                   1997                 1996
                                              --------------------------------------
   <S>                                          <C>                  <C>       
   Aircraft                                     $   18,826           $   32,860
   Rail equipment                                   18,102               18,183
   Trailers                                         17,701               21,173
   Marine containers                                 9,232               10,640
                                               ------------------------------------
                                                    63,861               82,856
   Less accumulated depreciation                   (49,343 )            (62,114 )
                                               ------------------------------------
     Net equipment                              $   14,518           $   20,742
                                               ====================================

</TABLE>

     As of September 30, 1997, all equipment was either on lease or operating in
     PLM-affiliated short-term trailer rental facilities,  except for 169 marine
     containers and 3 railcars. With the exception of 71 marine containers and 3
     railcars,  all equipment was either on lease or operating in PLM-affiliated
     short-term trailer rental facilities as of December 31, 1996. The aggregate
     carrying value of off-lease  equipment was $0.4 million and $0.2 million as
     of September 30, 1997 and December 31, 1996, respectively.

     During the nine months ended  September 30, 1997, the  Partnership  sold or
     disposed of aircraft,  marine containers,  trailers, and railcars,  with an
     aggregate net book value of $2.9 million, for proceeds of $4.3 million. For
     the nine months ended September 30, 1996, the Partnership  sold or disposed
     of marine containers,  trailers,  and railcars,  with an aggregate net book
     value of $0.6 million, for proceeds of $0.9 million.

7.   Transactions with General Partner and Affiliates

     Partnership  management  fees of $0.2 million and $0.1 million were payable
     as of September 30, 1997 and December 31, 1996, respectively.

     The Partnership's proportional share of the affiliated expenses incurred by
     the  USPE  during  1997 and  1996 is  listed  in the  following  table  (in
     thousands):

<TABLE>
<CAPTION>
                                                       For the Three Months               For the Nine Months
                                                        Ended September 30,               Ended September 30,
                                                          1997         1996              1997            1996
                                                     -------------------------------------------------------------

     <S>                                             <C>            <C>               <C>             <C>      
     Data processing and administrative
        expenses                                     $       1      $      13         $       5       $      19
     Management fees                                         -             31                 -              44

</TABLE>

8.   Notes Payable

     In the first nine months of 1997, the  Partnership  prepaid $7.2 million of
     the  outstanding  notes  payable,  representing  a portion of the principal
     payment due March 31, 1999 and a portion of the final  annual $9.0  million
     principal installment of the loan due March 31, 2000.

9.   Subsequent Event

     In October 1997, the  Partnership  prepaid $1.3 million of the  outstanding
notes payable.


<PAGE>


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

(I)  RESULTS OF OPERATIONS

Comparison of the Partnership's Operating Results for the Three Months Ended 
September 30, 1997 and 1996

(A)  Owned Equipment Operations

Lease  revenues  less direct  expenses  (defined as repair and  maintenance  and
asset-specific insurance expenses) on owned equipment decreased during the third
quarter of 1997,  compared  to the same  quarter of 1996.  The  following  table
presents  lease  revenues  less  direct  expenses  by owned  equipment  type (in
thousands):

<TABLE>
<CAPTION>

                                                                            For the Three Months
                                                                             Ended September 30,
                                                                            1997             1996
                                                                         ----------------------------
   <S>                                                                   <C>               <C>       
   Rail equipment                                                        $    795          $   753   
   Trailers                                                                   697              826
   Aircraft                                                                   459              609
   Marine containers                                                          154              298

</TABLE>

Rail equipment: Railcar lease revenues and direct expenses were $1.1 million and
$0.3  million,  respectively,  for the third  quarter of 1997,  compared to $1.2
million and $0.4 million,  respectively,  during the same quarter of 1996. Lease
revenue decreased due to the sale of railcars in 1997 and 1996. Railcar expenses
decreased  due to running  repairs  required on certain of the  railcars  during
1996, which were not needed during 1997, and the smaller fleet in 1997.

Trailers:  Trailer lease revenues and direct expenses were $0.9 million and $0.2
million,  respectively,  for the third quarter of 1997, compared to $1.0 million
and $0.2 million,  respectively,  during the same quarter of 1996.  The decrease
was  primarily  due to the sale of trailers in 1997 and 1996.  In addition,  the
trailer fleet is experiencing lower utilization in the PLM-affiliated short-term
rental yards.

Aircraft:  Aircraft  lease  revenues and direct  expenses  were $0.5 million and
$10,000,  respectively,  for the third quarter of 1997, compared to $0.6 million
and $1,000, respectively, during the same quarter of 1996. Aircraft contribution
decreased in the third quarter of 1997, compared to the same period in 1996, due
to the sale of two aircraft in the second and third quarters of 1997,  which was
partially offset by an increase in the lease rate for another aircraft.

Marine  containers:  Marine  container lease revenues were $0.2 million and $0.3
million during the third quarter of 1997 and 1996,  respectively.  The number of
marine  containers  owned by the  Partnership  has been  declining over the past
twelve months due to sales and dispositions.  The result of this declining fleet
has been a decrease in marine container revenues.

(B)  Indirect Expenses Related to Owned Equipment Operations

Total indirect  expenses of $2.0 million for the third quarter of 1997 decreased
from $2.6 million for the same period in 1996.  The  variances  are explained as
follows:

     (1) A $0.4 million decrease in depreciation  and amortization  expense from
1996 levels reflects the effect of asset sales in 1996 and 1997.

     (2) A $0.3 million decrease in interest expense is due to a decrease in the
level of outstanding  debt during the third quarter of 1997 when compared to the
same  period in 1996.  In 1997,  the  Partnership  prepaid  $7.2  million of the
outstanding  notes  payable.  In the  third and  fourth  quarters  of 1996,  the
Partnership prepaid $14.0 million of the outstanding notes payable.

     (3) A $0.1  million  increase  in bad debt  expense  reflects  the  General
Partner's  evaluation  of the  collectibility  of  receivables  due from certain
lessees.


<PAGE>


(C)  Net Gain on Disposition of Owned Equipment

Net gain on  disposition of equipment for the third quarter of 1997 totaled $0.3
million, and resulted from the disposal or sale of an aircraft, trailers, marine
containers,  and railcars, with an aggregate net book value of $1.2 million, for
aggregate  proceeds  of $1.5  million.  For the same  period  in 1996,  the $0.1
million net gain on disposition of equipment  resulted from the sale or disposal
of the trailers,  marine  containers,  and railcars,  with an aggregate net book
value of $0.1 million, for proceeds of $0.2 million.

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

Equity in net income (loss) of unconsolidated  special-purpose  entities (USPEs)
represents  net income  (loss)  generated  from the  operation of  jointly-owned
assets accounted for under the equity method (in thousands).
<TABLE>
<CAPTION>

                                                                            For the Three Months
                                                                             Ended September 30,
                                                                            1997             1996
                                                                         ----------------------------
   <S>                                                                   <C>             <C>         
   Aircraft                                                              $     12        $     (70 ) 
   Mobile offshore drilling unit                                                -            7,093

</TABLE>

Aircraft:  As of  September  30,  1997 and  1996,  the  Partnership  owned a 50%
investment in an entity that owns a commercial  aircraft.  Revenues and expenses
were  $0.1  and $0.1  million,  respectively,  for the  third  quarter  of 1997,
compared  to  expenses  of $0.1  million  for  the  same  period  in  1996.  The
Partnership's share of the net contribution increased due to the sale of its 50%
investment  in an entity that owned an aircraft  engine in the third  quarter of
1997.

Mobile  offshore  drilling  unit:  During the third quarter of 1996, the General
Partner sold the  Partnership's 55% investment in an entity which owned a mobile
offshore drilling unit, resulting in a $7.1 million net gain.

(E)  Net Income

As a result of the foregoing,  the Partnership's net income was $0.5 million for
the third quarter of 1997,  compared to a net income of $7.1 million  during the
same period of 1996. The Partnership's  ability to operate and liquidate assets,
secure leases,  and re-lease those assets whose leases expire is subject to many
factors,  and the Partnership's  performance in the third quarter of 1997 is not
necessarily  indicative of future  periods.  In the third  quarter of 1997,  the
Partnership   distributed  $1.1  million  to  the  unitholders,   or  $0.15  per
weighted-average depositary unit.

Comparison of the Partnership's Operating Results for the Nine Months Ended 
September 30, 1997 and 1996

(A)  Owned Equipment Operations

Lease  revenues  less direct  expenses  (defined as repair and  maintenance  and
asset-specific  insurance expenses) on owned equipment decreased during the nine
months  ended  September  30,  1997,  compared to the same  period of 1996.  The
following  table presents lease revenues less direct expenses by owned equipment
type (in thousands):

<TABLE>
<CAPTION>

                                                                             For the Nine Months
                                                                             Ended September 30,
                                                                            1997             1996
                                                                         ----------------------------
   <S>                                                                   <C>            <C>       
   Rail equipment                                                        $  2,596       $    2,460
   Trailers                                                                 1,973            2,612
   Aircraft                                                                 1,656            1,821
   Marine containers                                                          538              997

</TABLE>

Rail equipment: Railcar lease revenues and direct expenses were $3.4 million and
$0.8  million,  respectively,  for the nine months  ended  September  30,  1997,
compared to $3.5 million and $1.0 million, respectively,  during the same period
of 1996. Lease revenues  decreased due to the sale of railcars in 1997 and 1996.
Railcar  expenses  decreased due to running  repairs  required on certain of the
railcars  during 1996,  which were not needed during 1997, and the smaller fleet
in 1997.

Trailers:  Trailer lease revenues and direct expenses were $2.5 million and $0.5
million, respectively, for the nine months ended September 30, 1997, compared to
$3.0 million and $0.4 million, respectively, during the same period of 1996. The
decrease in net  contribution  was due to the sale of trailers in 1997 and 1996.
In  addition,  the  trailer  fleet  is  experiencing  lower  utilization  in the
PLM-affiliated short-term rental yards.

Aircraft:  Aircraft  lease  revenues and direct  expenses  were $1.7 million and
$30,000, respectively, for the nine months ended September 30, 1997, compared to
$1.8 million and $10,000, respectively, during the same period of 1996. Aircraft
contribution  decreased in the nine months ended September 30, 1997, compared to
the same period in 1996, due to the sale of two aircraft in the second and third
quarters of 1997.

Marine  containers:  Marine  container lease revenues were $0.5 million and $1.0
million for the nine months ended September 30, 1997 and 1996, respectively. The
number of marine containers owned by the Partnership has been declining over the
past twelve months due to sales and  dispositions.  The result of this declining
fleet has been a decrease in marine container revenue.

(B)  Indirect Expenses Related to Owned Equipment Operations

Total indirect  expenses of $6.1 million for the nine months ended September 30,
1997  decreased from $7.9 million for the same period of 1996. The variances are
explained as follows:

     (1) A $1.0 million decrease in depreciation  and amortization  expense from
1996 levels reflects the effect of asset sales in 1996 and 1997.

     (2) A $0.9 million decrease in interest expense is due to a decrease in the
level of  outstanding  debt during the nine months  ended  September  30,  1997,
compared to the same  period in 1996.  In 1997,  the  Partnership  prepaid  $7.2
million of the  outstanding  notes payable.  In the third and fourth quarters of
1996, the Partnership prepaid $14.0 million of the outstanding notes payable.

     (3) A $0.1 million  decrease in management fees to affiliates  reflects the
lower levels of lease revenues in 1997 compared to 1996.

     (4) A $0.2  million  increase  in bad debt  expense  reflects  the  General
Partner's  evaluation  of the  collectibility  of  receivables  due from certain
lessees.

(C)  Net Gain on Disposition of Owned Equipment

Net gain on  disposition  of equipment  for the nine months ended  September 30,
1997 totaled $1.4  million,  and resulted from the sale or disposal of aircraft,
marine containers,  trailers, and railcars,  with an aggregate net book value of
$2.9 million,  for aggregate proceeds of $4.3 million. For the nine months ended
September  30,  1996,  the $0.3  million net gain on  disposition  of  equipment
resulted from the sale or disposal of marine containers, trailers, and railcars,
with an aggregate net book value of $0.6 million, for aggregate proceeds of $0.9
million.

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

Equity  in  net  income  (loss)  of  unconsolidated   special-purpose   entities
represents  net income  (loss)  generated  from the  operation of  jointly-owned
assets accounted for under the equity method (in thousands).

<TABLE>
<CAPTION>
                                                                            For the Nine Months
                                                                            Ended September 30,
                                                                          1997               1996
                                                                       ------------------------------
   <S>                                                                 <C>                <C>       
   Aircraft                                                            $ (1,029 )         $   (381 )
   Mobile offshore drilling unit                                              -              6,980

</TABLE>

Aircraft:  As of  September  30,  1997 and  1996,  the  Partnership  owned a 50%
investment in an entity that owns a commercial  aircraft.  Revenues and expenses
were $0.2  million and $1.2  million,  respectively,  for the nine months  ended
September 30, 1997, compared to $0.4 million and $0.8 million, respectively, for
the same period in 1996. The  Partnership's  share of revenues  decreased due to
the off-lease status of this aircraft during the nine months ended September 30,
1997;  this aircraft had been on lease for the first six months ended  September
30, 1996.  The  Partnership  sold its 50%  investment  in an entity that owns an
aircraft  engine  in the  third  quarter  of 1997.  The  Partnership's  share of
expenses  increased due to the repairs to this engine to meet 1997 airworthiness
requirements.   This  increase  was  partially  offset  by  a  decrease  in  the
Partnership's  share of bad debt expenses.  In 1996,  the General  Partner fully
reserved the uncollected outstanding receivables from the aircraft's lessee that
encountered financial difficulties.

Mobile  offshore  drilling  unit:  During  1996,  the General  Partner  sold the
Partnership's 55% investment in an entity which owned a mobile offshore drilling
unit,  resulting in a $7.1 million net gain, which was offset by a net loss from
operations of $0.1 million.

(E)  Net Income

As a result of the foregoing,  the Partnership's net income was $1.1 million for
the nine  months  ended  September  30,  1997,  compared to a net income of $7.0
million during the same period of 1996. The Partnership's ability to operate and
liquidate assets,  secure leases,  and re-lease those assets whose leases expire
is subject to many factors, and the Partnership's performance in the nine months
ended September 30, 1997 is not necessarily indicative of future periods. In the
nine months ended September 30, 1997, the Partnership  distributed  $4.8 million
to the unitholders, or $0.65 per weighted-average depositary unit.

(II) FINANCIAL CONDITION -- CAPITAL RESOURCES AND LIQUIDITY

The General Partner purchased the Partnership's initial equipment portfolio with
capital raised from its initial equity offering and permanent debt financing. No
further  capital  contributions  from original  partners are permitted under the
terms of the  Partnership's  limited  partnership  agreement.  The Partnership's
total  outstanding  indebtedness of $4.5 million on October 31, 1997 can only be
increased up to a maximum of $35.0 million, subject to specific covenants in the
existing debt agreement.  The Partnership  relies on operating cash flow to meet
its operating obligations, maintain working capital reserves, and, to the extent
funds are available, make cash distributions to partners.

In the first nine months of 1997, the Partnership  used $7.2 million in proceeds
from the sale of assets and other cash on hand to prepay the  outstanding  debt.
The Partnership may continue to prepay the outstanding notes payable.

For the nine months ended  September 30, 1997,  the  Partnership  generated $3.4
million in  operating  cash (net cash  provided  by  operating  activities  plus
distributions  from  unconsolidated   special-purpose   entities)  to  meet  its
operating obligations and maintain the current level of distributions (total for
the nine months ended  September 30, 1997 of $5.1 million) to the partners,  but
also used undistributed  available cash from prior periods of approximately $1.7
million.

During the nine  months  ended  September  30,  1997,  the  Partnership  sold or
disposed  of  aircraft,  marine  containers,  trailers,  and  railcars,  with an
aggregate net book value of $2.9 million, for proceeds of $4.3 million.

The cash  distributions  paid in August 1997 were reduced from an annual rate of
5% to an annual rate of 3% to more closely reflect current and expected net cash
flows from  operations.  Continued weak market  conditions in certain  equipment
sectors  and  equipment  sales  have  reduced  overall  lease  revenues  in  the
Partnership to the extent that reductions in distribution levels were necessary.
In addition, with the Partnership expected to enter the active liquidation phase
in the near future, the size of the Partnership's  remaining equipment portfolio
and,  in turn,  the amount of net cash flows from  operations  will  continue to
become  progressively  smaller as assets are sold. Although  distribution levels
have been  reduced,  significant  asset  sales may result in  potential  special
distributions to unitholders.



<PAGE>


(III)    OUTLOOK FOR THE FUTURE

Since the  Partnership  is in its  holding or  passive  liquidation  phase,  the
General  Partner will be seeking to  selectively  re-lease or sell assets as the
existing leases expire.  Sale decisions will cause the operating  performance of
the  Partnership to decline over the remainder of its life. The General  Partner
anticipates  the  liquidation  of  Partnership  assets will be  completed by the
planned termination of the Partnership at the end of the year 2000.

The  Partnership  intends  to use cash  flow  from  operations  to  satisfy  its
operating  requirements,  pay loan principal on debt, and pay cash distributions
to the investors.

(IV) FORWARD-LOOKING INFORMATION

Except for historical  information contained herein, the discussion in 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.













                     (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

                  None.


<PAGE>




Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned there unto duly authorized.



                                          PLM EQUIPMENT GROWTH FUND II
                                          By: PLM Financial Services, Inc.
                                              General Partner




Date:  October 31, 1997                   By: /s/ Richard Brock
                                              -----------------
                                              Richard Brock
                                              Vice President and
                                              Corporate Controller