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, 1996.

     [  ]         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)

                                     ASSETS
<TABLE>
<CAPTION>

                                                                                September 30,            December 31,
                                                                                    1996                     1995
                                                                              ------------------------------------------

   <S>                                                                          <C>                      <C>       
   Equipment held for operating leases                                          $    89,675              $   93,980
   Less accumulated depreciation                                                    (66,014 )               (65,000 )
                                                                              ------------------------------------------
                                                                                     23,661                  28,980
   Equipment held for sale                                                              410                      --
                                                                              ------------------------------------------
     Net equipment                                                                   24,071                  28,980

   Cash and cash equivalents                                                         10,141                   6,427
   Restricted cash                                                                      415                     548
   Investment in unconsolidated special purpose entities                              1,839                  10,515
   Accounts receivable, less allowance for
     doubtful accounts of $602 in 1996 and $19 in 1995                                1,781                   2,198
   Deferred charges, net of accumulated amortization of
     $1,434 in 1996 and $1,374 in 1995                                                  177                     237
   Prepaid expenses and other assets                                                      5                      52
                                                                              ------------------------------------------

   Total assets                                                                 $    38,429              $   48,957
                                                                              ==========================================


   Liabilities:

   Accounts payable and accrued expenses                                        $       248              $      409
   Due to affiliates                                                                    199                     398
   Note payable                                                                      18,000                  27,000
   Prepaid deposits and reserve for repairs                                           1,971                   2,954
                                                                              ------------------------------------------
     Total liabilities                                                               20,418                  30,761

   Partners' capital  (deficit):

   Limited Partners (7,381,805 and 7,426,305 Depositary Units,
     including 1,150 Depositary Units held in the
     Treasury at September 30, 1996 and December 31, 1995)                           18,383                  18,658
   General Partner                                                                     (372 )                  (462 )
                                                                              ------------------------------------------
     Total partners' capital                                                         18,011                  18,196
                                                                              ------------------------------------------

   Total liabilities and partners' capital                                      $    38,429              $   48,957
                                                                              ==========================================

</TABLE>

                       See accompanying notes to financial
                                  statements.


<PAGE>



                          PLM EQUIPMENT GROWTH FUND II
                             (A Limited Partnership)

                            STATEMENTS OF OPERATIONS
                (In thousands of dollars except per unit amounts)
<TABLE>
<CAPTION>


                                                       For the three months                 For the nine months
                                                       ended September 30,                  ended September 30,
                                                       1996           1995                1996            1995
                                                    ----------------------------------------------------------------

   <S>                                              <C>            <C>                 <C>            <C>             
   Revenues:

     Lease revenue                                  $   3,027      $   4,005           $   9,408      $   12,943      
     Interest and other income                             98            152                 240             401
     Net gain  on disposition of equipment                100            496                 267           1,351
                                                    ----------------------------------------------------------------
         Total revenues                                 3,225          4,653               9,915          14,695

   Expenses:

     Depreciation and amortization                      1,433          2,149               4,358           6,479
     Management fees to affiliate                         130            203                 451             637
     Interest expense                                     489            584               1,460           1,851
     Insurance expense to affiliate                        --             --                  --              87
     Other insurance expense                               32             33                  69             128
     Repairs and maintenance                              532            663               1,495           2,065
     Marine equipment operating expenses                   --             31                  --             176
     General and administrative
       expenses to affiliates                             378            206                 587             669
     Other general and administrative expenses            (30 )          281                 702             917
     Provision for (recovery of) bad debt                 159            (60 )               384             192
     Loss on revaluation of equipment                      --            667                  --             667
                                                    ----------------------------------------------------------------
                                                    ----------------------------------------------------------------
         Total expenses                                 3,123          4,757               9,506          13,868
                                                    ----------------------------------------------------------------

   Equity in net income of unconsolidated
    special purpose entities                            7,023             --               6,599              --
                                                    ----------------------------------------------------------------

   Net income (loss)                                $   7,125      $    (104 )         $   7,008      $      827   
                                                    ================================================================

   Partners' share of net income (loss):

     Limited Partners                               $   7,002      $    (612 )         $   6,567      $       67      
     General Partner                                      123            508                 441             760
                                                    ----------------------------------------------------------------

           Total                                    $   7,125      $    (104 )         $   7,008      $      827    
                                                    ================================================================

   Net income  (loss)  per  Depositary  Unit  
     (7,381,805  and  7,439,005  Units,
     including 1,150 Units held in Treasury 
     respectively,
     at September 30, 1996 and 1995)                $    0.95      $   (0.08 )         $    0.89      $     0.01    
                                                    ================================================================

   Cash distributions                               $   1,944      $   3,132           $   7,014      $    9,416   
                                                    ================================================================

   Cash distributions per Depositary Unit           $    0.25      $    0.40           $    0.90      $     1.20   
                                                    ================================================================

</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, 1994 to September 30, 1996
                            (in thousands of dollars)

<TABLE>
<CAPTION>


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

   <S>                                                          <C>                 <C>               <C>        
   Partners' capital (deficit) at December 31, 1994             $   30,850          $    (697 )       $    30,153

   Net income                                                           75                862                 937

   Cash distributions                                              (11,922 )             (627 )           (12,549 )

   Repurchase of Depositary Units                                     (345 )               --                (345 )
                                                                ---------------------------------------------------

   Partners' capital (deficit) at December  31, 1995                18,658               (462 )            18,196

   Net income                                                        6,567                441               7,008

   Cash distributions                                               (6,663 )             (351 )            (7,014 )

   Repurchase of Depositary Units                                     (179 )               --                (179 )
                                                                ---------------------------------------------------

   Partners' capital (deficit) at September 30, 1996            $   18,383          $    (372 )       $    18,011     
                                                                ===================================================

</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,
                                                                                       1996                 1995
                                                                                   -----------------------------------

   <S>                                                                             <C>                   <C>             
   Operating activities:
     Net income                                                                    $    7,008            $      827      
     Adjustments to reconcile net income to net
       cash provided by operating activities:
         Net gain on disposition of equipment                                            (267 )              (1,351 )
         Loss on revaluation of equipment                                                  --                   667
         Depreciation and amortization                                                  4,358                 6,479
         Income from unconsolidated special purpose
           entities in excess of cash distributions                                    (5,596 )                  --
         Changes in operating assets and liabilities:
           Restricted cash                                                                133                     1
           Accounts receivable, net                                                       369                   131
           Due to affiliate                                                              (199 )                 446
           Prepaid expenses and other assets                                               47                    80
           Accounts payable and accrued expenses                                         (161 )                (229 )
           Accrued drydock expenses                                                        --                   271
           Prepaid deposits and reserve for repairs                                      (983 )                (694 )
                                                                                   -----------------------------------
   Cash provided by operating activities                                                4,709                 6,628
                                                                                   -----------------------------------

   Investing activities:
     Proceeds from disposition of equipment                                               933                 6,743
     Liquidation proceeds from unconsolidated special purpose entities                 14,272                    --
     Payments for capital improvements                                                     (7 )                 (11 )
                                                                                   -----------------------------------
   Cash provided by investing activities                                               15,198                 6,732
                                                                                   -----------------------------------

   Financing activities:
     Principal payments on notes payable                                               (9,000 )              (8,000 )
     Cash distributions paid to Limited Partners                                       (6,663 )              (8,945 )
     Cash distributions paid to General Partner                                          (351 )                (471 )
     Repurchase of Depositary Units                                                      (179 )                (266 )
                                                                                   -----------------------------------
   Cash used in financing activities                                                  (16,193 )             (17,682 )
                                                                                   -----------------------------------

   Cash and cash equivalents:
   Net increase (decrease) in cash and cash equivalents                                 3,714                (4,322 )

   Cash and cash equivalents at beginning of period                                     6,427                12,348
                                                                                   -----------------------------------

   Cash and cash equivalents at end of period                                      $   10,141            $    8,026   
                                                                                   ===================================

   Supplemental information:
     Interest paid                                                                 $    1,457            $    1,795 
                                                                                   ===================================

</TABLE>


                       See accompanying notes to financial
                                  statements.


<PAGE>


                          PLM EQUIPMENT GROWTH FUND II
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                               September 30, 1996

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, 1996,  the  statements of
     operations for the three and nine months ended September 30, 1996 and 1995,
     the  statements  of  changes in  partners'  capital,  for the  period  from
     December 31, 1994 to September  30, 1996 and the  statements  of cash flows
     for the nine months ended September 30, 1996 and 1995. 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,  1995,  on file at the  Securities  and
     Exchange Commission.

2.   Investment in Unconsolidated Special Purpose Entities

     Prior  to  1996,  the  Partnership   accounted  for  operating   activities
     associated  with joint ownership of  transportation  equipment as undivided
     interests,  including  its  proportionate  share of each asset with similar
     wholly-owned assets in its financial  statements.  Under generally accepted
     accounting principles,  the effects of such activities, if material, should
     be reported  using the equity method of  accounting.  Therefore,  effective
     January 1, 1996, the  Partnership  adopted the equity method to account for
     its investment in such jointly-held assets.

     The principle  differences  between the previous  accounting method and the
     equity method relate to the  presentation  of activities  relating to these
     assets in the  statement of  operations.  Whereas,  under equity  method of
     accounting  for the  Partnership's  proportionate  share is  presented as a
     single net amount,  equity in net income (loss) of  unconsolidated  special
     purpose  entities,  under the previous  method,  the  Partnership's  income
     statement  reflected its  proportionate  share of each  individual  item of
     revenue and expense.  Accordingly, the effect of adopting the equity method
     of accounting  has no cumulative  effect on previously  reported  partner's
     capital  or on the  Partnership's  net  income  (loss)  for the  period  of
     adoption.  Because the effects on previously issued financial statements of
     applying the equity method of accounting to  investments  in  jointly-owned
     assets are not considered to be material to such financial statements taken
     as a whole,  previously issued financial statements have not been restated.
     However,  certain items have been  reclassified  in the  previously  issued
     balance sheet to conform to the current period presentation.

     The net investment in unconsolidated  special purpose entities includes the
     following  jointly-owned equipment (and related assets and liabilities) (in
     thousands):
<TABLE>
<CAPTION>

                                                       September 30,         December 31,
                                                            1996                 1995
                                                     ----------------------------------------

   <S>                                                   <C>                  <C>       
   50% interest in a Boeing 737-200A aircraft            $   1,839            $    2,365
   55% interest in a mobile offshore drilling unit              --                 8,150
                                                      ---------------------------------------
   Investment in unconsolidated special purpose
      entities                                           $   1,839            $   10,515
                                                      =======================================
</TABLE>

     During the nine months ended  September 30, 1996, the General  Partner sold
     the asset related to the  Partnership's  55% interest in a mobile  offshore
     drilling unit,  included in "Investment in  Unconsolidated  Special Purpose
     Entities,"  with a net book value of $7.2  million  for  proceeds  of $14.3
     million.  For the same period ended September 30, 1995, the General Partner
     sold the assets  related to the  Partnership's  50% owned DC-9 aircraft and
     50% owned marine vessel,  included in "Investment in Unconsolidated Special
     Purpose  Entities,"  with an  aggregate  net book value of $3.2 million and
     unused drydock reserves of $0.3 million,  for proceeds of $3.5 million. The
     Partnership

<PAGE>

                          PLM EQUIPMENT GROWTH FUND II
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                               September 30, 1996

2.   Investment in Unconsolidated Special Purpose Entities (continued)

     received liquidating  distributions from the Unconsolidated Special Purpose
Entities during the third quarter.

3.   Cash Distribution

     Cash  distributions  are  recorded  when paid and  totaled  $7,014,000  and
     $9,416,000  for  the  nine  months  ended  September  30,  1996  and  1995,
     respectively,  and  $1,944,000  and  $3,132,000  for the three months ended
     September 30, 1996 and 1995,  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 $96,000 and $8,878,000
     for the nine months ended September 30, 1996, and 1995, respectively,  were
     deemed to be a return of capital.

     Cash  distributions of $1,943,000 ($0.25 per Depositary Unit) were declared
     on October  24,  1996,  and are to be paid on  November  15,  1996,  to the
     unitholders of record as of September 30, 1996.

4.   Repurchase of Depositary Units

     On December 28, 1992, the Partnership engaged in a program to repurchase up
     to 200,000  Depositary  Units. In the nine months ended September 30, 1996,
     the  Partnership had purchased and canceled  44,500  Depositary  Units at a
     cost of $0.2  million.  As of  September  30,  1996,  the  Partnership  had
     cumulatively  repurchased  105,100  Depositary  Units  at a  cost  of  $0.8
     million.

5.   Delisting of Partnership Units

     The General Partner  delisted the  Partnership's  depositary units from the
     American Stock  Exchange  (AMEX) under the symbol GFY on April 8, 1996. The
     last day for  trading on the AMEX was March 22,  1996.  Under the  Internal
     Revenue  Code (the Code),  the  Partnership  was  classified  as a Publicly
     Traded  Partnership.  The Code treats all Publicly  Traded  Partnerships as
     corporations  if they remain  publicly  traded  after  December  31,  1997.
     Treating the Partnership as a corporation would mean the Partnership itself
     would become a taxable,  rather than a "flow through" entity.  As a taxable
     entity,  the income of the Partnership would have become subject to federal
     taxation at both the  partnership  level and at the  investor  level to the
     extent  that  income  would have  become  distributed  to an  investor.  In
     addition,  the  General  Partner  believed  that the  trading  price of the
     Depositary  Units would have been distorted when the Partnership  began the
     final liquidation of the underlying equipment portfolio.  In order to avoid
     taxation of the Partnership as a corporation  and to prevent  unfairness to
     Unitholders,  the General  Partner  delisted the  Partnership's  Depositary
     Units from the AMEX. While the Partnership's Depositary Units are no longer
     publicly traded on a national stock exchange, the General Partner continues
     to manage the  equipment  of the  Partnership  and prepare  and  distribute
     quarterly and annual reports and Forms 10-Q and 10-K in accordance with the
     Securities and Exchange Commission  requirements.  In addition, the General
     Partner  continues to provide pertinent tax reporting forms and information
     to Unitholders.  The General Partner anticipates an informal market for the
     Partnership's  units may develop in the  secondary  marketplace  similar to
     that which currently exists for non-publicly traded partnerships.



<PAGE>


                          PLM EQUIPMENT GROWTH FUND II
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                               September 30, 1996

6.   Equipment

     Owned equipment held for operating leases is stated at cost. The components
     of equipment are as follows (in thousands):
<TABLE>
<CAPTION>

                                               September 30,        December 31,
                                                   1996                 1995
                                              --------------------------------------
   <S>                                          <C>                  <C>       
   Equipment held for operating leases:
   Rail equipment                               $   18,244           $   19,747
   Marine containers                                12,023               13,399
   Aircraft                                         37,901               37,902
   Trailers and tractors                            21,507               22,932
                                               ------------------------------------
                                                    89,675               93,980
   Equipment held for sale                             410                   --
                                               ------------------------------------
                                                    90,085               93,980
   Less accumulated depreciation                   (66,014 )            (65,000 )
                                               ------------------------------------
                                               ====================================
   Net equipment                                $   24,071           $   28,980
                                               ====================================
</TABLE>

     Revenues are earned by placing the equipment under  operating  leases which
     are generally  billed  monthly or quarterly.  Certain of the  Partnership's
     marine containers are leased to operators of utilization-type leasing pools
     which include  equipment owned by unaffiliated  parties.  In such instances
     revenues received by the Partnership  consist of a specified  percentage of
     revenues generated by leasing the equipment to sublessees,  after deducting
     certain  direct  operating  expenses  of the  pooled  equipment.  Rents for
     railcars are based on mileage traveled or a fixed rate; rents for all other
     equipment are based on fixed rates.

     As of September 30, 1996, all equipment in the Partnership's  portfolio was
     either on lease or operating in  PLM-affiliated  short-term  trailer rental
     facilities,  except  for  an  aircraft,  84  marine  containers  and  seven
     railcars.  With the exception of 266 marine containers and one tractor, all
     equipment in the Partnership  portfolio was either on lease or operating in
     PLM-affiliate  short-term  trailer rental  facilities at December 31, 1995.
     The aggregate  carrying  value of equipment  off-lease was  $1,597,000  and
     $1,136,000 at September 30, 1996 and December 31, 1995, respectively.

     During the nine months ended  September 30, 1996, the  Partnership  sold or
     disposed of 208 marine  containers,  112 trailers and five railcars with an
     aggregate net book value of $0.6 million, for proceeds of $0.9 million. For
     the nine months ended September 30, 1995, the Partnership  sold or disposed
     of 2,209 marine  containers,  nine  trailers,  one tractor and one railcar,
     with an  aggregate  net book value of $2.4  million,  for  proceeds of $3.2
     million.

7.   Notes Payable

     In September of 1996, the Partnership prepaid $9 million of the $35 million
     outstanding  note  payable.  This  payment was applied to the third  annual
     installment due March 31, 1998. In 1995, the Partnership  prepaid the first
     annual $4  million  installment  of the loan due March  31,  1996,  and the
     second annual $4 million  installment  due March 31, 1997. All  prepayments
     were due to the sale of assets.

     In May 1996, the General  Partner revised its short term loan facility (the
     "Committed  Bridge Facility") and PLM Equipment Growth Fund II is no longer
     included as a borrower.

8.   Subsequent Event

     In October of 1996, the Partnership  sold 39 railcars with a net book value
     of $0.4 million,  for proceeds of $0.9 million.  This group of railcars was
     classified as equipment held for sale at September 30, 1996.

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, 1996 and 1995

(A)  Owned equipment operations

Lease revenues less direct expenses (defined as repairs and maintenance,  marine
equipment  operating,  and asset specific insurance expenses) on owned equipment
decreased  during the third quarter of 1996 when compared to the same quarter of
1995. The following  table presents lease revenues less direct expenses by owned
equipment type (in thousands):
<TABLE>
<CAPTION>


                                                                            For the three months
                                                                             ended September 30,
                                                                            1996             1995
                                                                         ----------------------------
   <S>                                                                   <C>             <C>        
   Aircraft                                                              $    609        $     749  
   Trailers                                                                   826              936
   Rail equipment                                                             753              816
   Marine containers                                                          298              368
</TABLE>


Aircraft:  Aircraft lease  revenues were $0.6 million and $0.8 million,  for the
third quarter of 1996 and 1995,  respectively,  during the same quarter of 1995.
The decrease in aircraft  contributions  was due to the  off-lease  status of an
aircraft in 1996, which was on-lease for the entire third quarter of 1995;

Trailers:  Trailer lease revenues and direct expenses were $1.0 million and $0.1
million,  respectively,  for the third quarter of 1996, compared to $1.1 million
and $0.2 million, respectively, during the same quarter of 1995. The decrease in
trailer  contribution  was due to the lower  utilization  in the PLM  affiliated
short-term rental yards;

Rail equipment: Railcar lease revenues and direct expenses were $1.1 million and
$0.4  million,  respectively,  for the third  quarter of 1996,  compared to $1.2
million and $0.4  million,  respectively,  during the same quarter of 1995.  The
decrease  in  railcar  contribution  was due to the  off-lease  status  of seven
railcars in the third quarter of 1996,  which were on-lease for the entire third
quarter of 1995;

Marine  containers:  Marine  container lease revenues were $0.3 million and $0.4
million during the third quarter of 1996 and 1995,  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 $2.6 million for the third quarter of 1996 decreased
from $2.8 million for the same period in 1995.  The  variances  are explained as
follows:

     (a) A $0.2 million decrease in depreciation  and amortization  expense from
1995 levels, reflecting the effect of asset sales in 1995 and 1996;

     (b) A $0.1 million decrease in interest expense due to a lower base rate of
interest  charged  on the  Partnership's  floating  rate debt  during  the third
quarter of 1996 as compared to the same period in 1995.  In  September  of 1996,
the Partnership  prepaid $9 million of the $35 million outstanding note payable.
This payment was applied to the third annual  installment due March 31, 1998. In
1995,  the  Partnership  prepaid  $8.0 million of the  outstanding  note payable
representing the principal payments due March 31, 1996 and 1997;

     (c) A $0.1 million decrease in administrative expenses from 1995 levels due
to  reduced  office  expenses  and   professional   services   required  by  the
Partnership;

     (d) A $0.1 million decrease in management fee to affiliates, reflecting the
lower levels of lease revenues in 1996 as compared to 1995;

     (e) A $0.2  million  increase  in bad debt  expense to reflect  the General
Partner's  evaluation of the  collectibility of receivables due from a container
lessee that encountered financial difficulties.

(C) Loss on  revaluation  of equipment  of $0.7 million in the third  quarter of
1995  resulted  from the  reduction  of the net book value of an aircraft to its
estimated net realizable value. There was no loss on revaluation of equipment in
the third quarter of 1996.

(D)  Net gain on disposition of owned equipment

Net gain on  disposition of equipment for the third quarter of 1996 totaled $0.1
million  which  resulted  from the disposal or sale of six  trailers,  65 marine
containers  and two railcars  with an aggregate  net book value of $0.1 million,
for aggregate  proceeds of $0.2 million.  For the same period in 1995,  the $0.5
million net gain on disposition of equipment  resulted from the sale or disposal
of the one trailer and 2,069 marine  containers with an aggregate net book value
of $2.1 million, for proceeds of $2.6 million.

(E)  Interest and other income

Interest and other income  decreased  $0.1 million  during the third  quarter of
1996 due  primarily  to lower  interest  rates earned on cash  equivalents  when
compared to the same period of 1995.

(F) Equity in net  income  (loss) of  unconsolidated  special  purpose  entities
represents  net  loss  generated  from the  operation  of  jointly-owned  assets
accounted for under the equity method (see Note 2 to the financial statements).
<TABLE>
<CAPTION>

                                                                            For the three months
                                                                             ended September 30,
                                                                            1996             1995
                                                                         ----------------------------
   <S>                                                                   <C>             <C>           
   Aircraft                                                              $    (70 )      $      43     
   Mobile offshore drilling unit                                            7,093              (70 )
</TABLE>


Aircraft:   As  of  September  30,  1996  and  1995,  the  Partnership  owned  a
50%-investment  in a commercial  aircraft.  Revenues and expenses  were $0.0 and
$0.1  million,  respectively,  for the third  quarter of 1996,  compared to $0.1
million  and $0.1  million,  respectively,  for the  same  period  in 1995.  The
Partnership's  share of revenue  decreased due to the  off-lease  status of this
aircraft  during the third  quarter of 1996,  which was  on-lease for the entire
quarter of 1995.

Mobile offshore drilling unit: As of September 30, 1995, the Partnership owned a
55% investment in a mobile  offshore  drilling unit (rig).  The General  Partner
sold the asset  related  to this  investment  resulting  in $7.1  million in net
gains, and the Partnership received a liquidating  distribution during the third
quarter of 1996.

 (G) Net Income (loss)

As a result of the foregoing,  the  Partnership's net income of $7.1 million for
the third quarter of 1996,  increased  from net loss of $0.1 million  during the
same period in 1995. The Partnership's  ability to operate and liquidate assets,
secure leases, and re-lease those assets whose leases expire during the duration
of the Partnership is subject to many factors and the Partnership's  performance
in the second quarter of 1996 is not  necessarily  indicative of future periods.
In the third quarter of 1996, the  Partnership  distributed  $1.8 million to the
Unitholders, or $0.25 per Depositary Unit.


<PAGE>


Comparison  of the  Partnership's  Operating  Results for the Nine Months  Ended
September 30, 1996 and 1995

(A)  Owned equipment operations

Lease revenues less direct expenses (defined as repairs and maintenance,  marine
equipment  operating,  and asset specific insurance expenses) on owned equipment
decreased  during the nine months ended  September 30, 1996 when compared to the
same period of 1995.  The following  table  presents  lease revenues less direct
expenses by owned equipment type (in thousands):
<TABLE>
<CAPTION>

                                                                             For the nine months
                                                                             ended September 30,
                                                                            1996             1995
                                                                         ----------------------------
   <S>                                                                   <C>            <C>           
   Aircraft                                                              $  1,821       $    1,506    
   Trailers                                                                 2,612            3,344
   Rail equipment                                                           2,460            2,689
   Marine containers                                                          997            1,264

</TABLE>


Aircraft:  Aircraft  lease  revenues and direct  expenses  were $1.8 million and
$10,000, respectively, for the nine months ended September 30, 1996, compared to
$2.2  million and $0.7  million,  respectively,  during the same period of 1995.
Lease  revenues  decreased due to the  off-lease  status of an aircraft in 1996,
offset by another  aircraft,  which was  off-lease in the first quarter of 1995.
Direct  expenses  decreased  due to the costs  incurred in the nine months ended
September 30, 1995 to refurbish  another  aircraft  prior to being  re-leased in
1995;

Trailers:  Trailer lease revenues and direct expenses were $3.0 million and $0.4
million, respectively, for the nine months ended September 30, 1996, compared to
$3.8 million and $0.5 million, respectively, during the same period of 1995. The
decrease in net  contribution  was due to the sale of 112  trailers in 1996.  In
addition,  the  trailer  fleet  is  experiencing  lower  utilization  in the PLM
affiliated short-term rental yards;

Rail equipment: Railcar lease revenues and direct expenses were $3.5 million and
$1.0  million,  respectively,  for the nine months  ended  September  30,  1996,
compared to $3.6 million and $0.9 million,  respectively  during the same period
of 1995. The decrease in railcar contribution resulted from the off-lease status
of seven railcars in the third quarter of 1996. In addition,  expenses increased
due to running  repairs  required on certain of the  railcars  during 1996 which
were not needed during 1995;

Marine  containers:  Marine  container lease revenues were $1.0 million and $1.3
million for the nine months ended September 30, 1996 and 1995, 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 $7.9 million for the nine months ended September 30,
1996, decreased from $8.7 million for the same period in 1995. The variances are
explained as follows:

     (a) A $0.3 million decrease in depreciation  and amortization  expense from
1995 levels, reflecting the effect of asset sales in 1995 and 1996;

     (b) A $0.4 million decrease in interest expense due to a lower base rate of
interest charged on the Partnership's  floating rate debt during the nine months
ended September 30, 1996 as compared to the same period in 1995. In September of
1996, the  Partnership  prepaid $9 million of the $35 million  outstanding  note
payable.  This payment was applied to the third annual installment due March 31,
1998. In 1995,  the  Partnership  prepaid $8.0 million of the  outstanding  note
payable representing the principal payments due March 31, 1996 and 1997;

     (c) A $0.2 million decrease in administrative expenses from 1995 levels due
to  reduced  office  expenses  and   professional   services   required  by  the
Partnership.

     (d) A $0.1 million decrease in management fee to affiliates, reflecting the
lower levels of lease revenues in 1996 as compared to 1995;

     (e) A $0.2  million  increase  in bad debt  expense to reflect  the General
Partner's  evaluation of the  collectibility of receivables due from a container
lessee that encountered financial difficulties.

(C) Loss on  revaluation  of equipment of $0.7 million in 1995 resulted from the
reduction of the net book value of an aircraft to its estimated  net  realizable
value.  There was no loss on  revaluation  of equipment in the nine months ended
September 30, 1996.

(D)  Net gain on disposition of owned equipment

Net gain on  disposition  of equipment  for the nine months ended  September 30,
1996 totaled $0.3 million which resulted from the sale or disposal of 208 marine
containers, 112 trailers, and five railcars, with an aggregate net book value of
$0.6 million for aggregate  proceeds of $0.9 million.  For the nine months ended
September  30,  1995,  the $0.8  million net gain on  disposition  of  equipment
resulted from the sale or disposal of 2,209 marine  containers,  nine  trailers,
one tractor,  and one railcar with an aggregate  net book value of $2.4 million,
for aggregate proceeds of $3.2 million.

(E)  Interest and other income

Interest and other income  decreased  $0.2 million  during the nine months ended
September  30,  1996  due  primarily  to lower  interest  rates  earned  on cash
equivalents when compared to the same period of 1995.

(F) Equity in net loss of unconsolidated special purpose entities represents net
loss generated from the operation of  jointly-owned  assets  accounted for under
the equity method (see Note 2 to the financial statements).
<TABLE>
<CAPTION>

                                                                             For the nine months
                                                                             ended September 30,
                                                                            1996             1995
                                                                         ----------------------------
   <S>                                                                   <C>              <C>        
   Aircraft                                                              $   (381 )       $    201   
   Mobile offshore drilling unit                                            6,980             (213 )
   Marine vessel                                                               --              346
</TABLE>

Aircraft:  As of  September  30,  1996 and  1995,  the  Partnership  owned a 50%
investment in a commercial aircraft. Revenues and expenses were $0.4 million and
$0.8  million,  respectively,  for the nine months  ended  September  30,  1996,
compared to $0.6 million and $0.4 million,  respectively, for the same period in
1995.  The  Partnership's  share of revenue  decreased  $0.2  million due to the
off-lease  status of this aircraft  during the third quarter of 1996,  which was
on-lease  for the entire  third  quarter  of 1995.  The  Partnership's  share of
expenses  increased  $0.4  million due to the  increase  in bad debt  expense to
reflect the General  Partner's  evaluation of the  collectibility of receivables
due from the aircraft's lessee that encountered financial difficulties.

During 1995, the General Partner sold the asset related to the Partnership's 50%
owned  DC-9  aircraft  resulting  of $47,000  in net gain,  and the  Partnership
received a liquidating distribution during the second quarter.

Mobile offshore drilling unit: As of September 30, 1995, the Partnership owned a
55%-investment  in a mobile  offshore  drilling unit (rig).  The General Partner
sold the assets  related to this  investment  resulting  in $7.1  million in net
gain, offset by a net loss from operations of $0.2 million,  and the Partnership
received a liquidating distribution during the third quarter of 1996.

Marine vessel: In the second quarter of 1995, the General Partner sold the asset
related to the  Partnership's  50% investment in a marine vessel  resulting in a
$0.5 million gain, offset by a net loss from operations of $0.2 million, and the
Partnership received a liquidating distribution during the third quarter.


<PAGE>


(G)  Net Income

As a result of the foregoing,  the  Partnership's net income of $7.0 million for
the nine months  ended  September  30, 1996,  increased  from net income of $0.8
million during the same period in 1995. The Partnership's ability to operate and
liquidate assets,  secure leases,  and re-lease those assets whose leases expire
during the  duration  of the  Partnership  is subject  to many  factors  and the
Partnership's  performance  in the nine months ended  September  30, 1996 is not
necessarily indicative of future periods. In the nine months ended September 30,
1996, the Partnership distributed $6.7 million to the Limited Partners, or $0.90
per Depositary Unit.

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

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,  currently $18.0 million, can only be increased
up to a maximum of $35 million  subject to specific  covenants  in the  existing
debt  agreement.  The  Partnership  relies  on  operating  cash flow to meet its
operating  obligations,  make cash  distributions to partners,  and increase the
Partnership's equipment portfolio with any remaining surplus cash available.

     Pursuant to the Limited  Partnership  Agreement,  the Partnership ceased to
reinvest  in  additional  equipment  effective  December  31,  1995.  During the
reinvestment  phase  of  the  Partnership,  the  General  Partner  assembled  an
equipment  portfolio capable of achieving a level of operating cash flow for the
remaining life of the Partnership sufficient to meet its obligations and sustain
a predictable level of distributions to the partners. Equipment sales now result
in partial liquidation of the Partnership's portfolio,  with proceeds being used
for payment of debt or distributions to partners.

     In the third quarter of 1996, the Partnership used $9.0 million in proceeds
from the sale of assets  and other  cash on hand to prepay  the third  annual $9
million  principal  installment  of the loan due March 31,  1998.  In 1995,  the
Partnership  prepaid  the first  annual $4 million  installment  of the loan due
March 31, 1996, and the second annual $4 million installment due March 31, 1997.

     In June 1996,  the General  Partner  revised its short term loan  facility,
(the "Committed  Bridge Facility") and PLM Equipment Growth Fund II is no longer
included as a borrower.

     For the nine months ended  September 30, 1996,  the  Partnership  generated
sufficient  operating  revenues  to meet  its  operating  obligations,  but used
undistributed available cash from prior periods of approximately $1.6 million to
maintain the current level of distributions  (total 1996 of $7.0 million) to the
partners.

(III) DELISTING OF PARTNERSHIP UNITS

The  General  Partner  delisted  the  Partnership's  depositary  units  from the
American Stock  Exchange  (AMEX) under the symbol GFY on April 8, 1996. The last
day for trading on the AMEX was March 22, 1996.  Under the Internal Revenue Code
(the Code), the Partnership was classified as a Publicly Traded Partnership.  On
December 28, 1992,  the  Partnership  engaged in a program to  repurchase  up to
200,000  Depositary  Units.  In the nine months ended  September  30, 1996,  the
Partnership had purchased and canceled 44,500 Depositary Units at a cost of $0.2
million. As of September 30, 1996, the Partnership had cumulatively  repurchased
105,100 Depositary Units at a cost of $0.8 million.

(IV) TRENDS

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.   Throughout  1995  and  the  first  part  of  1996,  market
conditions,  supply and demand equilibrium,  and other factors varied in several
markets.  In the  container  and  refrigerated  over-the-road  trailer  markets,
oversupply conditions,  industry  consolidations,  and other factors resulted in
falling  rates and lower  returns.  In the dry  over-the-road  trailer  markets,
strong  demand  and  a  backlog  of  new  equipment   deliveries  produced  high
utilization and returns.  The marine vessel,  rail, and mobile offshore drilling
unit markets could be generally  categorized  by increasing  rates as the demand
for  equipment  is  increasing  faster than new  additions  net of  retirements.
Finally,  demand for  narrowbody  stage II aircraft,  such as those owned by the
Partnership,  has increased as expected savings from newer  narrowbody  aircraft
have not  materialized  and  deliveries of the newer  aircraft have slowed down.
These trends are expected to continue for the near term. These different markets
have had individual effects on the performance of Partnership  equipment in some
cases  resulting  in  declining   performance,   and  in  others,   in  improved
performance.

     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,
governmental or other regulations,  and others. 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 continuously monitors both
the equipment  markets and the  performance  of the  Partnership's  equipment in
these  markets.  The  General  Partner  may make an  evaluation  to  reduce  the
Partnership's  exposure  to  equipment  markets in which it  determines  that it
cannot operate equipment and achieve acceptable rates of return

     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.



<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:  November 11, 1996                     By: /s/ David J. Davis
                                                 ------------------
                                                 David J. Davis
                                                 Vice President and
                                                 Corporate Controller