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

                                  FORM 10-Q

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

               For the Quarterly Period Ended September 30, 2000

                         Commission File Number 0-17383

                        ML-LEE ACQUISITION FUND II, L.P.
      (Exact name of registrant as specified in its Governing Instruments)

           Delaware                                 04-3028398
(State or other jurisdiction            (IRS Employer Identification No.)
of incorporation or organization)

                      2 World Financial Center - 14th Floor
                          New York, New York 10281-6114
              (Address of principal executive offices and zip code)

Registrant's telephone number, including area code:  (212) 236-6576

Securities registered pursuant to Section 12(b) of the Act:

        Title of each Class        Name of each exchange on which registered
               None                               Not Applicable

Securities registered pursuant to Section 12(g) of the Act:

                        Units of Limited Partnership Interest
                                (Title of class)

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>
                        ML-LEE ACQUISITION FUND II, L.P.

                                TABLE OF CONTENTS



PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

Statements of Assets,  Liabilities and Partners' Capital
    As of September 30, 2000 (Unaudited) and December 31, 1999 (Unaudited)

Statements of Operations
    For the Three and Nine Months Ended September 30, 2000 and 1999 (Unaudited)

Statements of Changes in Net Assets
    For the Nine Months Ended September 30, 2000 and 1999 (Unaudited)

Statements of Cash Flows
    For the Nine Months Ended September 30, 2000 and 1999 (Unaudited)

Statements of Changes in  Partners'  Capital
    For the Nine Months Ended September 30, 2000 (Unaudited)

Schedule of Portfolio Investments
    As of September 30, 2000 (Unaudited)

Notes to Financial Statements (Unaudited)

Supplemental Schedule of Realized Loss
    - Schedule 1 (Unaudited)

Supplemental Schedule of Unrealized Depreciation
    - Schedule 2 (Unaudited)


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


Item 3.   Quantative and Qualitative Disclosure About Market Risk



PART II - OTHER INFORMATION

Item 6.   Exibits and Reports on Form 8-K

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<TABLE>
<CAPTION>
                                        ML-LEE ACQUISITION FUND II, L.P.
                             STATEMENTS OF ASSETS, LIABILTIES AND PARTNERS' CAPITAL
                                              (DOLLARS IN THOUSANDS)
                                                   (UNAUDITED)


                                                                     September 30, 2000     December 31, 1999
                                                                     ------------------     -----------------
<S>                                                                     <C>                 <C>
Assets:

Investments - Notes 3, 4 and 7
  Portfolio Investments at fair value
    Managed Companies (amortized cost $14,537
      as of September 30, 2000 and $17,144 as of December 31, 1999)       $  14,537             $   17,144
    Non-Managed Companies (amortized cost $2,197
      as of September 30, 2000 and $2,297 as of December 31, 1999)              348                    406
    Temporary Investments, at amortized cost (cost $19,189
      as of September 30, 2000 and $15,255 as of December 31, 1999)          19,196                 15,280
Cash                                                                            266                     36
Accrued Interest                                                                202                    163
Prepaid Expenses                                                                  -                      6
                                                                          ---------              ---------
Total Assets                                                              $  34,549              $  33,035
                                                                          =========              =========

Liabilities and Partners' Capital:

Liabilities
    Reimbursable Administrative Expenses Payable - Note 6                 $     110              $     105
    Independent General Partners' Fees Payable - Note 6                           2                      6
    Legal and Professional Fees Payable                                          13                      5
    Deferred Interest Income                                                     18                     44
                                                                          ---------              ---------
Total Liabilities                                                               143                    160
                                                                          ---------              ---------

Partners' Capital
    Individual General Partner                                                   13                     13
    Managing General Partner                                                    612                    322
    Limited Partners (221,745 Units)                                         33,781                 32,540
                                                                          ---------              ---------
Total Partners' Capital                                                      34,406                 32,875
                                                                          ---------              ---------
Total Liabilities and Partners' Capital                                   $  34,549              $  33,035
                                                                          =========              =========

See the Accompanying Notes to Financial Statements (Unaudited).
</TABLE>
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<TABLE>
<CAPTION>
                                              ML-LEE ACQUISITION FUND II, L.P.
                                                 STATEMENTS OF OPERATIONS
                                                  (DOLLARS IN THOUSANDS)
                                                       (UNAUDITED)


                                                                  For the Three Months       For the Nine Months
                                                                  Ended September 30,        Ended September 30,
                                                                  --------------------     ----------------------
                                                                     2000       1999          2000        1999
                                                                   --------   --------     ---------    ---------
<S>                                                                <C>        <C>          <C>          <C>
Investment Income:
  Interest                                                         $    405   $    562     $   1,670    $   1,706
  Discount and Other Income                                             312         93           715          223
                                                                   --------   --------     ---------    ---------
    Total Investment Income                                             717        655         2,385        1,929
                                                                   --------   --------     ---------    ---------
Expenses:
  Investment Advisory Fee - Note 6                                      167        167           500          500
  Fund Administration Fee - Note 6                                       55         56           166          167
  Reimbursable Administrative Expenses - Note 6                          47         48           150          173
  Independent General Partners' Fees and Expenses                        20         23            60           64
  Legal and Professional Fees                                             1         37            12           37
  Insurance Expense                                                       2          1             6            3
                                                                   --------   --------     ---------    ---------
    Total Expenses                                                      292        332           894          944
                                                                   --------   --------     ---------    ---------
Net Investment Income                                                   425        323         1,491          985

Realized Loss on Sales of Investments - Note 3 and Schedule 1             -     (3,507)           (7)      (4,533)

Net Change in Unrealized Depreciation on
  Investments - Schedule 2
  Nonpublic Securities                                                    -      9,596            47       13,637
                                                                   --------   --------     ---------    ---------
Net Increase in Net Assets Resulting from Operations                    425      6,412         1,531       10,089

Less:  Earned MGP Distributions to Managing General Partner             (92)      (109)         (297)        (293)
                                                                   --------   --------     ---------    ---------
Net Increase Available for Pro-Rata Distribution to All Partners   $    333   $  6,303     $   1,234    $   9,796
                                                                   ========   ========     =========    =========


See the Accompanying Notes to Financial Statements (Unaudited).
</TABLE>
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<TABLE>
<CAPTION>
                                       ML-LEE ACQUISITION FUND II, L.P.
                                     STATEMENTS OF CHANGES IN NET ASSETS
                                            (DOLLARS IN THOUSANDS)
                                                 (UNAUDITED)




                                                                  For the Nine Months Ended September 30,
                                                                  ---------------------------------------
                                                                         2000                  1999
                                                                      ---------             ---------
<S>                                                                   <C>                   <C>
From Operations:
  Net Investment Income                                               $   1,491             $     985
  Realized Loss on Sales of Investments                                      (7)               (4,533)
  Net Change in Unrealized Depreciation on Investments                       47                13,637
                                                                      ---------             ---------

  Net Increase in Net Assets Resulting from Operations                    1,531                10,089
  Cash Distributions to Partners                                              -                (8,351)
                                                                      ---------             ---------

  Total Increase                                                          1,531                 1,738
Net Assets:
  Beginning of Year                                                      32,875                31,026
                                                                      ---------             ---------

  End of Period                                                       $  34,406             $  32,764
                                                                      =========             =========


See the Accompanying Notes to Financial Statements (Unaudited).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                      ML-LEE ACQUISITION FUND II, L.P.
                                         STATEMENTS OF CASH FLOWS
                                          (DOLLARS IN THOUSANDS)
                                               (UNAUDITED)




                                                                   For the Nine Months Ended September 30,
                                                                   --------------------------------------
                                                                           2000              1999
                                                                        ---------         ---------
<S>                                                                     <C>               <C>
Increase in Cash

Cash Flows From Operating Activities:
  Interest, Discount and Other Income                                   $   2,338         $   2,946
  Investment Advisory Fee                                                    (500)             (500)
  Fund Administration Fee                                                    (166)             (167)
  Reimbursable Administrative Expenses                                       (145)             (149)
  Independent General Partners' Fees and Expenses                             (64)              (77)
  Legal and Professional Fees                                                 (22)              (65)
  Purchase of Temporary Investments, Net                                   (3,934)          (11,502)
  Proceeds from Sales, Maturities and Paydowns
    of Portfolio Company Investments                                        2,723            17,919
                                                                        ---------         ---------
Net Cash Provided by Operating Activities                                     230             8,405
                                                                        ---------         ---------
Cash Flows from Financing Activities:
  Cash Distributions to Partners                                                -            (8,351)
                                                                        ---------         ---------
Net Cash Used in Financing Activities                                           -            (8,351)
                                                                        ---------         ---------
  Net Increase in Cash                                                        230                54
  Cash at Beginning of Year                                                    36                 5
                                                                        ---------         ---------
Cash at End of Period                                                   $     266         $      59
                                                                        =========         =========


Reconciliation of Net Investment Income
  to Net Cash Provided by Operating Activities

Net Investment Income                                                   $   1,491         $     985
                                                                        ---------         ---------
Adjustments to Reconcile Net Investment Income
  to Net Cash Provided by Operating Activities:
 (Increase) Decrease in Investments at Cost                                (1,222)           10,168
  Decrease in Receivable for Investments Sold                                   -               782
 (Increase) Decrease in Accrued Interest and Discount Receivable              (47)            1,017
  Decrease in Prepaid Expenses                                                  6                 3
  Increase in Reimbursable Administrative Expenses Payable                      5                24
  Decrease in Independent General Partners' Fees Payable                       (4)              (13)
  Increase (Decrease) in Legal and Professional Fees Payable                    8               (28)
  Realized Loss on Sales of Investments                                        (7)           (4,533)
                                                                        ---------         ---------
Total Adjustments                                                          (1,261)            7,420
                                                                        ---------         ---------
Net Cash Provided by Operating Activities                               $     230         $   8,405
                                                                        =========         =========

See the Accompanying Notes to Financial Statements (Unaudited).
</TABLE>
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<TABLE>
<CAPTION>
                                                     ML-LEE ACQUISITION FUND II, L.P.
                                                 STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
                                                           (DOLLARS IN THOUSANDS)
                                                                 (UNAUDITED)




                                                                        Individual    Managing
                                                                          General      General      Limited
                                                                          Partner      Partner      Partners      Total
                                                                       ------------  ----------    -----------   ---------
<S>                                                                    <C>           <C>           <C>           <C>
For the Nine Months Ended September 30, 2000
  Partners' Capital as of January 1, 2000                              $         13  $      322    $    32,540   $  32,875
  Allocation of Net Investment Income                                             -         290          1,201       1,491
  Allocation of Realized Loss on Sale of Investment                               -           -             (7)         (7)
  Allocation of Net Change in Unrealized Depreciation
   on Investments                                                                 -           -             47          47
                                                                       ------------  ----------    -----------   ---------
Partners' Capital as of September 30, 2000                             $         13  $      612    $    33,781   $  34,406
                                                                       ============  ==========    ===========   =========

See the Accompanying Notes to Financial Statements (Unaudited).
</TABLE>
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<TABLE>
<CAPTION>
                                                 ML-LEE ACQUISITION FUND II, L.P.
                                                SCHEDULE OF PORTFOLIO INVESTMENTS
                                                        SEPTEMBER 30, 2000
                                                      (DOLLARS IN THOUSANDS)
                                                           (UNAUDITED)


                                                                                                                          % of
   Principal                                                                        Investment  Investment     Fair       Total
 Amount/Shares     Investment                                                          Date       Cost(f)      Value   Investments
 -------------     ----------                                                       ----------  ----------   --------  -----------
<S>               <C>                                                               <C>         <C>          <C>       <C>
                   MEZZANINE INVESTMENTS
                   MANAGED COMPANIES


                   BIG V SUPERMARKETS, INC. (a) - Note 3
$10,430            Big V Supermarkets, Inc., Sr. Sub. Nt. 14.14% due 03/15/01(b)(g)    12/27/90   $ 10,430   $ 10,430
117,333 Shares     Big V Holding Corp., Common Stock (c)                               12/27/90      4,107      4,107
                   (16.6% of fully diluted common equity) (e)                                     --------------------------------
                                                                                                    14,537     14,537       42.66%
                                                                                                  --------------------------------
                   COLE NATIONAL CORPORATION
13,161 Warrants    Cole National Corporation, Common Stock Purchase Warrants (c)        9/26/90          -          -
                     (0.0% of fully diluted common equity
                        assuming exercise of warrants)
                        $1,393 13% Sr. Secured Bridge Note
                        Purchased 9/25/90           $1,393
                        Repaid 11/15/90             $1,393                                        -------------------------------
                        Realized Gain               $    0                                               -          -        0.00%
                                                                                                  -------------------------------

                   TOTAL INVESTMENT IN MANAGED COMPANIES                                          $ 14,537   $ 14,537       42.66%
                                                                                                  ===============================


                   NON-MANAGED COMPANIES

                   BIOLEASE, INC. - Notes 3 and 7 and Schedule 2
$668               BioLease, Inc., 13% Sub. Nt. due 06/06/04 (b)                        06/08/94  $    576   $    334
96.56  Shares      BioLease, Inc., Common Stock (c)                                     06/08/94        94          -
10,014 Warrants    BioTransplant, Inc., Common Stock Purchase Warrants(c)               06/08/94        14         14
 9,362 Options     BioTransplant, Inc., Common Stock Purchase Options(c)                02/02/96         -          -
                                                                                                  -------------------------------
                                                                                                       684        348      1.02%
                                                                                                  -------------------------------

                   FLA. ORTHOPEDICS, INC. - Schedule 2
 19,366 Shares     FLA. Holdings, Inc. Series B Preferred Stock (a) (c) (d)             08/02/93     1,513          -
  3,822 Warrants   FLA. Holdings, Inc. Common Stock Purchase Warrants (a) (c)           08/02/93         -          -
                   $4,842 12.5% Subordinated Note
                   Purchased 08/02/93                     $ 4,842
                   Surrendered 08/16/96                   $     0
                   Realized Loss                          $(4,842)
                   121,040 Common Stock
                   Purchased 08/02/93                     $ 1,513
                   Exchanged 08/02/96
                   19,366 Series B Preferred Stock        $ 1,513
                   Realized Gain                          $     0
                   Total Realized Loss                    $(4,842)
                                                                                                  -------------------------------
                                                                                                     1,513           -       0.00%
                                                                                                  -------------------------------
                    TOTAL INVESTMENT IN NON-MANAGED COMPANIES                                     $  2,197    $    348       1.02%
                                                                                                  ===============================


See the Accompanying Notes to Financial Statements (Unaudited).
</TABLE>
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<TABLE>
<CAPTION>
                                           ML-LEE ACQUISITION FUND II, L.P.
                                   SCHEDULE OF PORTFOLIO INVESTMENTS (continued)
                                                 SEPTEMBER 30, 2000
                                               (DOLLARS IN THOUSANDS)
                                                    (UNAUDITED)


                                                                                                                       % of
 Principal                                                                         Investment  Investment    Fair      Total
Amount/Shares     Investment                                                          Date       Cost(f)     Value  Investments
-------------     ----------                                                       ----------  ----------  -------- -----------
<S>               <C>                                                              <C>         <C>         <C>       <C>
                  SUMMARY OF MEZZANINE INVESTMENTS

                  Subordinated Notes                                                 Various   $ 11,006    $ 10,764    31.58%
                  Preferred Stock, Common Stock, Warrants and Stock Rights           Various      5,728       4,121    12.10%
                                                                                               ------------------------------
                  TOTAL MEZZANINE INVESTMENTS                                                  $ 16,734    $ 14,885    43.68%
                                                                                               ==============================

                  TEMPORARY INVESTMENTS

                  COMMERCIAL PAPER
$10,000           State Street Clipper Receivable, 6.50% due 11/13/00                 9/29/00  $  9,919    $  9,923
$ 9,275           State Street Clipper Receivable, 6.60% due 10/2/00                  9/29/00     9,270       9,273
                                                                                               ------------------------------
                  TOTAL INVESTMENT IN COMMERCIAL PAPER                                         $ 19,189    $ 19,196    56.32%
                                                                                               ------------------------------
                  TOTAL TEMPORARY INVESTMENTS                                                  $ 19,189    $ 19,196    56.32%
                                                                                               ------------------------------
                  TOTAL INVESTMENT PORTFOLIO                                                   $ 35,923    $ 34,081   100.00%
                                                                                               ==============================


     (a)  Represents  investment  in  affiliates  as defined  in the  Investment
          Company  Act  of  1940.
     (b)  Restricted  security.
     (c)  Restricted  non-income producing equity security.
     (d)  Non-accrual investment status.
     (e)  Percentages of Common Equity are not audited by PricewaterhouseCoopers
          LLP.
     (f)  Represents original cost and excludes accretion of discount of $28 for
          Mezzanine Investments and $7 for Temporary Investments.
     (g)  $3,911,000 is scheduled to mature on December 15, 2000, with the
          remaining  $6,519,000 scheduled to mature on March 15, 2001.

See the Accompanying Notes to Financial Statements (Unaudited).
</TABLE>
<PAGE>
                         ML-LEE ACQUISITION FUND II, L.P.
                          NOTES TO FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2000
                                  (UNAUDITED)

1.   Organization

     ML-Lee  Acquisition  Fund II, L.P. ("Fund II") was formed along with ML-Lee
Acquisition  Fund  (Retirement   Accounts)  II,  L.P.  (the  "Retirement  Fund";
collectively  referred  to as the  "Funds")  and  the  Certificates  of  Limited
Partnership  were filed under the Delaware  Revised Uniform Limited  Partnership
Act on September 23, 1988. The Funds' operations commenced on November 10, 1989.
Capital  contributions  from the Limited  Partners and the General  Partners (as
defined below) totaled $222,295,000 in the public offering of Fund II, the final
closing for which was held on January 5, 1990.

     Mezzanine Investments II, L.P. (the "Managing General Partner"), subject to
the  supervision  of the  Individual  General  Partners  (as  defined  below and
hereinafter  with the Managing  General Partner as the "General  Partners"),  is
responsible for overseeing and monitoring of Fund II's investments. The Managing
General Partner is a Delaware limited  partnership in which ML Mezzanine II Inc.
is the general  partner and Thomas H. Lee  Advisors  II,  L.P.,  the  Investment
Adviser to the Funds, is the limited  partner.  The Individual  General Partners
are Vernon R. Alden,  Joseph L. Bower and Stanley H. Feldberg (the  "Independent
General  Partners")  and Thomas H. Lee. ML Fund  Administrators  Inc. (the "Fund
Administrator") is an indirect  wholly-owned  subsidiary of Merrill Lynch & Co.,
Inc. and is responsible for the day to day administrative services necessary for
the operations of Fund II.

2.   Basis of Accounting

     For financial  reporting  purposes,  the records of Fund II are  maintained
using the accrual method of accounting.  The preparation of financial statements
in accordance with generally accepted accounting  principles requires management
to make estimates and assumptions that affect the amounts and disclosures in the
financial statements. Actual reported results could vary from these estimates.

     The financial  statements reflect all adjustments which are, in the opinion
of management,  necessary for a fair  presentation  of the financial  condition,
results of operations and cash flows for the periods presented. Such adjustments
consisted of those of a normal  recurring  nature,  as well as an  adjustment of
$205,000 to correct for a 1999  understatement of Mezzanine  Investment  income.
The results of operations for the three and nine months ended September 30, 2000
are not  necessarily  indicative  of the results  that may be  achieved  for the
entire year. Footnote  disclosure which substantially  duplicates the disclosure
contained  in Fund II's Annual  Report on Form 10-K for the year ended  December
31, 1999, which is hereby incorporated by reference, has been omitted.

3.   Investment Transactions

     On  April  28,  2000,  BioLease,   Inc.  ("BioLease")  refinanced  existing
construction  and term loans and utilized a portion of the refinancing  proceeds
to  make a  $116,000  partial  paydown  to  Fund  II of  BioLease's  13%  Senior
Subordinated  Note.  Fund II  realized a loss from this  transaction  of $7,000,
after the payment of $18,000 in  transaction  costs and the write-off of $11,000
of unamortized note discount.

     On June  15,  2000,  $2,607,000  (20%)  of  Fund  II's  $13,037,000  senior
subordinated  Note from Big V  Supermarkets,  Inc.  ("Big V")  matured.  Fund II
recorded no gain or loss from this transaction.  An additional  $3,911,000 (30%)
is scheduled to mature on December 15, 2000, with the remaining $6,519,000 (50%)
scheduled to mature on March 15, 2001.

     In September  2000,  the court  approved a settlement in respect of certain
litigation  commenced  by Hills  Stores  Company  ("Hills")  against  its former
directors,  including  Thomas H. Lee (who had been serving on the Hills Board of
Directors as a  representative  of Fund II). The settlement  provided a complete
release of Mr. Lee in his role as a director of Hills. As a result, the reserves
which had been maintained by Fund II for future indemnification  obligations are
no longer required for such purpose.

     However,  before  consenting to the  disposition  of all or part of Fund II
reserves,  at the most recent quarterly  meeting,  the General Partners reviewed
certain contractual covenants,  commitments and contingencies Fund II's has with
respect to its investment in Big V Supermarkets, Inc. ("Big V"). Such covenants,
commitments and  contingencies may have the effect of delaying and/or precluding
future distributions, and accordingly, the General Partners have determined that
further distributions should not be made until Fund II's responsibilities  under
such  covenants,   commitments  and  contingencies  have  been  more  thoroughly
investigated  and  resolved.  The General  Partners will continue to review such
reserves each quarter in light of this matter, and  distributions,  if any, will
be made in accordance with Fund II's Partnership Agreement.

     Subsequently,  Fund II and the  Retirement  Fund  agreed to  guarantee,  in
aggregate, $1,000,000 of short-term financing requirements of Big V.

4.   Non-Accrual of Investments

     In accordance with Fund II's Accounting Policy,  Florida Orthopedics,  Inc.
has been on non-accrual status since January 1, 1995.

5.   Payment-In-Kind Securities

     All  payment-in-kind  securities received in lieu of cash interest payments
by Fund II's portfolio  companies are recorded at face value (which approximates
accrued  interest),  unless the  Investment  Adviser  and the  Managing  General
Partner  determine that there is no reasonable  assurance of collecting the full
principal  amounts of such  securities.  In accordance  with this policy,  as of
September  30, 2000 and December 31, 1999,  Fund II's  portfolio of  investments
excluded   approximately   $160,000   and   $131,000,   respectively,   of  such
payment-in-kind notes received from BioLease, Inc.

6.   Related Party Transactions

     The  Investment  Adviser,  pursuant to an investment  management  agreement
among  the  Investment  Adviser,  the  Thomas H. Lee  Company  and Fund II dated
November  10,  1989,  is  responsible  for the  identification,  management  and
liquidation of Mezzanine  Investments  and Bridge  Investments  for Fund II. The
Investment  Adviser  is  entitled  to  receive  an  Investment  Advisory  Fee as
compensation for these services.

     As compensation for its services,  the Fund Administrator,  an affiliate of
the Managing General Partner,  is entitled to receive a Fund Administration Fee.
In addition,  the Fund  Administrator  is entitled to  reimbursement  of 100% of
out-of-pocket expenses incurred by the Fund Administrator on behalf of the Funds
("Reimbursable  Administrative Expenses").  Reimbursable Administrative Expenses
primarily  consist  of  printing,  audit  and tax  preparation,  legal  fees and
expenses, and custodian fees.

     As provided by the Partnership  Agreement,  the Managing General Partner of
Fund II is entitled to receive an incentive  distribution after Limited Partners
have received their Priority Return of 10% per annum ("MGP  Distributions").  Of
the MGP Distributions,  the Investment Adviser is entitled to receive 95% and ML
Mezzanine II Inc. is entitled to receive 5%. During 2000,  the Managing  General
Partner received no cash distributions.

7.    Subsequent Events

     On November 9, 2000, Fund II exercised its rights under the  BioTransplant,
Inc.   common  stock   purchase   warrants  and   purchased   10,014  shares  of
BioTransplant,  Inc.  common  stock for $30,042,  exclusive  of any  transaction
costs.

<PAGE>
<TABLE>
<CAPTION>

                                              SCHEDULE 1
                                    ML-LEE ACQUISITION FUND II, L.P.
                                SUPPLEMENTAL SCHEDULE OF REALIZED LOSS
                             FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
                                       (DOLLARS IN THOUSANDS)
                                             (UNAUDITED)


                                   Principal Amount/     Investment        Net         Realized
 Security                          Number of Shares         Cost         Proceeds        Loss
 --------                          ----------------      ----------      --------      --------
 <S>                               <C>                   <C>             <C>           <C>

 Biolease, Inc. (Note)                   $ 116             $ 105           $ 98          $ (7)
                                         =====             =====           ====          ====

 See the Accompanying Notes to Financial Statements (Unaudited).
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                                                        SCHEDULE 2
                                             ML-LEE ACQUISITION FUND II, L.P.
                                   SUPPLEMENTAL SCHEDULE OF UNREALIZED DEPRECIATION
                                     FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
                                                  (DOLLARS IN THOUSANDS)
                                                       (UNAUDITED)


                                                             Reversal of        Reversal of
                                                              Unrealized         Unrealized
                                                             Depreciation       Depreciation
                                                                 for                for         Total Unrealized   Total Unrealized
                                                           the Three Months   the Nine Months     Depreciation       Depreciation
                            Investment        Fair               Ended             Ended              as of              as of
Security                       Cost           Value       September 30, 2000 September 30, 2000 December 31, 1999 September 30, 2000
--------------------------  ----------      --------      ------------------ ------------------ ----------------- ------------------
<S>                         <C>             <C>              <C>              <C>              <C>                <C>
Non Public Securities:
Biolease, Inc.
  Common Stock*             $     94        $     -            $         -      $        -        $       (94)       $      (94)
  Subordinated Notes* (a)        576            334                      -               -               (270)             (270)
FLA. Orthopedics, Inc.
  Preferred  Stock*            1,513              -                      -               -             (1,513)           (1,513)
  Subordinated Note*               -              -                      -               -                  -                 -
                                                               -----------      ----------         ----------        ----------
Unrealized Depreciation from Non Public Securities                       -               -             (1,877)           (1,877)
                                                               -----------      ----------         ----------        ----------

Reversal of Unrealized Depreciation on Securities Sold in 2000:
BioLease, Inc.
  Subordinate Note*                                                      -              47                (47)                -
                                                               -----------      ----------         ----------        ----------
Total Unrealized Depreciation                                  $         -      $       47         $   (1,924)       $   (1,877)
                                                               ===========      ==========         ==========        ==========

*  Restricted Security
(a) Investment cost is after April 28, 2000 partial note paydown and excludes accretion of remaining discount of $28.


See the Accompanying Notes to Financial Statements (Unaudited).
</TABLE>
<PAGE>
Item 2.  Management's  Discussion  and Analysis of Financial  Condition and
         Results of Operations

Liquidity & Capital Resources

     At  the  regular  quarterly  meeting  of the  General  Partners  of  ML-Lee
Acquisition  Fund II, L.P.  ("Fund II"),  held on December  14, 1999,  Vernon R.
Alden,  Joseph L. Bower,  Stanley H. Feldberg and Thomas H. Lee (the "Individual
General  Partners")  determined  to extend the initial ten year term of Fund II,
which was due to terminate  January 5, 2000,  for an additional two year period,
pursuant to Section 2.4 of the Partnership Agreement.  Such extension will allow
Fund II to more effectively deal with its assets pending their liquidation.  The
term of Fund II will now expire on January 5, 2002. In addition,  the Individual
General  Partners  have the right,  pursuant to the  Partnership  Agreement,  to
extend the term of Fund II for an additional  one year period if they  determine
that such extension is in the best interest of Fund II.

     On August 6, 1991, the Independent  General Partners approved a reserve for
follow-on investments of approximately $24,900,000 for Fund II. As of August 11,
2000,  this  remaining  reserve  balance  was  approximately  $3,100,000  due to
follow-on  investments  in Petco Animal  Supplies,  Fitz and Floyd,  Inc.,  Fine
Clothing, Inc., Hills Stores, Ghirardelli Holdings and Anchor Advanced Products.
Additionally,  approximately  $8,300,000 of the reserve has been returned to the
partners.  The level of the  reserve  was based upon an  analysis  of  potential
follow-on  investments in specific portfolio companies that may become necessary
to protect or enhance Fund II's existing investment.

     On  April  28,  2000,  BioLease,   Inc.  ("BioLease")  refinanced  existing
construction  and term loans and utilized a portion of the refinancing  proceeds
to  make a  $116,000  partial  paydown  to  Fund  II of  BioLease's  13%  Senior
Subordinated  Note.  Fund II  realized a loss from this  transaction  of $7,000,
after the payment of $18,000 in  transaction  costs and the write-off of $11,000
of unamortized note discount.

     On June  15,  2000,  $2,607,000  (20%)  of  Fund  II's  $13,037,000  senior
subordinated  Note from Big V  Supermarkets,  Inc.  ("Big V")  matured.  Fund II
recorded no gain or loss from this transaction.  An additional  $3,911,000 (30%)
is scheduled to mature on December 15, 2000, with the remaining $6,519,000 (50%)
scheduled to mature on March 15, 2001.

     On November 9, 2000, Fund II exercised its rights under the  BioTransplant,
Inc.   common  stock   purchase   warrants  and   purchased   10,014  shares  of
BioTransplant,  Inc.  common  stock for $30,042,  exclusive  of any  transaction
costs.

     In September  2000,  the court  approved a settlement in respect of certain
litigation  commenced  by Hills  Stores  Company  ("Hills")  against  its former
directors,  including  Thomas H. Lee (who had been serving on the Hills Board of
Directors as a  representative  of Fund II). The settlement  provided a complete
release of Mr. Lee in his role as a director of Hills. As a result, the reserves
which had been maintained by Fund II for future indemnification  obligations are
no longer required for such purpose.

     However,  before  consenting to the disposition of all or part of Fund II's
reserves,  at the most recent quarterly  meeting,  the General Partners reviewed
certain  contractual  covenants,  commitments and contingencies Fund II has with
respect to its investment in Big V Supermarkets, Inc. ("Big V"). Such covenants,
commitments and  contingencies may have the effect of delaying and/or precluding
future distributions, and accordingly, the General Partners have determined that
further  distributions should not be made until Fund II's responsibilties  under
such  covenants,   commitments  and  contingencies  have  been  more  thoroughly
investigated  and  resolved.  The General  Partners will continue to review such
reserves each quarter in light of this matter, and  distributions,  if any, will
be made in accordance with Fund II's Partnership Agreement.

     Subsequently,  Fund II and the  Retirement  Fund  agreed to  guarantee,  in
aggregate, $1,000,000 of short-term financing requirements of Big V.

     As of September  30,  2000,  Fund II had  outstanding  a total (at cost) of
$16,734,000 invested in Mezzanine Investments  representing  $14,537,000 Managed
and $2,197,000 Non-Managed portfolio  investments,  and Temporary Investments of
$19,189,000 comprised of commercial paper with maturities of less than 60 days.

     As provided by the Partnership  Agreement,  the Managing General Partner of
Fund II is entitled to receive an incentive  distribution after Limited Partners
have received their Priority Return of 10% per annum ("MGP Distributions").  The
Managing  General Partner is required to defer a portion of any MGP Distribution
earned  from the sale of  portfolio  investments  in excess  of 20% of  realized
capital  gains,  net realized  capital losses and  unrealized  depreciation,  in
accordance with the Partnership Agreement (the "Deferred  Distribution Amount").
Any Deferred  Distribution  Amount is distributable to the Partners  pro-rata in
accordance with their capital contributions, and certain amounts otherwise later
payable to Limited Partners from  distributable cash from operations are instead
payable to the Managing General Partner until the Deferred  Distribution  Amount
is paid. As of September 30, 2000 there is no outstanding Deferred  Distribution
Amount.

     As recovered capital from portfolio company sales is distributed to Limited
Partners,  the Limited  Partners'  net asset  value  ("NAV") per Unit is reduced
accordingly, and the interest income previously generated by holdings which have
been sold will no longer be received by Fund II.  Because  Fund II has only four
portfolio  companies  remaining,  only two of which are  income  producing,  the
amount of interest income received by Fund II is not  significant.  As a result,
it is expected that any future cash (to the extent such cash is not reserved for
expenses  and   contingencies   -  see  discussion   above)   available  to  pay
distributions to Partners will be derived almost entirely from recovered capital
and gains from asset  sales,  which are  subject  to market  conditions  and are
inherently  unpredictable  as to  timing.  Therefore,  in the  absence  of  cash
available for distribution resulting from the future sale of portfolio holdings,
the only cash available for distribution by Fund II will derive from operations;
this cash is estimated to be less than one dollar per Unit each quarter.

Investment in High-Yield Securities

     Fund II  invested  primarily  in  subordinated  debt  and  preferred  stock
securities   ("High-Yield   Securities"),   generally   linked  with  an  equity
participation,  issued in conjunction with the mezzanine  financing of privately
structured,   friendly  leveraged  acquisitions,   recapitalizations  and  other
leveraged  financings.  High-Yield  Securities  are  debt and  preferred  equity
securities that are unrated or are rated by Standard & Poor's  Corporation as BB
or lower and by Moody's  Investor  Services,  Inc. as Ba or lower.  Risk of loss
upon default by the issuer is significantly  greater with High-Yield  Securities
than  with  investment  grade  securities  because  High-Yield   Securities  are
generally unsecured and are often subordinated to other creditors of the issuer.
Also,  these  issuers  usually  have high  levels of  indebtedness  and are more
sensitive  to adverse  economic  conditions,  such as  recession  or  increasing
interest rates,  than  investment  grade issuers.  Most of these  securities are
subject to resale  restrictions and generally there is no quoted market for such
securities.

     Although Fund II cannot eliminate the risks associated with its investments
in High-Yield Securities,  it has established risk management policies.  Fund II
subjected each prospective  investment to rigorous  analysis and made only those
investments  that were  recommended by the Investment  Advisor and that met Fund
II's  investment  guidelines or that had otherwise been approved by the Managing
General Partner and the Independent General Partners. Fund II's investments were
measured  against  specified Fund II investment and performance  guidelines.  To
limit the  exposure of Fund II's capital in any single  issuer,  Fund II limited
the  amount of its  investment  in a  particular  issuer.  Fund II's  Investment
Adviser also continually  monitors portfolio  companies in order to minimize the
risks associated with its investments in High-Yield Securities.

     The  Investment   Adviser  reviews  each  portfolio   company's   financial
statements quarterly.  In addition, the Investment Adviser routinely reviews and
discusses  financial and operating  results with the  company's  management  and
where  appropriate,   attends  board  of  director  meetings.   In  some  cases,
representatives  of the Investment  Adviser,  acting on behalf of the Funds (and
affiliated investors where applicable), serve as one or more of the directors on
the  boards  of  portfolio  companies.  Fund II may,  from  time to  time,  make
follow-on investments to the extent necessary to protect or enhance its existing
investments.

Forward Looking Information

     In  addition  to  historical   information  contained  or  incorporated  by
reference   in  this  report  on  Form  10-Q,   Fund  II  may  make  or  publish
forward-looking statements about management expectations,  strategic objectives,
business  prospects,   anticipated  financial  performance,  and  other  similar
matters.  In  order  to  comply  with the  terms  of the  safe  harbor  for such
statements  provided by the Private  Securities  Litigation  Reform Act of 1995,
Fund II notes that a variety of factors,  many of which are beyond its  control,
affect its operations,  performance,  business  strategy,  and results and could
cause actual results and experience to differ  materially from the  expectations
expressed in these  statements.  These factors include,  but are not limited to,
the effect of changing  economic and market  conditions,  trends in business and
finance and in investor  sentiment,  the level of volatility of interest  rates,
the actions undertaken by both current and potential new competitors, the impact
of current,  pending,  and future  legislation and regulation both in the United
States and throughout the world, and the other risks and uncertainties  detailed
in this Form 10-Q.  Fund II undertakes no  responsibility  to update publicly or
revise any forward-looking statements.

Results of Operations

Net Investment Income

     For the three and nine months ended  September  30, 2000 and 1999,  Fund II
had net  investment  income of  $425,000,  $1,491,000,  $323,000  and  $985,000,
respectively.  The increase in net  investment  income during the three and nine
months ended  September  30, 2000,  as compared to the same periods in 1999,  is
primarily  attributable  to an  increase in interest  and  discount  income from
Temporary Investments and other factors, as discussed below.

Investment Income and Expenses

     Total investment income from operations for the three and nine months ended
September 30, 2000 and 1999 consists  primarily of interest and discount  income
earned on Fund  II's  portfolio  of  Mezzanine  and  Temporary  Investments  and
short-term  money  market  instruments.  For the  three  and nine  months  ended
September  30,  2000  and  1999,  Fund II had  investment  income  of  $717,000,
$2,385,000,  $655,000 and  $1,929,000  respectively.  The increase in investment
income during the three and nine months ended September 30, 2000, as compared to
the same  periods in 1999,  is primarily  attributable  to an increase in income
earned on Temporary  Investments  as a result of  investing  the Fitz and Floyd,
Inc. sale proceeds,  the Biolease,  Inc.  partial  paydown  proceeds,  the Big V
Supermarkets,  Inc. partial maturity  proceeds,  and income from operations from
the third  quarter  1999 and  forward,  all of which  have been  reserved.  This
increase  was  partially  offset by a  decrease  in income  earned on  Mezzanine
Investments  as a result of the August  1999 sale of Fitz and Floyd,  Inc.,  the
April 2000 partial paydown of the Biolease,  Inc. subordinated note and the June
2000 partial maturity of the Big V Supermarkets,  Inc. senior subordinated note.
In addition,  the  increase in  investment  income  during the nine months ended
September 30, 2000, as compared to the same period in 1999, is attributable to a
$205,000  adjustment  in  the  first  quarter  of  2000  to  correct  for a 1999
understatement of Mezzanine Investment income.

     Major  expenses for the three and nine months ended  September 30, 2000 and
1999 consisted of Investment Advisory Fees and Administrative Expenses.

     The  Investment   Adviser  and  Fund   Administrator   both  receive  their
compensation on a quarterly basis. The total Investment Advisory Fee incurred by
Fund II to the Investment  Adviser for the three and nine months ended September
30, 2000 and 1999 were $167,000, $500,000, $167,000 and $500,000,  respectively,
and was  calculated  at an annual rate of 1.0% of assets under  management  (net
offering proceeds reduced by cumulative capital reductions and realized losses),
with a minimum annual amount of $1,200,000 for the Funds on a combined basis.

     As compensation  for its services,  the Fund  Administrator  is entitled to
receive an annual  amount of $400,000  for the Funds on a combined  basis,  plus
reimbursement   of  100%  of  out-of-pocket   expenses   incurred  by  the  Fund
Administrator  on behalf of Fund II  ("Reimbursable  Administrative  Expenses").
Reimbursable  Administrative Expenses primarily consist of printing,  audit, tax
preparation, legal fees and expenses, and custodian fees. For the three and nine
months ended September 30, 2000 and 1999, Fund II incurred a Fund Administration
Fee of $55,000, $166,000, $56,000 and $167,000,  respectively. For the three and
nine  months  ended  September  30,  2000 and 1999,  Fund II  incurred  $47,000,
$150,000,  $48,000 and $173,000,  respectively,  in Reimbursable  Administrative
Expenses.

     For the three and nine months ended  September 30, 2000 and 1999,  the Fund
incurred legal and professional  fees of $1,000,  $12,000,  $37,000 and $37,000,
respectively. Such expenses are primarily attributable to legal fees incurred on
behalf of indemnified defendants in connection with the Hills litigation.

Net Assets

     Fund II's net assets  increased by $1,531,000  during the nine months ended
September 30, 2000, due to net investment income of $1,491,000 and a reversal of
net unrealized depreciation of $47,000,  partially offset by a net realized loss
of $7,000 from the partial  paydown of a Mezzanine  Investment.  During the nine
months ended September 30, 1999,  Fund II's net assets  increased by $1,738,000,
due to net  investment  income of  $985,000  and a  reversal  of net  unrealized
depreciation of $13,637,000,  partially offset by realized losses from the sales
of two Mezzanine  Investments  of $4,533,000  and  distributions  to partners of
$8,351,000.

Unrealized Appreciation and Depreciation on Investments

     Fund II  recorded  a reversal  of net  unrealized  depreciation  of $47,000
during the nine months  ended  September  30, 2000 as compared to a  $13,637,000
reversal of net  unrealized  depreciation  during the same period in 1999.  Fund
II's  cumulative net unrealized  depreciation on investments as of September 30,
2000 totaled $1,877,000.

     The  Managing  General  Partner and the  Investment  Adviser  review,  on a
quarterly  basis,  the valuation of Fund II's portfolio  investments that do not
have a readily  ascertainable  market  value;  such  investment  valuations  are
subject  to final  approval  from the  Individual  General  Partners.  Portfolio
investments  are  valued at  original  cost plus  accreted  value in the case of
original issue discount or deferred pay  securities.  Such  investments  will be
revalued  if there is an  objective  basis  for doing so at a  different  price.
Investments  will be written down in value if the Managing  General  Partner and
Investment  Adviser believe adverse credit  developments of a significant nature
require a write-down of such securities. Investments will be written up in value
only if there has been an  arms'-length  third party  transaction to justify the
increased  valuation.  Although  the  Managing  General  Partner and  Investment
Adviser  use  their  best  judgement  in  estimating  the  fair  value  of these
investments, there are inherent limitations in any estimation technique.

     As  a  result  of  total  net  realized  and  unrealized  appreciation  and
depreciation  recorded by Fund II through September 30, 2000,  Limited Partners'
NAV was  $152.33  per  Unit.  Fund II's net  assets  include  private  placement
securities   (approximately  43.3%  of  net  assets)  for  which  there  are  no
ascertainable  market values and commercial  paper  (approximately  55.8% of net
assets)  which  is  stated  at  amortized  cost.  Fund  II's  private  placement
securities are primarily  comprised of its  investments  in Big V  Supermarkets,
Inc.,  which are valued at cost.  The  September  30,  2000 NAV figure  does not
reflect  any change that may have  occurred  in the value of Fund II's  holdings
since  September 30, 2000,  does not reflect residual costs related to the Hills
litigation  other than those  incurred  through  September 30, 2000, nor does it
represent the Units' current market value. Furthermore, Limited Partners may not
be able to realize this value upon a sale of their Units.

     The  information   presented  herein  is  based  on  pertinent  information
available to the Managing General Partner and Investment Adviser as of September
30, 2000.  Although the Managing General Partner and Investment  Adviser are not
aware of any factors not disclosed  herein that would  significantly  affect the
estimated  fair  value  amounts,  such  amounts  have not  been  comprehensively
revalued  since  that  time,  and the  current  estimated  fair  value  of these
investments may have changed significantly since that point in time.

     For  additional  information  please  refer  to  Supplemental  Schedule  of
Unrealized Depreciation - Schedule 2.

Realized Losses

     Fund II recorded a realized  loss of $7,000  during the nine  months  ended
September 30, 2000, as compared to realized losses of $4,533,000 during the same
period in 1999.

     Should a Limited  Partner  decide to sell his Units,  any such sale will be
recorded  on the  books  and  records  of  Fund  II  quarterly,  only  upon  the
satisfactory  completion and acceptance of Fund II's transfer  documents.  There
can be no assurances  that such  transfer will be effected  before any specified
date. Additionally,  pursuant to the Partnership Agreement,  until a transfer is
recognized,  the Limited  Partner of record (i.e. the transferor) is entitled to
receive all the benefits and burdens of ownership of Units,  and any  transferee
has no rights to distributions  of sale proceeds  generated at any time prior to
the recognition of the transfer and assignment. Accordingly,  Distributable Cash
from  Investments for a quarter and  Distributable  Capital  Proceeds from sales
after  transfer or assignment  have been entered into,  but before such transfer
and  assignment is  recognized,  would be payable to the  transferor and not the
transferee.

Item 3.  Quantitative and Qualitative Disclosure About Market Risk

     As of  September  30,  2000,  Fund  II  maintains  a  portion  of its  cash
equivalents in financial instruments with original maturities of three months or
less.  These  financial  instruments are subject to interest rate risk, and will
decline in value if interest rates increase.  A significant increase or decrease
in  interest  rates is not  expected  to have a  material  effect  on Fund  II's
financial position.
<PAGE>
                          PART II - OTHER INFORMATION


     Item 1. Legal Proceedings.
             -----------------
             None

     Item 2. Changes in Securities and Use of Proceeds.
             -----------------------------------------
             None

     Item 3. Defaults Upon Senior Securites.
             ------------------------------
             None

     Item 4. Submission of Matters to a Vote of Security holders.
             ---------------------------------------------------
             None

     Item 5. Other Information.
             -----------------
             None

     Item 6. Exhibits and Reports on Form 8-K.
             --------------------------------
             (a) Exhibits:

                 Exhibit 27 - Financial  Data Schedule for the quarter  ended
                 September 30, 2000.

             (b) Reports on Form 8-K:

                 None

<PAGE>
                                    SIGNATURES



     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the  undersigned,  thereunto  duly  authorized  on the 14th day of
November, 2000.


                                   ML-LEE ACQUISITION FUND II, L.P.

                             By:   Mezzanine Investments II, L.P.
                                   Managing General Partner

                             By:   ML Mezzanine II Inc.,
                                   its General Partner



Dated:  November 14, 2000      /s/ Kevin T. Seltzer
                               ----------------------------------
                                   Kevin T. Seltzer
                                   ML Mezzanine II, Inc.
                                   Vice President and Treasurer
                                  (Principal Financial Officer of Registrant)