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 Period Ended June 30, 1997

                         Commission File Number 0-17383

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

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

                             World Financial Center
                            South Tower - 23rd Floor
                          New York, New York 10080-6123
              (Address of principal executive offices and zip code)

Registrant's telephone number, including area code: (212) 236-7339.

Securities registered pursuant to Section 12(b) of the Act: None.

           Name on each exchange on which registered: 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 .

Aggregate  market  value of voting  securities  held by  non-affiliates:  Not
Applicable.

<PAGE>
                         PART I - FINANCIAL INFORMATION

                        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 June 30, 1997 and December 31, 1996

Statements of  Operations - For the Three and Six Months Ended
 June 30, 1997 and 1996

Statements of Changes in Net Assets - For the Six Months Ended
 June 30, 1997 and 1996

Statements of Cash Flows - For the Six Months Ended
 June 30, 1997 and 1996

Statement of Changes in Partners' Capital - June 30, 1997

Schedule of Portfolio Investments - June 30, 1997

Notes to Financial Statements

Supplemental Schedule of Realized Gains and Losses - Schedule 1

Supplemental Schedule of Unrealized Appreciation and
Depreciation - Schedule 2 


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


Part II.  Other Information

<PAGE>
<TABLE>
<CAPTION>
                        ML-LEE ACQUISITION FUND II, L.P.
             STATEMENTS OF ASSETS, LIABILITIES AND PARTNERS' CAPITAL
                             (DOLLARS IN THOUSANDS)
<S>                                                                             <C>                    <C>
                                                                                 (Unaudited)
                                                                                June 30, 1997          December 31, 1996
                                                                                -------------          -----------------

ASSETS:
Investments - Notes 2,4,5
Portfolio Investments at fair value
    Managed Companies (amortized cost $68,066
      at June 30, 1997 and $81,990 at December 31, 1996)                        $      35,546          $          51,516
    Non-Managed Companies (amortized cost $23,967
      at June 30, 1997 and $21,608 at December 31, 1996)                                8,854                      8,865
    Temporary Investments, at amortized cost (cost $7,330
      at June 30, 1997 and $10,199 at December 31, 1996)                                7,339                     10,217
Cash (of which $115 was restricted at December 31, 1996)                                   --                        125
Accrued Interest Receivable - Note 2                                                      464                        951
Prepaid Expenses                                                                            2                          4
                                                                                -------------          -----------------
TOTAL ASSETS                                                                    $      52,205          $          71,678
                                                                                =============          =================

LIABILITIES AND PARTNERS' CAPITAL:

Liabilities
    Legal and Professional Fees Payable                                         $         222          $             159
    Reimbursable Administrative Expenses Payable - Note 8                                  53                         45
    Independent General Partners' Fees Payable - Note 9                                    23                         33
    Deferred Interest Income - Note 2                                                     173                        326
                                                                                -------------          -----------------
Total Liabilities                                                                         471                        563
                                                                                -------------          -----------------

Partners' Capital - Note 2
    Individual General Partner                                                             16                         19
    Managing General Partner                                                              352                      1,368
    Limited Partners (221,745 Units)                                                   51,366                     69,728
                                                                                -------------          -----------------
Total Partners' Capital                                                                51,734                     71,115
                                                                                -------------          -----------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL                                         $      52,205          $          71,678
                                                                                =============          =================


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

<PAGE>
<TABLE>
<CAPTION>
                        ML-LEE ACQUISITION FUND II, L.P.
                            STATEMENTS OF OPERATIONS
                             (DOLLARS IN THOUSANDS)
                                  (UNAUDITED)

<S>                                                           <C>               <C>                 <C>               <C>
                                                                 For the Three Months Ended             For the Six Months Ended
                                                              -------------------------------       -------------------------------
                                                              June 30, 1997     June 30, 1996       June 30, 1997     June 30, 1996
                                                              -------------     -------------       -------------     -------------
INVESTMENT INCOME - Notes 2,4,6:
Interest                                                      $       1,622     $       1,340       $       2,808     $      11,032
Discount and Dividend Income                                          5,539               372               5,669               579
                                                                -----------     -------------       -------------     -------------
    TOTAL INCOME                                                      7,161             1,712               8,477            11,611
                                                                -----------     -------------       -------------     -------------
EXPENSES:
Investment Advisory Fee - Note 7                                        214               264                 418               518
Fund Administration Fee - Note 8                                        162               173                 320               343
Legal and Professional Fees                                               -               421                  99               971
Reimbursable Administrative Expenses - Note 8                            53                61                  79                67
Independent General Partners' Fees and Expenses - Note 9                 51                61                  76               153
Insurance Expense                                                         1                 1                   2                 2
                                                              -------------     -------------       -------------     -------------
    TOTAL EXPENSES                                                      481               981                 994             2,054
                                                              -------------     -------------       -------------     -------------

NET INVESTMENT INCOME                                                 6,680               731               7,483             9,557
Net Realized Gain on Investments - Note 4 and Schedule 1                 47             6,353                  50            10,617
Net Change in Unrealized Appreciation\(Depreciation)
  on Investments: Note 5 and Schedule 2
  Publicly Traded Securities                                         (1,085)           (9,742)             (2,045)          (10,836)
  Nonpublic Securities                                                   63                --              (2,376)           (6,634)
                                                              -------------     -------------       -------------     -------------
SUBTOTAL                                                             (1,022)           (9,742)             (4,421)          (17,470)
NET INCREASE (DECREASE) IN NET ASSETS
   RESULTING FROM OPERATIONS                                          5,705            (2,658)              3,112             2,704
                                                              -------------     -------------       -------------     -------------
Less:  Incentive Distribution to Managing General Partner            (2,137)           (2,444)             (2,137)           (5,366)
                                                              -------------     -------------       -------------     -------------
NET INCREASE (DECREASE) AVAILABLE FOR PRO-RATA
  DISTRIBUTION TO ALL PARTNERS                                $       3,568     $      (5,102)      $         975     $      (2,662)
                                                              =============     =============       =============     =============


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

<PAGE>
<TABLE>
<CAPTION>
                        ML-LEE ACQUISITION FUND II, L.P.
                       STATEMENTS OF CHANGES IN NET ASSETS
                             (DOLLARS IN THOUSANDS)
                                  (UNAUDITED)

<S>                                                                  <C>                <C>
                                                                         For the Six Months Ended
                                                                     ---------------------------------
                                                                      June 30, 1997      June 30, 1996
                                                                     --------------     --------------

FROM OPERATIONS:

Net Investment Income                                                $        7,483     $        9,557

Net Realized Gain on Investments                                                 50             10,617

Net Change in Unrealized Depreciation From Investments                       (4,421)           (17,470)
                                                                     --------------     --------------
Net Increase in Net Assets Resulting from Operations                          3,112              2,704

Cash Distributions to Partners                                              (22,493)           (37,335)
                                                                     --------------     --------------

Total Decrease                                                              (19,381)           (34,631)

NET ASSETS:

Beginning of Year                                                            71,115            119,183
                                                                     --------------     --------------

End of Period                                                        $       51,734     $       84,552
                                                                     ==============     ==============



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

<PAGE>
<TABLE>
<CAPTION>
                        ML-LEE ACQUISITION FUND II, L.P.
                            STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)
                                  (UNAUDITED)

<S>                                                                    <C>                <C>
                                                                           For the Six Months Ended
                                                                       --------------------------------
                                                                       June 30, 1997      June 30, 1996
                                                                       -------------      -------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES:
  Interest, Dividends and Discount Income                              $       7,974      $      12,605
  Legal and Professional Fees                                                    (32)            (1,081)
  Investment Advisory Fee                                                       (418)              (518)
  Fund Administration Fee                                                       (320)              (343)
  Independent General Partners' Fees and Expenses                                (86)              (178)
  Reimbursable Administrative Expenses                                           (71)               (63)
  (Purchase) Sale of Temporary Investments, Net                                2,869            (11,291)
  Purchase of Follow On Investment                                            (2,420)                --
  Proceeds from Sales of Portfolio Company Investments                        14,872             38,204
                                                                       -------------      -------------
NET CASH PROVIDED BY OPERATING ACTIVITIES                                     22,368             37,335
                                                                       -------------      -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Cash Distributions to Partners                                             (22,493)           (37,335)
                                                                       -------------      -------------
NET CASH APPLIED TO FINANCING ACTIVITIES                                     (22,493)           (37,335)
                                                                       -------------      -------------
  Net Decrease in Cash                                                          (125)                --
  Cash at Beginning of Year                                                      125                  1
                                                                       -------------      -------------
CASH AT END OF PERIOD                                                  $          --      $           1
                                                                       =============      =============

                                   RECONCILIATION OF NET INVESTMENT INCOME
                                 TO NET CASH PROVIDED BY OPERATING ACTIVITIES

Net Investment Income                                                  $       7,483      $       9,557
                                                                       -------------      -------------
ADJUSTMENTS TO RECONCILE NET INVESTMENT INCOME 
    TO NET CASH PROVIDED BY OPERATING ACTIVITIES
  Decrease in Investments                                                     15,276             16,297
  (Increase) Decrease in Accrued Interest,
    Dividend and Discount Receivable                                            (504)               994
  Decrease in Prepaid Expenses                                                     2                  3
  Increase (Decrease) in Legal and Professional Fees Payable                      63               (110)
  Increase in Reimbursable Administrative Expenses Payable                         8                  3
  Decrease in Independent General Partners' Fees Payable                         (10)               (26)
  Net Realized Gain on Sales of Investments                                       50             10,617
                                                                       -------------      -------------
TOTAL ADJUSTMENTS                                                             14,885             27,778
                                                                       -------------      -------------
NET CASH PROVIDED BY OPERATING ACTIVITIES                              $      22,368      $      37,335
                                                                       =============      =============


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






<PAGE>
<TABLE>
<CAPTION>
                        ML-LEE ACQUISITION FUND II, L.P.
                    STATEMENT OF CHANGES IN PARTNERS' CAPITAL
                             (DOLLARS IN THOUSANDS)
                                  (UNAUDITED)

<S>                                                                         <C>              <C>             <C>            <C>
                                                                            Individual       Managing
                                                                               General        General         Limited
                                                                               Partner        Partner        Partners         Total
                                                                            ----------       --------        --------      --------

For the Six Months Ended June 30, 1997
Partners' Capital at January 1, 1997                                        $       19       $  1,368        $ 69,728      $ 71,115
Allocation of Net Investment Income                                                  2          2,017           5,464         7,483
Allocation of Net Realized Gain on Investments                                       -              -              50            50
Allocation of Net Change in Unrealized  Depreciation From Investments               (1)           (10)         (4,410)       (4,421)
Cash Distributions to Partners                                                      (4)        (3,023)        (19,466)      (22,493)
                                                                            ----------       --------        --------      --------
Partners' Capital at June 30, 1997                                          $       16       $    352        $ 51,366      $ 51,734
                                                                            ==========       ========        ========      ========

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



<PAGE>
<TABLE>
<CAPTION>
                        ML-LEE ACQUISITION FUND II, L.P.
                        SCHEDULE OF PORTFOLIO INVESTMENTS
                                JUNE 30, 1997
                            (DOLLARS IN THOUSANDS)
                                 (UNAUDITED)

   Principal                                                                                                      Fair         % Of
    Amount                                                                          Investment   Investment      Value        Total
Shares/Warrants    Investment                                                             Date       Cost(e)   (Note 2) Investments
<S>                <C>                                                              <C>          <C>         <C>        <C>
                   MEZZANINE INVESTMENTS
                   MANAGED COMPANIES

                   ANCHOR ADVANCED PRODUCTS, INC. (b) - Note 4
410,677 Shares     Anchor Holdings Inc., Common Stock (d)                             04/30/90      $ 1,396    $ 1,396
                   $5,867  11.67 Sr. Sub. Note
                   $7,822  17.50 Jr. Sub. Note
                   Purchased 4/30/90                      $13,689 
                   Repaid 4/02/97                         $13,689
                   Realized Gain                          $     -
                   162,967 Shares Common Stock
                   Purchased 4/30/90                      $ 1,548
                   Excersise 247,710 Warrants 4/2/97      $ 2,354  
                   Return of Capital Proceeds
                     from the Anchor Dividend             $(2,506)
                   Cost Basis of Equity                   $ 1,396                                ----------------------------------
                                                                                                      1,396      1,396         2.70
                                                                                                 ----------------------------------
                   BIG V SUPERMARKETS, INC. (b)
$13,037            Big V Supermarkets, Inc., Sr. Sub. Nt. 14.14% due 03/15/01(c)      12/27/90       13,037     13,037
117,333 Shares     Big V Holding Corp., Common Stock(d)                               12/27/90        4,107      4,107
                   (16.6% of fully diluted common equity)                                        ----------------------------------
                                                                                                     17,144     17,144        33.13
                                                                                                 ----------------------------------
                   COLE NATIONAL CORPORATION
1,341 Warrants     Cole National Corporation, Common Stock Purchase Warrants(d)       09/26/90            -          -
                   (0.0% of fully diluted common equity assuming exercise   
                   of warrants)
                   $1,393 13% Sr. Secured Bridge Note
                   Purchased 09/25/90                     $ 1,393
                   Repaid 11/15/90                        $ 1,393                               
                   Realized Gain                          $     0                                ----------------------------------
                                                                                                          -          -         0.00
                                                                                                 ----------------------------------
2,058,474 Shares   FIRST ALERT, INC., (b) Note 5
                   First Alert, Inc., Common Stock(a)(d)                              07/31/92        3,320      5,789
                   (8.1% of fully diluted common equity)
                   $ 10,198 12.5% Sub. Note
                   Purchased 07/31/92                     $10,198
                   Repaid 03/28/94                        $10,198
                   Realized Gain                          $     0                                ----------------------------------
                                                                                                      3,320      5,789        11.19
                                                                                                 ----------------------------------
                   HILLS STORES COMPANY - Note 5
458,432 Shares     Hills Stores Company, Common Stock(a)(d)                           04/03/90       30,246      1,576
62,616 Shares      Hills Stores Company, Common Stock(a)(d)                           08/21/95        4,530        215
                   (4.1% of fully diluted common equity)                                         ----------------------------------
                                                                                                     34,776      1,791         3.46
                                                                                                 ----------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                        ML-LEE ACQUISITION FUND II, L.P.
                        SCHEDULE OF PORTFOLIO INVESTMENTS
                                JUNE 30, 1997
                            (DOLLARS IN THOUSANDS)
                                 (UNAUDITED)
                                 (CONTINUED)

   Principal                                                                                                      Fair         % Of
    Amount                                                                          Investment   Investment      Value        Total
Shares/Warrants    Investment                                                             Date       Cost(e)   (Note 2) Investments
<S>                <C>                                                              <C>          <C>         <C>        <C>
                   PLAYTEX PRODUCTS, INC. (b) - Note 5
343,726 Shares     Playtex Products, Inc., Common Stock(a)(d)                         03/29/90     $  5,299   $   3,222 
                   (0.6%  of  fully  diluted   common  equity)
                   $7,333  15% Subordinated  Note
                   Purchased  03/29/90                    $ 7,333
                   Sold 09/28/90                          $ 7,349
                   Realized  Gain                         $    16
                   84,870  Shares  Common  Stock
                   Purchased 03/29/90                     $   282
                   Sold 12/20/91                          $   328
                   Realized Gain                          $    46
                   $7,334 15% Subordinated Note
                   Purchased  03/29/90                    $ 7,334
                   Sold 02/01/93                          $ 7,327
                   Realized Loss                          $    (7)
                   Total Net Realized Gain                $    55                                ----------------------------------
                                                                                                      5,299      3,222         6.23
                                                                                                 ----------------------------------
                   CINNABON INTERNATIONAL, INC.
                   (formerly Restaurants Unlimited) 
$6,044             Restaurants Unlimited, 11% Subordinated Note due 06/30/02(c)       06/03/94        6,044      6,044
391,302 Warrants   Restaurants Unlimited, Common Stock Warrants(d)                    06/03/94            -          -
                    (2.1% of fully diluted common equity)                                        ----------------------------------
                                                                                                      6,044      6,044        11.68
                                                                                                 ----------------------------------
                   STANLEY FURNITURE COMPANY, INC. (b) - Notes 4,5
6,921 Shares       Stanley Furniture Company, Inc., Common Stock(a)(d)                06/30/91           87        160
                   (0.3% of the fully diluted common equity)                    
                   9,631 Shares Common Stock
                   Purchased 06/31/91                     $   121   
                   Sold 8,375 Shares 11/13/96             $   127                                  
                   Sold 1,256 12/13/96                    $    19                                  
                   Realized Gain                          $    25
                   Purchased 272 Shares 06/30/91          $     4
                   Sold 02/07/97                          $     7 
                   Realized Gain                          $     3   
                   Purchased 6,281 Shares 06/30/91        $    79
                   Sold 06/30/97                          $   126    
                   Realized Gain                          $    47
                   Total Net Realized Gain                $    75                                        
                                                                                                 ----------------------------------
                                                                                                         87        160          .31
                                                                                                 ----------------------------------
                   TOTAL INVESTMENT IN MANAGED COMPANIES                                            $68,066    $35,546        68.70
                                                                                                 ==================================

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                        ML-LEE ACQUISITION FUND II, L.P.
                        SCHEDULE OF PORTFOLIO INVESTMENTS
                                JUNE 30, 1997
                             (DOLLARS IN THOUSANDS)
                                 (UNAUDITED)
                                 (CONTINUED)

   Principal                                                                                                      Fair         % Of
    Amount                                                                          Investment   Investment      Value        Total
Shares/Warrants    Investment                                                             Date       Cost(e)   (Note 2) Investments
<S>                <C>                                                              <C>          <C>         <C>        <C>
                   NON-MANAGED COMPANIES

                   BIOLEASE, INC.
$784               Biolease, Inc., 13% Sub. Nt. due 06/06/04 (c)                      06/08/94      $   676    $   709
96.56 Shares       BioLease, Inc., Common Stock (d)                                   06/08/94           94         94
10,014 Warrants    Biotransplant, Inc., Common Stock Purchase Warrants(d)             06/08/94           14         14
                                                                                                 ----------------------------------
                                                                                                        784        817         1.58
                                                                                                 ----------------------------------
                   FITZ AND FLOYD - Notes 4,5
$2,420             FFSC, Inc., 12% Subordinated Note due 4/15/04                      04/15/97        2,420      2,420
8,470 Shares       FFSC, Inc., Series A Preferred Stock                               04/15/97       12,619      3,027
51,425 Shares      FFSC, Inc., Common Stock                                           04/15/97            -          -      
                   1,324,508 Shares Common Stock
                   Purchased various                      $    20   
                   Surrendered May 1996                   $     -                                  
                   Realized Loss                          $   (20)
                   $10,281  Sr. Sub. Note
                   $2,419  Sr. Sub. Note
                   Purchased various                      $12,679
                   Exchanged 04/11/97
                   8,470 Sh Series A Preferred Stock and       
                   51,245 Shares Common Stock             $12,679
                   Realized Gain                          $     0
                   Total Realized Loss                    $   (20)                               ----------------------------------
                                                                                                     15,039      5,447        10.53
                                                                                                 ----------------------------------
                   FLA. ORTHOPEDICS, INC. - Note 5,6
19,366 Shares      FLA. Holdings, Inc. Series B Preferred Stock (d)                   08/02/93        1,513          -
 3,822 Warrants    FLA. Holdings, Inc. Common Stock Purchase Warrants(d)              08/02/93            -          -
                   $4,842  12.5 Sub. Note
                   Purchased 8/02/93                      $ 4,842
                   Surrendered 8/02/96                    $     -
                   Realized Loss                          $(4,842)
                   121,040 Common Stock
                   Purchased 08/02/93                     $ 1,513
                   Exchanged 08/06/96
                   19,366 Series B Preferred Stock        $ 1,513
                   Realized Gain                          $     0
                   Total Realized Loss                    $(4,842)                               ----------------------------------
                                                                                                      1,513          -         0.00
                                                                                                 -----------------------------------
                   SORETOX - Notes 5,6
$3,503             Stablex Canada, Inc., Sub. Nt. 10% due 06/30/07(c)(f)(g)           06/29/95        3,503      2,590
$3,128             Stablex Canada, Inc., Jr. Sub. Nt. 11% due 06/30/09(c)(f)(g)       06/29/95        3,128          -
2,004 Warrants     Seaway TLC, Inc. Common Stock Purchase Warrants                    12/06/91            -          - 
                                                                                                 ----------------------------------
                                                                                                      6,631      2,590         5.00
                                                                                                 ----------------------------------
                   TOTAL INVESTMENT IN NON-MANAGED COMPANIES                                        $23,967      8,854        17.11
                                                                                                 ==================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                        ML-LEE ACQUISITION FUND II, L.P.
                        SCHEDULE OF PORTFOLIO INVESTMENTS
                                JUNE 30, 1997
                             (DOLLARS IN THOUSANDS)
                                  (UNAUDITED)
                                  (CONTINUED)

   Principal                                                                                                      Fair         % Of
    Amount                                                                          Investment   Investment      Value        Total
Shares/Warrants    Investment                                                             Date       Cost(e)   (Note 2) Investments
<S>                <C>                                                              <C>          <C>         <C>        <C>
                   SUMMARY OF MEZZANINE INVESTMENTS
                   Subordinated Notes                                                  Various       28,808     24,800        47.93
                   Preferred Stock, Common Stock, Warrants and Stock Rights            Various       63,225     19,600        37.88
                                                                                                 ----------------------------------
                   TOTAL MEZZANINE INVESTMENTS                                                      $92,033    $44,400        85.81
                                                                                                 ==================================
                   TEMPORARY INVESTMENTS

                   TIME DEPOSITS
$   127            State Street Repurchase Agreement 3% due 07/01/97                  06/30/97          127        127        
                                                                                                 ----------------------------------
                   TOTAL INVESTMENT IN TIME DEPOSITS                                                    127        127          .25

                   COMMERCIAL PAPER
$   695            Ford Motor Credit Company, 5.46% due 07/01/97                      06/26/97          694        695
$ 6,524            State Street Clipper Receivable 5.54% due 07/08/97                 06/23/97        6,509      6,517             
                                                                                                 ----------------------------------
                   TOTAL INVESTMENT IN COMMERCIAL PAPER                                               7,203      7,212        13.94
                                                                                                 ----------------------------------
                   TOTAL TEMPORARY INVESTMENTS                                                        7,330      7,339        14.19
                                                                                                 ----------------------------------
                   TOTAL INVESTMENT PORTFOLIO                                                       $99,363    $51,739       100.00%
                                                                                                 ==================================



    (a) Publicly traded class of securities.
    (b) Represents investment in affiliates as defined in the Investment 
        Company Act of 1940.
    (c) Restricted security.
    (d) Restricted non-income producing equity security.
    (e) Represents  original cost and excludes  accretion of discount of 
        $35 for Mezzanine Investments and $9 for Temporary Investments.
    (f) Inclusive of receipt of payment-in-kind securities.
    (g) Non-accrual investment status.
    (h) Non-income producing equity security.

See the Accompanying Notes to Financial Statements.

</TABLE>
<PAGE>
                               ML-LEE ACQUISITION FUND II, L.P.
                                NOTES TO FINANCIAL STATEMENTS
                                       JUNE 30, 1997
                                        (UNAUDITED)

1.  Organization and Purpose

     ML-Lee Acquisition Fund II, L.P. ("Fund II") (formerly T.H. Lee Acquisition
Fund II,  L.P.) was  formed  along  with  ML-Lee  Acquisition  Fund  (Retirement
Accounts) II, L.P. (the "Retirement Fund";  together with Fund II 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.

     Mezzanine Investments II, L.P. (the "Managing General Partner"), subject to
the  supervision  of  the  Individual  General  Partners,   is  responsible  for
overseeing and monitoring 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.

     Fund II has elected to operate as a business  development company under the
Investment  Company Act of 1940.  Fund II's primary  investment  objective is to
provide  current  income and capital  appreciation  potential  by  investing  in
privately-structured,   friendly   leveraged   buyouts   and   other   leveraged
transactions.   Fund  II  pursues  this  objective  by  investing  primarily  in
subordinated  debt and related equity  securities issued in conjunction with the
"mezzanine  financing"  of friendly  leveraged  buyout  transactions,  leveraged
acquisitions and leveraged recapitalizations. Fund II may also invest in "bridge
investments"  if it is  believed  that such  investments  would  facilitate  the
consummation of a mezzanine financing.

     Fund II will terminate no later than January 5, 2000,  subject to the right
of the Individual  General  Partners to extend the term for up to one additional
two-year  period and one additional  one-year period if such extension is in the
best  interest  of Fund II.  Fund II will  then have  five  additional  years to
liquidate its remaining investments.

2.  Significant Accounting Policies

Basis of Accounting

     For financial  reporting  purposes,  the records of Fund II are  maintained
using the  accrual  method of  accounting.  For  federal  income  tax  reporting
purposes,   the  results  of  operations  are  adjusted  to  reflect   statutory
requirements arising from book to tax differences.  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.

Valuation of Investments

     Securities for which market  quotations are readily available are valued by
reference to such market  quotation  using the last trade price (if reported) or
the  last  bid  price  for  the  period.   For  securities   without  a  readily
ascertainable  market value  (including  securities  restricted as to resale for
which a corresponding  publicly traded class exists),  fair value is determined,
on a quarterly  basis,  in good faith by the  Managing  General  Partner and the
Investment  Adviser with final approval from the Individual  General Partners of
Fund II. For privately issued securities in which Fund II typically invests, the
fair value of an  investment is its original cost plus accrued 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  judgment  in  estimating  the  fair  value  of  these
investments,  there  are  inherent  limitations  in  any  estimation  technique.
Therefore,  the  fair  value  estimates  presented  herein  are not  necessarily
indicative of the amount which Fund II could  realize in a current  transaction.
Future  confirming  events will also affect the  estimates of fair value and the
effect of such events on the estimates of fair value could be material.

     Temporary  Investments  with  maturities of less than 60 days are stated at
amortized cost, which approximates market.

     The  information   presented  herein  is  based  on  pertinent  information
available to the Managing General Partner and Investment  Adviser as of June 30,
1997. 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 because  investments of companies  whose equity is
publicly  traded  are  valued at the last price at June 30,  1997,  the  current
estimated fair value of these investments may have changed  significantly  since
that point in time.
<PAGE>
Interest Receivable on Investments

     Investments  generally will be placed on non-accrual status in the event of
a default  (after the  applicable  grace  period  expires) or if the  Investment
Adviser and the Managing  General Partner  determine that there is no reasonable
assurance of collecting interest.

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. As of June 30, 1997 and December 31, 1996,
Fund II had in its portfolio of investments  $441,900 of payment-in-kind  notes,
which excludes $1.1 million of payment-in-kind  notes received from notes placed
on non-accrual status and $29,059 of payment-in-kind equity.

Investment Transactions

     Fund II records investment  transactions on the date on which it obtains an
enforceable right to demand the securities or payment therefor.  Fund II records
Temporary Investment transactions on the trade date.

     Realized  gains and losses on  investments  are  determined on the basis of
specific identification for accounting and tax purposes.

Sales and Marketing Expenses, Offering Expenses and Sales Commissions

     Sales  commissions  and selling  discounts  were  allocated to the specific
Partners' accounts in which they were applied.  Sales and marketing expenses and
offering  expenses were allocated  between the Funds in proportion to the number
of Units issued by each Fund and to the Partners in  proportion to their capital
contributions.

Deferred Interest Income

     All fees  received  by Fund II upon the  funding  of  Mezzanine  or  Bridge
Investments  are  treated as deferred  interest  income and  amortized  over the
maturity of such investments.

Partners' Capital

     Partners' Capital  represents Fund II's equity divided in proportion to the
Partners'  Capital  Contributions  and does not represent the Partners'  Capital
Accounts.  Profits and losses,  as defined in the  Partnership  Agreement,  when
realized,  are allocated in accordance  with the  provisions of the  Partnership
Agreement summarized in Note 3.

Interim Financial Statements

     The financial  information  included in this interim  report as of June 30,
1997 and for the period then ended has been  prepared by  management  without an
audit by independent  certified public  accountants.  The results for the period
ended  June 30,  1997  are not  necessarily  indicative  of the  results  of the
operations  expected for the year and reflect  adjustments,  all of a normal and
recurring  nature,  necessary  for the fair  presentation  of the results of the
interim period.  In the opinion of Mezzanine  Investments II, L.P., the Managing
General  Partner of Fund II,  all  necessary  adjustments  have been made to the
aforementioned  financial information for a fair presentation in accordance with
generally accepted accounting principles.

3.  Allocations of Profits and Losses

     Pursuant  to  the  Partnership   Agreement,   all  profits  from  Temporary
Investments generally are allocated 99.75% to the Limited Partners, 0.23% to the
Managing General Partner and 0.02% to the Individual  General  Partner.  Profits
from Mezzanine Investments will, in general, be allocated as follows:

    first, if the capital  accounts of any partners have negative  balances,  to
    such  partners in  proportion  to the  negative  balances  in their  capital
    accounts until the balances of all such capital accounts equal zero,

    second,  99.75%  to the  Limited  Partners,  0.23% to the  Managing  General
    Partner and 0.02% to the Individual  General Partner until the sum allocated
    to the Limited Partners equals any previous losses allocated together with a
    cumulative  Priority  Return of 10% on the average daily amount in Mezzanine
    Investments, and any outstanding Compensatory Payments,

    third,  69.75% to the  Limited  Partners,  30.225% to the  Managing  General
    Partner and 0.025% to the  Individual  General  Partner  until the  Managing
    General Partner has received 20.281% of the total profits allocated,

    thereafter,  79.75% to the Limited Partners, 20.225% to the Managing General
    Partner and 0.025% to the Individual General Partner.

     Losses will be allocated in reverse order of profits  previously  allocated
and thereafter  99.75% to the Limited  Partners,  0.23% to the Managing  General
Partner and 0.02% to the Individual General Partner.
<PAGE>
4.  Investment Transactions

     During February 1997, Fund II sold 272 shares of Stanley  Furniture for $24
per share and received total proceeds of $6,528 and recognized a gain of $3,105.
On June 30, 1997,  Fund II entered into a stock purchase  agreement with Stanley
Furniture  whereby  Fund II sold 6,281 shares of Stanley  Furniture  for $20 per
share.  Fund II received  total  proceeds of $125,620  and  recognized a gain of
$46,582.

     On April 2, 1997, Anchor Advanced  Products,  Inc., a Delaware  corporation
("Anchor"),  completed  a  recapitalization  pursuant  to  which  Anchor  issued
$100,000,000  aggregate  principal  amount of Senior  Notes due 2004 and entered
into  a  new  credit   facility  (the   "Recapitalization").   As  part  of  the
Recapitalization,  Anchor  repaid  substantially  all of its  outstanding  debt,
including all accrued  interest and any premiums in connection  therewith.  As a
result,  Anchor repaid the Senior Subordinated Note and Junior Subordinated Note
held by Fund II, together with all accrued interest and prepayment  premiums for
an aggregate of $14.5 million.

     Immediately prior to the Recapitalization,  Fund II owned 162,967 shares of
the common stock of Anchor  Holdings,  Inc.,  the parent of Anchor.  Immediately
after the consummation of the  Recapitalization,  Fund II exercised its warrants
to purchase  common stock (at an exercise price of $9.50 per share) and acquired
an additional  247,710  shares of common stock,  bringing its total  holdings of
common  stock to  410,677  shares.  In  connection  with  the  Recapitalization,
Holdings paid a dividend to all holders of Holdings common stock of record as of
April 2, 1997, in the amount of $19.02 per share (the "Anchor  Dividend").  As a
result of such dividend,  the Fund received $7.8 million, of which approximately
32% or $2.5 million was returned to partners as return of capital.

     On April 11, 1997 the Bankruptcy  Court confirmed a plan of  Reorganization
for Fitz & Floyd. As a result, on April 14, 1997, a follow-on investment of $2.4
million  was made in Fitz and  Floyd and Fund II  received  a $2.4  million  12%
subordinated note. Additionally,  Fund II exchanged the $12.6 million adjustable
notes,  which Fund II previouslly held, for Series A Preferred Stock and Class A
Common Stock in Fitz and Floyd. No gain or loss was recorded on the trasaction.

     On August 6, 1991, the Independent  General Partners approved a reserve for
follow-on  investments  of $24.9  million for Fund II. As of June 30, 1997,  the
remaining reserve balance was $4.1 million due to follow-on investments in Petco
Animal Supplies, Fitz and Floyd, Fine Clothing, Inc., Hills Stores,  Ghirardelli
Holdings  and  Anchor  Advanced  Products.  Additionally,  $7.29  million 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.

     Because  Fund  II  primarily   invests  in  high-yield   private  placement
securities,  the risk of loss upon  default  by an issuer is  greater  than with
investment  grade  securities  because   high-yield   securities  are  generally
unsecured and are often  subordinated  to other  creditors of the issuer.  Also,
high-yield  issuers  usually  have higher  levels of  indebtedness  and are more
sensitive to adverse economic conditions.

     Although Fund II cannot eliminate the risks associated with its investments
in high-yield securities,  it has procedures in place to continually monitor the
risks associated with its investments under a variety of market conditions.  Any
potential  Fund II loss would  generally  be limited  to its  investment  in the
portfolio company as reflected in the portfolio of investments.

     Should bankruptcy proceedings commence,  either voluntarily or by action of
the court against a portfolio  company,  the ability of Fund II to liquidate the
position or collect proceeds from the action may be delayed or limited.

5.  Unrealized Appreciation and Depreciation of Investments

     For the six months  ended June 30, 1997,  Fund II recorded  net  unrealized
depreciation  of  $4,421,206  as  compared  to net  unrealized  depreciation  of
$17,469,030  for the  same  period  in  1996.  As of June 30,  1997,  Fund  II's
cumulative net unrealized depreciation on investments totaled $47,668,158.

     For the three months ended June 30, 1997,  Fund II recorded net  unrealized
depreciation  of  $1,022,547  as  compared  to net  unrealized  appreciation  of
$9,741,195   recorded  for  the  comparable   period  in  1996.  For  additional
information,   please  refer  to  the   Supplemental   Schedule  of   Unrealized
Appreciation and Depreciation - Schedule 2.

6.  Non-Accrual of Investments

     In accordance  with Fund II's Accounting  Policy,  the following notes have
been on non-accrual status since the date indicated:

    - FLA. Orthopedics, Inc., on January 1, 1995. 
    - Stablex Canada, Inc., on June 29, 1995.
<PAGE>

7.  Investment Advisory Fee

     The  Investment  Adviser  provides  the   identification,   management  and
liquidation of portfolio investments for the Funds. As compensation for services
rendered to the Funds,  the Investment  Adviser  receives a quarterly fee at the
annual rate of 1% of assets under  management (net offering  proceeds reduced by
cumulative capital reductions and realized losses), with a minimum annual fee of
$1.2  million  for Fund II and the  Retirement  Fund on a  combined  basis.  The
Investment  Advisory  Fee is  calculated  and paid  quarterly,  in  advance.  In
addition,  the  Investment  Adviser  receives  95% of  the  benefit  of any  MGP
Distributions  paid to the Managing  General  Partner (see Note 10). For the six
months  ended  June 30,  1997 and  1996,  Fund II paid  $417,570  and  $518,234,
respectively, in Investment Advisory Fees to Thomas H. Lee Advisors II, L.P. For
the three  months  ended  June 30,  1997 and  1996,  Fund II paid  $213,617  and
$264,164, respectively, in Investment Advisory Fees.


8.  Fund Administration Fees and Expenses

     As compensation for its services,  ML Fund  Administrators  Inc. (the "Fund
Administrator";  an affiliate of the  Managing  General  Partner) is entitled to
receive  from the Funds an annual  amount of the greater of $500,000 or 0.45% of
the excess of net offering  proceeds less 50% of capital  reductions  and 50% of
realized  losses.  In addition,  ML Mezzanine II Inc.,  an affiliate of the Fund
Administrator  and Merrill  Lynch & Co.,Inc.,  receives 5% of the benefit of any
MGP  Distributions  paid to the Managing General Partner (see Note 10). The Fund
Administration Fee is calculated and paid quarterly, in advance, by each Fund in
proportion  with the net  offering  proceeds.  For the six months ended June 30,
1997  and  1996,  Fund II paid  $320,329  and  $342,979,  respectively,  in Fund
Administration  Fees. For the three months ended June 30, 1997 and 1996, Fund II
paid $162,386 and $172,625, respectively, in Fund Administration Fees.

     Pursuant to the  administrative  services agreement between Fund II and the
Fund  Administrator,  effective  November  10,  1993,  a portion  of the  actual
out-of-pocket expenses incurred in connection with the administration of Fund II
is being reimbursed to the Fund  Administrator.  Actual  out-of-pocket  expenses
("reimbursable expenses") primarily consist of printing, audits, tax preparation
and  custodian  fees.  For the six months ended June 30, 1997 and 1996,  Fund II
incurred $78,793 and $66,847,  respectively,  in reimbursable  expenses. For the
three months ended June 30, 1997 and 1996, Fund II incurred $52,983 and $60,444,
respectively, in reimbursable expenses.

     Beginning in November 1997, the Fund  Administration  Fee will change to an
annual  amount of  $400,000  for Fund II and the  Retirement  Fund on a combined
basis, plus 100% of all reimbursable expenses incurred by the Fund.
     
9. Independent General Partners' Fees and Expenses

     As compensation for their services,  each Independent  General Partner will
receive a combined annual fee of $40,000  (payable  quarterly) from the Funds in
addition to a $1,000 fee for each meeting attended ($500 if a meeting is held on
the same day as a committee meeting of the General Partners) plus  reimbursement
for any out-of-pocket expenses incurred. Fees and expenses are allocated between
the Funds in proportion to the number of units issued by each fund. Compensation
for each of the Individual  General Partners is reviewed  annually.  For the six
months  ended June 30,  1997 and 1996,  Independent  General  Partners  Fees and
Expenses for Fund II totalled $76,394 and $153,111,  respectively. For the three
months  ended June 30, 1997,  Fund II incurred  $51,020 in  Independent  General
Partners Fees and Expenses as compared to $61,574 for the same period in 1996.

10. Related Party Transactions

     Fund  II's  investments  generally  are  made as  co-investments  with  the
Retirement  Fund. In addition,  certain of the Mezzanine  Investments and Bridge
Investments  which were made by Fund II  involve  co-investments  with  entities
affiliated  with the  Investment  Adviser.  Such  co-investments  are  generally
prohibited  absent exemptive relief from the Securities and Exchange  Commission
(the "Commission").  As a result of these affiliations and Fund II's expectation
of engaging in such  co-investments,  the Funds together with ML-Lee Acquisition
Fund,  L.P.,  sought  an  exemptive  order  from the  Commission  allowing  such
co-investments,   which  was   received  on   September   1,  1989.   Fund  II's
co-investments in Managed Companies,  and in certain cases its co-investments in
Non-Managed Companies, typically involve the entry by the Funds and other equity
security  holders into  stockholders'  agreements.  While the provisions of such
stockholders'  agreements  vary,  such  agreements may include  provisions as to
corporate  governance,  registration  rights,  rights  of  first  offer or first
refusal,  rights to participate in sales of securities to third parties,  rights
of majority stockholders to compel minority stockholders to participate in sales
of securities to third parties, transfer restrictions, and preemptive rights.

     Thomas H. Lee  Company,  a sole  proprietorship  owned by Thomas H. Lee, an
Individual  General  Partner  of  Fund  II and an  affiliate  of the  Investment
Advisor,  typically performs certain  management  services for Managed Companies
and  receives  management  fees in  connection  therewith,  usually  pursuant to
written  agreements with such companies.  In addition,  certain of the portfolio
companies  have  contractual  or other  relationships  pursuant to which they do
business with one another.
<PAGE>
     Merrill  Lynch,  Pierce,  Fenner  &  Smith  Incorporated  ("MLPF&S")  is an
affiliate of the Managing General Partner. MLPF&S and certain of its affiliates,
in the ordinary course of their business, perform various financial services for
various portfolio  companies of the Funds,  which may include investment banking
services,  broker/dealer  services  and  economic  forecasting,  and  receive in
consideration   therewith   various  fees,   commissions   and   reimbursements.
Furthermore,  MLPF&S  and its  affiliates  or  investment  companies  advised by
affiliates of MLPF&S may, from time to time,  purchase or sell securities issued
by portfolio  companies of the Funds in connection with its ordinary  investment
operations.

     During  the six  month  period  ending  June  30,  1997,  Fund II paid  the
Individual  General Partner  distributions  totaling $4,389 and Managing General
Partner   distributions   totaling  $3,023,386  (which  includes  $2,979,496  of
incentive  fees). As of June 30, 1997, the Managing General Partner has earned a
total of $24.7  million in MGP  Incentive  Fees,  none of which is  deferred  in
payment to the Managing General Partner as a Deferred  Distribution  amount (the
"Deferred  Distribution")  at this  time,  in  accordance  with the  Partnership
Agreement.  To the  extent not  payable to the  Managing  General  Partner,  any
Deferred Distribution is distributed to the Partners pro-rata in accordance with
their capital  contributions,  and certain  amounts  otherwise  later payable to
Partners from distributable cash from operations would instead be payable solely
to the Managing General Partner until the Deferred  Distribution  amount is paid
in full.
    
11. Litigation

     On February 3, 1992 and February 5, 1992, respectively, one Limited Partner
from Fund II and one Limited  Partner from the  Retirement  Fund each  commenced
class actions in the US District Court for the District of Delaware, purportedly
on behalf of all persons who  purchased  limited  partnership  interests  in the
Funds  between  November  10, 1989 and January 5, 1990,  against the Funds,  the
Managing  General  Partner,  the  Individual  General  Partners,  the Investment
Adviser  to the  Funds and  certain  named  affiliates  of such  persons.  These
actions,  alleging  that the  defendants  made  material  misrepresentations  or
omitted material  information in the offering materials for the Funds concerning
the investment  purposes of the Funds,  were  consolidated by the court on March
31, 1992,  and a  consolidated  complaint was filed by the plaintiffs on May 14,
1992. In April 1993,  plaintiffs filed an amended complaint,  adding claims that
certain transactions by the Funds were prohibited by the federal securities laws
applicable to the Funds and their affiliates under the Investment Company Act of
1940,  as amended.  The  amended  complaint  also named the Funds'  counsel as a
defendant.  Defendants moved to dismiss the amended  complaint,  and, by Opinion
and Order dated March 31, 1994, the Court granted in part and denied in part the
motions to dismiss.  Additionally,  by its March 31, 1994 Opinion and Order, the
Court certified the case as a class action, and ordered plaintiffs to replead by
filing a new  complaint  reflecting  the  Court's  rulings.  On April 15,  1994,
plaintiffs  served and filed a new complaint,  which  defendants moved to strike
for not conforming to the Court's  ruling.  On August 3, 1994, the Court granted
defendants'  motion to strike the new complaint.  Plaintiffs  thereafter filed a
revised second amended complaint dated September 26, 1994.  Factual discovery in
this litigation has concluded,  although plaintiffs have made application to the
Court for  permission to conduct  additional  fact  discovery.  The parties have
conducted  expert  discovery,  the conclusion of which is subject to the Courts'
decision on a pending  matter.  The  defendants in this action  believe that the
remaining  claims are  without  merit,  although  whether or not the  plaintiffs
prevail, the Funds may be obligated to indemnify and advance litigation expenses
to certain of the defendants under the terms and conditions of various indemnity
provisions in the Funds'  Partnership  Agreements  and separate  indemnification
agreements,  and the  amount  of such  indemnification  and  expenses  could  be
material.  Fund II has advanced  amounts to the  indemnified  parties based upon
amounts which are deemed  reimbursable  in accordance  with the  indemnification
provisions and has included these amounts in Legal and Professional Fees. In the
opinion of legal counsel,  the outcome of this case is not  determinable at this
time.

     On August 9, 1994, the same two Limited  Partners as noted in the preceding
paragraph  commenced  another putative class action in the US District Court for
the District of Delaware, purportedly on behalf of all persons who owned limited
partnership  interests in the Funds on November 4, 1993,  against the Funds, the
Managing  General  Partners,  the Individual  General  Partners,  the Investment
Adviser to the Funds and certain named  affiliates  of such persons.  Plaintiffs
allege that the defendants violated certain provisions of the Investment Company
Act of 1940 and the  common  law in  connection  with the sale by certain of the
defendants  of shares of common stock of Snapple  Beverage  Corp.  in a November
1993 secondary  offering and seek actual and punitive  damages and an accounting
in connection therewith. Defendants' motion to dismiss this complaint was denied
on December 29, 1995. On August 4, 1995, while defendants' motion to dismiss the
original  complaint was pending,  plaintiffs filed an amended complaint alleging
additional  violations  of the  Investment  Company  Act of 1940 and  common law
arising out of the secondary offering. The plaintiffs moved for summary judgment
on  certain of these  claims.  On  October  13,  1995,  the  defendants  in this
litigation  each filed briefs in opposition  to  plaintiffs  motion and moved to
dismiss the amended  complaint.  By an Opinion  dated March 30, 1996,  the Court
denied  plaintiffs'  motion for partial summary  judgment.  By order of the same
date, and without  opposition by defendants,  the Court  certified the case as a
class action. Defendants also filed separate motions to dismiss, which the Court
denied  by an  order  dated  June 30,  1996.  The  parties  are now  engaged  in
discovery.  Whether or not the plaintiffs prevail, the Funds may be obligated to
indemnify and advance litigation expenses to certain of the defendants under the
terms and conditions of various indemnity  provisions in the Funds'  Partnership
Agreements  and  separate  indemnification  agreements.  In the opinion of legal
counsel, the outcome of this case is not determinable at this time.
<PAGE>

12. Income Taxes (Statement of Financial Accounting Standards No. 109)

     No  provision  for income taxes has been made because all income and losses
are  allocated to Fund II's  partners  for  inclusion  in their  respective  tax
returns.

     Pursuant  to the  Statement  of  Financial  Accounting  Standards  No.  109
Accounting  for Income Taxes,  Fund II is required to disclose any difference in
the tax basis of Fund II's assets and liabilities versus the amounts reported in
the financial  statements.  As of December 31, 1996,  the tax basis of Fund II's
assets are greater  than the amounts  reported in the  financial  statements  by
$44.1 million. This difference is attributable to net unrealized depreciation on
investments which has not been recognized for tax purposes.

13. Subsequent Events
    
     On August 1, 1997,  the  Individual  General  Partners  approved the second
quarter 1997 cash  distribution  totalling  $3,203,136,  which  consisted of net
distributable  proceeds,  of $1,808,753  from the sale of portfolio  companies (
which  $1,651,649  is return  of  capital,  of which  $1,511,505  of the  Anchor
Dividend was returned to partners as Return of Capital),  $135,289 of net income
from  temporary   investments  and  $1,259,094  of  net  income  from  Mezzanine
Investments  (which  includes  $841,740  of  dividend  income  from  the  Anchor
Dividend).  The total amount  distributed to Limited  Partners was $2,818,379 or
$12.71 per Unit. The Managing General Partner  received $6,353  representing its
interest in Fund II and $377,769 in performance  incentive fees.  Thomas H. Lee,
as an Individual  General Partner  received $635,  representing  his interest in
Fund II. This cash distribution was paid on August 14, 1997.

<PAGE>
<TABLE>
<CAPTION>
                                             SCHEDULE 1
                                  ML-LEE ACQUISITION FUND II, L.P.
                        SUPPLEMENTAL SCHEDULE OF REALIZED GAINS AND LOSSES
                              FOR THE 3 AND 6 MONTHS ENDED JUNE 30, 1997
                                      (DOLLARS IN THOUSANDS)
                                            (UNAUDITED)

<S>                                                        <C>                    <C>            <C>               <C>
                                                               Par Value or       Original                         Realized
SECURITY                                                   Number of Shares           Cost       Net Proceeds          Gain
-----------------------------------------------            ----------------       --------       ------------      --------   
For the Three Months Ended March 31, 1997

Stanley Furniture
      Common Stock                                                      272       $      4       $          7      $      3
-----------------------------------------------                                   --------       ------------      -------- 
Total for the Three Months Ended March 31, 1997                                          4                  7             3
-----------------------------------------------                                   --------       ------------      --------      
For the Three Months Ended June 30, 1997

Anchor Advanced Products
      Notes                                                         $13,689         13,689             13,689            --

Stanley Furniture
      Common Stock                                                    6,281             79                126            47
-----------------------------------------------                                   --------       ------------      --------
For the Three Months Ended June 30, 1997                                            13,768             13,815            47
-----------------------------------------------                                   --------       ------------      --------   
Total for the Six Months Ended June 30, 1997                                      $ 13,772       $     13,822      $     50
===============================================                                   ========       ============      ========     

</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                                                   SCHEDULE 2
                                         ML-LEE ACQUISITION FUND II, L.P.
                           SUPPLEMENTAL SCHEDULE OF UNREALIZED APPRECIATION AND DEPRECIATION
                                       FOR THE PERIOD ENDED JUNE 30, 1997
                                             (DOLLARS IN THOUSANDS)
                                                  (UNAUDITED)

<S>                                       <C>            <C>      <C>              <C>             <C>              <C> 
                                                                     Unrealized       Unrealized       Total              Total
                                                                    Appreciation/   Appreciation/    Unrealized        Unrealized  
                                                                   (Depreciation)   (Depreciation)  Appreciation/    Appreciation/ 
                                                                   for the Three     for the Six   (Depreciation)   (Depreciation)
                                           Investment      Fair      Months ended    Months ended  at December 31,    at June 30,
SECURITY                                      Cost        Value     June 30, 1997   June 30, 1997       1996             1997
---------------------------------         -----------    ------   ---------------  --------------  --------------   -------------
PUBLICLY TRADED SECURITIES

First Alert
  Common Stock                                $ 3,320    $5,789           $  (129)        $(1,158)       $  3,627        $  2,469

Hills Stores
  Common Stock                                 34,776     1,791              (423)         (1,335)        (31,650)        (32,985)
  
Playtex
  Common Stock                                  5,299     3,222              (516)            472          (2,549)         (2,077)
   
Stanley
  Common Stock                                     87       160               (17)            (24)             98              74
---------------------------------                                 ---------------  --------------  --------------   -------------
TOTAL UNREALIZED APPRECIATION
  (DEPRECIATION) FROM PUBLICLY
  TRADED SECURITIES                                                       $(1,085)        $(2,045)       $(30,474)       $(32,519)
---------------------------------                                 ---------------  --------------  --------------   -------------
NON PUBLIC SECURITIES:

Fitz and Floyd
  Common Stock                                 12,619     3,027           $    63         $    63        $ (9,659)       $ (9,596)

FLA. Orthopedics, Inc. 
  Preferred Stock*                              1,513        --                --              --          (1,513)         (1,513)

Stablex Canada Inc. 
  Subordinated Notes                            6,631     2,590                --          (2,439)         (1,602)         (4,041)
---------------------------------                                 ---------------  --------------  --------------   -------------
TOTAL UNREALIZED APPRECIATION
  (DEPRECIATION) FROM NON PUBLIC
  SECURITIES                                                              $    63         $(2,376)       $(12,774)       $(15,150)
---------------------------------                                 ---------------  --------------  --------------   -------------
TOTAL NET UNREALIZED APPRECIATION
  (DEPRECIATION)                                                          $(1,022)        $(4,421)       $(43,248)       $(47,669)
=================================                                 ===============  ==============  ==============   =============


* Restricted security.

</TABLE>
<PAGE>
     Item 2.  Management's  Discussion  and Analysis of 
               Financial  Condition and Results of Operations


Liquidity & Capital Resources

     As of June  30,  1997,  Fund II had a total of $92.0  million  invested  in
Mezzanine  Investments  representing  $68.1  million  Managed and $23.9  million
Non-Managed  portfolio  investments.  These  investments  were  financed  by net
offering  proceeds and debt financing.  This represents a $11.6 million decrease
versus the total  invested in  Mezzanine  Investments  at  December  31, 1996 of
$103.6  million.  The decrease in  investments is due primarily to the sales and
redemptions of Portfolio  Investments.  The remaining  proceeds were invested in
Temporary Investments primarily comprised of commercial paper with maturities of
less than two months.

     Fund  II  invested  substantially  all of its  net  proceeds  in  Mezzanine
Investments,  consisting of high-yield  subordinated debt and/or preferred stock
linked with an equity  participation,  of middle market  companies in connection
with friendly  leveraged  acquisitions,  recapitalizations  and other  leveraged
financings.  Fund II's  Mezzanine  Investments  typically were issued in private
placement  transactions  which are generally subject to certain  restrictions on
sales  thereby  limiting  their  liquidity.  Fund II was  fully  invested  as of
December 20, 1992, which was within 36 months from the date of the final closing
(after including the reserve for follow-on  investments and exclusive of amounts
available for  reinvestment).  The  reinvestment  period for various  amounts of
capital proceeds  received during the last twelve months of Fund II's investment
period terminated at various times through December 18, 1993.

     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.  The Managing  General
Partner is required to defer a portion of any incentive fee 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").  This  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.

     On August 6, 1991, the Independent  General Partners approved a reserve for
follow-on  investments  of $24.9  million for Fund II. As of June 30, 1997,  the
remaining reserve balance was $4.1 million due to follow-on investments in Petco
Animal Supplies, Fitz and Floyd, Fine Clothing, Inc., Hills Stores,  Ghirardelli
Holdings  and  Anchor  Advanced  Products.  Additionally,  $7.29  million 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.

     All net proceeds from the sale of Mezzanine Investments received by Fund II
in the future will be distributed to its partners unless applied to or set aside
for expenses or follow-on investments.

     The  proportion  of  distributions  provided by net  investment  income has
dropped  significantly  from prior years due  primarily to  increased  sales and
redemptions of Mezzanine  Investments  and the resulting  decrease in investment
income as those  holdings  cease to generate  interest  income.  Pursuant to the
terms of the  Partnership  Agreement,  all net investment  income from Mezzanine
Investments  will be  distributed  to the  Managing  General  Partner  until the
Managing  General Partner  receives an amount equal to any outstanding  Deferred
Distribution Amount. Given these circumstances, it is expected that the majority
of future cash distributions to Limited Partners will almost entirely be derived
from gains and recovered  capital from asset sales,  which are subject to market
conditions and are inherently  unpredictable as to timing. Assuming there are no
asset sales in a particular  quarter,  Limited  Partners are expected to receive
only small  amounts of net  distributable  cash,  which are estimated to be less
than one  dollar  per  Limited  Partnership  Unit  each  quarter.  Distributions
therefore  are expected to vary  significantly  in amount and may not be made in
every quarter.

Investment in High-Yield Securities

     Fund  II  invests  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.
<PAGE>
     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.

     Certain issuers of Securities held by Fund II (First Alert, Hills,  Playtex
and  Stanley  Furniture)  have  registered  their  equity  securities  in public
offerings.  Although the equity  securities of the same class  presently held by
Fund II were not  registered in these  offerings,  Fund II has the ability under
Rule  144  under  the  Securities  Act of 1933 to sell  publicly  traded  equity
securities  held by it for at least one year on the open market,  subject to the
volume  restrictions  set forth in that rule.  The Rule 144 volume  restrictions
generally are not applicable to equity  securities of  non-affiliated  companies
held by Fund II for at least two years. In certain cases, Fund II has agreed not
to make  any  sales  of  equity  securities  for a  specified  hold-back  period
following a public offering.

     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.

Results of Operations

Investment Income and Expenses

     The investment income from operations for the quarter consists primarily of
interest and discount income earned on the investment of proceeds from partners'
contributions in Mezzanine Investments and short-term money market instruments.

     For the six months ended June 30, 1997,  Fund II had  investment  income of
$8,476,482 as compared to $11,611,044  for the same period in 1996. The decrease
of $3,134,562 in 1997  investment  income as compared to 1996 is due to the sale
of income producing  portfolio  companies,  as well as recognition of previously
unrecorded interest income of payment-in-kind  securities totalling $7.2 million
related to the sale of CST Office Products, Inc. in March of 1996.

     Major  expenses for the period  consisted of  Investment  Advisory Fees and
Fund Administration Fees.
     
     The  Investment   Adviser  and  Fund   Administrator   both  receive  their
compensation  on a quarterly  basis.  The  Investment  Advisory  Fee paid to the
Investment  Adviser for the six months ended June 30, 1997 and 1996 was $417,570
and  $518,234,  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
Fund II and the  Retirement  Fund  on a  combined  basis.  The  decrease  in the
Investment   Advisory  Fee  is  primarily  the  result  of  returns  of  capital
distributed  to Limited  Partners.  For the three months ended June 30, 1997 and
1996,  Investment Advisory Fees paid to the Investment Adviser were $213,617 and
$264,164, respectively.

     The Fund  Administration  Fee paid to the  Fund  Administrator  for the six
months ended June 30, 1997 and 1996 was $320,329 and $342,979, respectively, and
was  calculated  at an  annual  rate of  0.45%  of the  excess  of net  offering
proceeds,  less 50% of capital  reductions and 50% of realized  losses.  For the
three months ended June 30, 1997 and 1996, the Fund  Administration  Fee paid to
the Fund Administrator was $162,386 and $172,625, respectively.

     Beginning in November of 1997, the Fund  Administration  Fee will change to
an annual amount of $400,000 for Fund II and the  Retirement  Fund on a combined
basis, plus 100% of all reimbursable expenses (as defined below) incurred by the
Fund.

     Pursuant to the  administrative  services agreement between Fund II and the
Fund  Administrator,  effective  November  10,  1993,  a portion  of the  actual
out-of-pocket expenses incurred in connection with the administration of Fund II
is  reimbursable  to  the  Fund  Administrator.  Actual  out-of-pocket  expenses
("reimbursable expenses") primarily consist of printing, audits, tax preparation
and  custodian  fees.  For the six months ended June 30, 1997 and 1996,  Fund II
incurred  reimbursable  expenses of $78,793 and $66,847,  respectively.  For the
quarters ended June 30, 1997 and 1996, reimbursable expenses totaled $52,983 and
$60,444, respectively.
<PAGE>
    
     For the six months ended June 30, 1997,  Fund II had net investment  income
of  $7,482,625  as  compared  to  $9,556,790  for the same  period in 1996.  The
decrease of $2,074,165 in 1997 net investment  income as compared to 1996 is due
to the recognition of interest income from payment-in-kind securities related to
the sale of CST Office  Products,  Inc., in March of 1996,  partially  offset by
lower  Legal and  Professional  Fees and  Investment  Advisory  Fees.  Legal and
Professional  Fees were lower in 1997 than in 1996  partially due to a rebate of
approximately  $287 thousand  pertaining to legal fees paid by Fund II on behalf
of Fitz and Floyd pertaining to the Plan of Reorganization.

     For the three months ended June 30, 1997, Fund II had net investment income
of $6,680,385 as compared to $731,444 for the same period in 1996.  The increase
in net investment income is due to dividend income received pertaining to Anchor
Advanced Products, Inc. along with lower Legal and Professional Fees recorded in
1997.

Net Assets

     Fund II's net assets  decreased by $19,381,444  during the six months ended
June  30,  1997  due to  the  payment  of  cash  distributions  to  partners  of
$22,492,551 and net unrealized  depreciation of $4,421,206,  partially offset by
realized  gains  from the  sale of  Mezzanine  Investments  of  $49,688  and net
investment income of $7,482,625.  This compares to the decrease in net assets of
$34,629,866 for the six months ended June 30, 1996 resulting from the payment of
cash distributions to partners of $37,334,508 and net unrealized depreciation of
$17,469,030,  partially  offset  by net  investment  income of  $10,616,882  and
realized gains from investments of $9,556,790.

Unrealized Appreciation and Depreciation on Investments

     For the six months  ended June 30, 1997,  Fund II recorded  net  unrealized
depreciation   of  $4,421,206   compared  to  net  unrealized   depreciation  of
$17,469,030  for the  same  period  in  1996.  As of June 30,  1997,  Fund  II's
cumulative net unrealized depreciation on investments totaled $47,688,158.
    
     For the three months ended June 30, 1997,  Fund II recorded net  unrealized
depreciation  of  $1,022,547  as  compared  to net  unrealized  depreciation  of
$9,741,195   recorded  for  the  comparable   period  in  1996.  For  additional
information,   please  refer  to  the   Supplemental   Schedule  of   Unrealized
Appreciation and Depreciation - Schedule 2.

     Fund II's valuation of the Common Stock of First Alert, Hills,  Playtex and
Stanley Furniture reflect their closing market prices at June 30, 1997.

     The  Managing  General  Partner  and  the  Investment  Adviser  review  the
valuation  of  Fund  II's  portfolio  investments  that  do not  have a  readily
ascertainable  market value on a quarterly  basis with final  approval  from the
Individual General Partners.  Portfolio  investments are valued at original cost
plus  accrued  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   Advisor  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.

     Approximately 53% of Fund II's mezzanine investments (at cost) are invested
in private  placement  securities  for which there are no  ascertainable  market
values.  Although the Managing General Partner and Investment  Adviser use their
best  judgment  in  estimating  the fair value of these  investments,  there are
inherent  limitations in any  estimation  technique.  Therefore,  the fair value
estimates  presented  herein are not necessarily  indicative of the amount which
Fund II could realize in a current transaction.

     The First Alert,  Hills,  Playtex and Stanley Furniture  securities held by
Fund II are restricted  securities under the SEC's Rule 144 and can only be sold
under that rule in a registered public offering or pursuant to an exemption from
the registration requirement. In addition, resale in some cases is restricted by
lockup or other  agreements.  Fund II may be  considered  an  affiliate of First
Alert and Stanley Furniture under the SEC's Rule 144 and, therefore,  any resale
of  securities  of those  companies,  under  Rule 144,  is limited by the volume
limitations in that rule.  Accordingly,  the values referred to in the financial
statements for the remaining First Alert,  Hills,  Playtex and Stanley Furniture
securities  held by Fund II do not  necessarily  represent  the  prices at which
these securities could currently be sold.

     The  information   presented  herein  is  based  on  pertinent  information
available to the Managing General Partner and Investment  Adviser as of June 30,
1997. 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.
<PAGE>
Realized Gains and Losses

     For the six months ended June 30, 1997, Fund II had net realized gains from
the sale of Mezzanine  Investments of $49,688 as compared to $10,616,882 for the
same period in 1996.

     For the quarter  ended June 30, 1997,  Fund II had net realized  gains from
investments of $46,582 as compared to $6,352,650  recorded in the second quarter
of 1996. For additional  information,  please refer to the Supplemental Schedule
of Realized Gains and Losses - Schedule 1.

Cash Distributions

     On August 1, 1997,  the  Individual  General  Partners  approved the second
quarter 1997 cash  distribution  totalling  $3,203,136,  which  consisted of net
distributable  proceeds of  $1,808,753  from the sale of  portfolio  companies (
which  $1,651,649  is return  of  capital,  of which  $1,511,505  of the  Anchor
Dividend was returned to partners as Return of Capital),  $135,289 of net income
from  temporary   investments  and  $1,259,094  of  net  income  from  Mezzanine
Investments  (which  includes  $841,740  of  dividend  income  from  the  Anchor
Dividend).  The total amount  distributed to Limited  Partners was $2,818,379 or
$12.71 per Unit. The Managing General Partner  received $6,353  representing its
interest in Fund II and $377,769 in performance  incentive fees.  Thomas H. Lee,
as an individual  general partner  received $635,  representing  his interest in
Fund II. This cash distribution was paid on August 14, 1997.

     Because  most of the  Fund  II's  debt  holdings  were  previously  sold or
redeemed,  remaining  portfolio  interest  income expected to be received by the
Fund II may not be sufficient to cover the Fund II's expenses in the future.  As
a result,  any interest income received will be used to pay Fund II expenses any
may not be available for distribution. The majority of future cash distributions
to Limited Partners will be derived from gains and recovered  capital from asset
sales,  which are  dependent  upon future  market  conditions  and therefore are
inherently  unpredictable.  Cash  distributions,  therefore,  are likely to vary
significantly in amount and may not be made in every quarter.

     Should you decide to sell you Units, please be aware that such sale will be
recorded  on the  books  and  records  of the Fund II  quarterly,  only upon the
satisfactory  completion  and  acceptance of the 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.

<PAGE>
Part II - Other Information

     Items 1 - 5 are  herewith  omitted as the  response  to all items is either
none or not applicable.



     Item 6. Exhibits and Reports on Form 8-K
      
     (a) Exhibit 27 - Financial  Data  Schedule for the quarter 
                      ending June 30, 1997.

     (b) Reports on form 8-K: Anchor Recapitalization Filed May 2, 1997


<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 this 13th day of
August, 1997.

                        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: August 13, 1997         /s/  Audrey Bommer
                               Audrey Bommer
                               Vice President and Treasurer
                               (Chief Financial Officer)


Dated: August 13, 1997         /s/  Roger F. Castoral, Jr.
                               Roger F. Castoral, Jr.
                               Assistant Treasurer
                               (Principal Accounting Officer)

<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 this 13th day of
August, 1997.

                      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: August 13, 1997
                          Audrey Bommer
                          Vice President and Treasurer
                          (Chief Financial Officer)




Dated: August 13, 1997
                          Roger F. Castoral, Jr.
                          Assistant Treasurer
                          (Principal Accounting Officer)