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




     [X]  Quarterly  Report  Pursuant  to Section 13 or 15(d) of the  Securities
          Exchange Act of 1934 For the fiscal quarter ended March 31, 2002

     [ ]  Transition  Report  Pursuant to Section 13 or 15(d) of the  Securities
          Exchange Act of 1934 For the transition period from     to

                         Commission file number 1-10813
                             -----------------------

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


              California                                    68-0146197
    (State or other jurisdiction of                      (I.R.S. Employer
    incorporation or organization)                      Identification No.)

        120 Montgomery Street,
     Suite 1350, San Francisco, CA                             94104
         (Address of principal                              (Zip code)
          executive offices)


       Registrant's telephone number, including area code: (415) 445-3201
                             -----------------------


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports)  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days. Yes X No ______




<PAGE>



                          PLM EQUIPMENT GROWTH FUND III
                             (A Limited Partnership)
                            CONDENSED BALANCE SHEETS
                 (in thousands of dollars, except unit amounts)
                                   (unaudited)

<TABLE>
<CAPTION>

                                                                                         March 31,            December 31,
                                                                                          2002                 2001
                                                                                     ------------------------------------
ASSETS

<S>                                                                                   <C>                 <C>
Equipment held for operating leases at cost                                           $     31,841        $     37,731
Less accumulated depreciation                                                              (28,722)            (33,833)
                                                                                      -----------------------------------
  Net equipment                                                                              3,119               3,898

Cash and cash equivalents                                                                    4,681              10,141
Accounts receivable, net of allowance for doubtful
    accounts of $501 in 2002 and $518 in 2001                                                2,104                 420
Prepaid expenses and other assets                                                               65                  23
                                                                                      -----------------------------------

    Total assets`                                                                     $      9,969        $     14,482
                                                                                      ===================================

LIABILITIES AND PARTNERS' CAPITAL

Liabilities:
Accounts payable and accrued expenses                                                 $        185        $        416
Due to affiliates                                                                               87                  66
Lessee deposits and reserves for repairs                                                         9                  29
                                                                                      -----------------------------------
  Total liabilities                                                                            281                 511
                                                                                      -----------------------------------

Partners' capital:
Limited partners (9,871,210 depositary units as
    of March 31, 2002 and December 31, 2001)                                                 9,688              13,971
General Partner                                                                                 --                  --
                                                                                      -----------------------------------
  Total partners' capital                                                                    9,688              13,971
                                                                                      -----------------------------------

    Total liabilities and partners' capital                                           $      9,969        $     14,482
                                                                                      ===================================

</TABLE>




















       See accompanying notes to unaudited condensed financial statements.

<PAGE>



                          PLM EQUIPMENT GROWTH FUND III
                             (A Limited Partnership)
                         CONDENSED STATEMENTS OF INCOME
         (in thousands of dollars, except weighted-average unit amounts)
                                   (unaudited)
<TABLE>
<CAPTION>
                                                                           For the Three Months
                                                                              Ended March 31,
                                                                          2002            2001
                                                                       ---------------------------
REVENUES

<S>                                                                    <C>            <C>
Lease revenue                                                          $   1,607      $    1,970
Interest and other income                                                     39              53
Net gain on disposition of equipment                                         172           3,842
                                                                       ---------------------------
  Total revenues                                                           1,818           5,865
                                                                       ---------------------------

EXPENSES

Depreciation and amortization                                                386             601
Repairs and maintenance                                                      439             560
Equipment operating expenses                                                   8               8
Insurance expenses                                                            21              71
Management fees to affiliate                                                 111             119
General and administrative expenses to affiliates                             60             164
Other general and administrative expenses                                    139             429
(Recovery of) provision for bad debts                                        (17)             30
                                                                       ---------------------------
  Total expenses                                                           1,147           1,982
                                                                       ---------------------------

Equity in net income (loss) of unconsolidated
    special-purpose entity                                                    34             (10)
                                                                       ---------------------------

    Net income                                                         $     705      $    3,873
                                                                       ===========================

PARTNERS' SHARE OF NET INCOME

Limited partners                                                       $     456      $    3,873
General Partner                                                              249              --
                                                                       ---------------------------

    Total                                                              $     705      $    3,873
                                                                       ===========================

Limited partners' net income per weighted-average
  depositary unit                                                      $    0.05      $     0.39
                                                                       ===========================

Cash distributions                                                     $   4,988      $       --
                                                                       ===========================

Cash distributions per limited partners'
  weighted-average depository unit:                                    $    0.48      $       --
                                                                       ===========================

</TABLE>









       See accompanying notes to unaudited condensed financial statements.

<PAGE>



                          PLM EQUIPMENT GROWTH FUND III
                             (A Limited Partnership)
              CONDENSED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
             For the Period from December 31, 2000 to March 31, 2002
                            (in thousands of dollars)
                                   (unaudited)
<TABLE>
<CAPTION>

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

<S>                                                   <C>                <C>             <C>
  Partners' capital as of December 31, 2000           $    9,316         $   --          $    9,316

Net income                                                 5,247             31               5,278

Cash distribution                                           (592)           (31)               (623)
                                                      -----------------------------------------------

  Partners' capital as of December 31, 2001               13,971             --              13,971

Net income                                                   456            249                 705

Cash distribution                                         (4,739)          (249)             (4,988)
                                                      -----------------------------------------------

  Partners' capital as of March 31, 2002              $    9,688         $   --          $    9,688
                                                      ===============================================
</TABLE>




































       See accompanying notes to unaudited condensed financial statements.

<PAGE>



                          PLM EQUIPMENT GROWTH FUND III
                             (A Limited Partnership)
                       CONDENSED STATEMENTS OF CASH FLOWS
                            (in thousands of dollars)
                                   (unaudited)
<TABLE>
<CAPTION>
                                                                                                  For the Three Months
                                                                                                     Ended March 31,
                                                                                                   2002           2001
                                                                                               ----------------------------
             OPERATING ACTIVITIES

<S>                                                                                            <C>             <C>
             Net income                                                                        $      705      $    3,873
             Adjustments to reconcile net income to net cash provided by (used in)
                 operating activities:
               Depreciation and amortization                                                          386             601
               Net gain on disposition of equipment                                                  (172)         (3,842)
               Equity in net (income) loss from unconsolidated special-purpose entity                 (34)             10
               Changes in operating assets and liabilities:
                 Accounts receivables, net                                                             56            (485)
                 Restricted cash                                                                       --             125
                 Prepaid expenses and other assets                                                    (42)            (21)
                 Accounts payable and accrued expenses                                               (231)           (102)
                 Due to affiliates                                                                     21              34
                 Lessee deposits and reserves for repairs                                             (20)           (185)
                                                                                               ----------------------------
                   Net cash provided by operating activities                                          669               8
                                                                                               ----------------------------

             INVESTING ACTIVITIES

             Payments for capitalized improvements                                                     (7)            (44)
             Distributions from unconsolidated special-purpose entity                                  34              66
             Proceeds from disposition of equipment                                                    77           5,422
                                                                                               ----------------------------
                   Net cash provided by investing activities                                          104           5,444
                                                                                               ----------------------------

             FINANCING ACTIVITIES

             Refundable payment made to transfer agent                                             (1,245)             --
             Cash distribution paid to limited partners                                            (4,739)             --
             Cash distribution paid to General Partner                                               (249)             --
                                                                                               ----------------------------
                   Net cash used in financing activities                                           (6,233)             --
                                                                                               ----------------------------

             Net (decrease) increase in cash and cash equivalents                                  (5,460)          5,452
             Cash and cash equivalents at beginning of period                                      10,141           1,832
                                                                                               ----------------------------
             Cash and cash equivalents at end of period                                        $    4,681      $    7,284
                                                                                               ============================
</TABLE>

















       See accompanying notes to unaudited condensed financial statements.

                          PLM EQUIPMENT GROWTH FUND III
                             (A Limited Partnership)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (unaudited)

1.   OPINION OF MANAGEMENT

In the opinion of the  management  of PLM Financial  Services,  Inc. (FSI or the
General Partner),  the accompanying  unaudited  condensed  financial  statements
contain all  adjustments  necessary,  consisting  primarily of normal  recurring
accruals,  to present fairly the unaudited  condensed  financial position of PLM
Equipment  Growth Fund III (the  Partnership)  as of March 31, 2002 and December
31, 2001,  the  unaudited  condensed  statements  of income for the three months
ended March 31, 2002 and 2001, the unaudited condensed  statements of changes in
partners'  capital for the period from December 31, 2000 to March 31, 2002,  and
the  unaudited  condensed  statements  of cash flows for the three  months ended
March 31,  2002 and 2001.  Certain  information  and note  disclosures  normally
included  in  financial   statements  prepared  in  accordance  with  accounting
principles  generally  accepted  in the  United  States  of  America  have  been
condensed or omitted from the accompanying  condensed financial statements.  For
further  information,  reference should be made to the financial  statements and
notes thereto included in the  Partnership's  Annual Report on Form 10-K for the
year ended December 31, 2001, on file at the Securities and Exchange Commission.

2.   SCHEDULE OF PARTNERSHIP PHASES

The Partnership,  in accordance with its limited partnership agreement,  entered
its  liquidation  phase  on  January  1,  2000  and  has  commenced  an  orderly
liquidation  of the  Partnership's  assets.  The  General  Partner may no longer
reinvest cash flows and surplus  funds in  equipment.  All future cash flows and
surplus funds, if any, are to be used for  distributions to partners,  except to
the extent used to maintain  reasonable  reserves.  The General  Partner filed a
certificate of dissolution  on behalf of the  Partnership  with the Secretary of
State for the State of California on December 31, 2000, and following completion
of the liquidation of the Partnership,  will file a certificate of cancellation.
During the  liquidation  phase,  the  Partnership's  assets will  continue to be
reported at the lower of carrying amount or fair value less cost to sell.

3.   CASH DISTRIBUTIONS

Cash  distributions  are recorded when paid and may include amounts in excess of
net income that are  considered to represent a return of capital.  For the three
months ended March 31, 2002,  cash  distributions  totaled  $5.0  million.  Cash
distributions to the limited partners of $4.3 million for the three months ended
March  31,  2002  were  deemed to be a return  of  capital.  There  were no cash
distributions during the three months ended March 31, 2001.

4.   TRANSACTIONS WITH GENERAL PARTNER AND AFFILIATES

The  balance  due to  affiliates  as of March 31,  2002 and  December  31,  2001
included $0.1 million due to FSI and its affiliate for management fees.

The  Partnership  did not incur any  expenses  to  affiliates  by jointly  owned
equipment during the first quarter of 2002.The Partnership's  proportional share
of the expenses  incurred by an  unconsolidated  special-purpose  entity  (USPE)
during the first quarter of 2001 was $10,000.



<PAGE>


                          PLM EQUIPMENT GROWTH FUND III
                             (A Limited Partnership)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (unaudited)

5.   EQUIPMENT

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

                                                                  March 31,             December 31,
                                                                   2002                  2001
                                                              --------------------------------------

<S>                                                            <C>                   <C>
Railcars                                                       $    27,864           $    32,305
Trailers                                                             2,473                 3,036
Marine containers                                                    1,504                 2,390
                                                               -------------------------------------
                                                                    31,841                37,731
Less accumulated depreciation                                      (28,722)              (33,833)
                                                               -------------------------------------
    Net equipment                                              $     3,119           $     3,898
                                                               =====================================
</TABLE>

As of March 31, 2002,  all equipment in the  Partnership  portfolio was on lease
except  for  107  railcars.  As of  December  31,  2001,  all  equipment  in the
Partnership  portfolio was on lease except for 100 railcars.  The net book value
of the  equipment  off lease was $0.3  million as of March 31, 2001 and December
31, 2000.

Capital  improvements to the Partnership's  equipment of $7,000 and $44,000 were
made during the three months ended March 31, 2002 and 2001, respectively.

During the three months ended March 31, 2002, the Partnership disposed of marine
containers,  trailers,  and  railcars,  with an aggregate net book value of $0.4
million for aggregate  proceeds of $0.6  million.  During the three months ended
March 31,  2001,  the  Partnership  disposed  of  aircraft,  marine  containers,
trailers,  and  railcars,  with an aggregate  net book value of $1.6 million for
aggregate proceeds of $5.4 million.











                      (this space intentionally left blank)


<PAGE>


                          PLM EQUIPMENT GROWTH FUND III
                             (A Limited Partnership)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (unaudited)

6.   OPERATING SEGMENTS

The  Partnership  operates or operated  primarily  in four  different  segments:
aircraft  leasing,  railcar  leasing,  marine  container  leasing,  and  trailer
leasing.  Each segment of equipment  leasing  engages in short-term and mid-term
operating  leases to a variety of  customers.  The  following  tables  present a
summary of the operating segments (in thousands of dollars):
<TABLE>
<CAPTION>

                                                       Marine
     For the three months ended            Railcar    Container  Trailer      All
             March 31, 2002                Leasing     Leasing   Leasing     Other(1)    Total
             --------------                -------     -------   -------     ------      -----

     REVENUES
<S>                                        <C>        <C>       <C>        <C>       <C>
       Lease revenue                       $  1,479   $      7  $    121   $     --  $  1,607
       Interest income and other                 13         --        --         26        39
       Gain on disposition of equipment          97         50        25         --       172
                                          ----------------------------------------------------
         Total revenues                       1,589         57       146         26     1,818
                                          ----------------------------------------------------

     COSTS AND EXPENSES
       Operations support                       386         --        66         16       468
       Depreciation                             345          6        35         --       386
       Management fees to affiliates            105         --         6         --       111
       General and administrative                84         --        19         96       199
     expenses
       Provision for (recovery of) bad          (26)        --         9         --       (17)
     debts
                                          ----------------------------------------------------
         Total costs and expenses               894          6       135        112     1,147
                                          ----------------------------------------------------
     Equity in net income of an USPE             --         --        --         34        34
                                          ----------------------------------------------------
     Net income (loss)                     $    695   $     51  $     11   $    (52) $    705
                                          ====================================================

     Total assets as of March 31, 2002     $  3,179   $     42  $    757   $  5,991  $  9,969
                                          ====================================================
</TABLE>
<TABLE>
<CAPTION>

                                                                Marine
     For the three months ended            Aircraft  Railcar    Container  Trailer
             March 31, 2001                Leasing   Leasing    Leasing    Leasing   All Other(2) Total
             --------------                -------   -------    -------    -------    -------     -----

     REVENUES
<S>                                        <C>       <C>        <C>        <C>        <C>       <C>
       Lease revenue                       $    185  $  1,680   $     12   $     93   $     --  $  1,970
       Interest income and other                  6        --         --         --         47        53
       Net gain on disposition of             3,699        90         32         21         --     3,842
     equipment
                                           --------------------------------------------------------------
         Total revenues                       3,890     1,770         44        114         47     5,865
                                           --------------------------------------------------------------

     COSTS AND EXPENSES
       Operations support                        25       509         --         45         60       639
       Depreciation and amortization            151       395          9         46         --       601
       Management fees to affiliates              2       111          1          5         --       119
       General and administrative expenses      147        52         --         20        374       593
       Provision of bad debts                    --        30         --         --         --        30
                                           --------------------------------------------------------------
         Total costs and expenses               325     1,097         10        116        434     1,982
                                           --------------------------------------------------------------
     Equity in net loss of an USPE               --        --         --         --        (10)      (10)
                                           --------------------------------------------------------------
     Net income (loss)                     $  3,565  $    673   $     34   $     (2)  $   (397) $  3,873
                                           ==============================================================
</TABLE>

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


(1)  Includes certain assets not identifiable to a particular  segment,  such as
     cash,  prepaid  expenses and certain  accounts  receivable.  Also  includes
     certain interest income and costs not identifiable to a particular  segment
     such as certain operations support and general and administrative expenses.
     Also  includes  the equity in the  income of an entity  that owned a marine
     vessel.

(2)  Includes certain interest income and costs not identifiable to a particular
     segment such as certain  operations  support and general and administrative
     expenses.  Also  includes  the equity in the loss of an entity that owned a
     marine vessel.


<PAGE>


                          PLM EQUIPMENT GROWTH FUND III
                             (A Limited Partnership)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (unaudited)

7. NET INCOME PER WEIGHTED-AVERAGE DEPOSITORY UNIT

Net income per  weighted-average  depository  unit was  computed by dividing net
income  attributable to the limited partners by the  weighted-average  number of
depository  units deemed  outstanding  during the period.  The  weighted-average
number of  depository  units  deemed  outstanding  during the three months ended
March 31, 2002 and 2001 was 9,871,210.

8. CONTINGENCIES

The Partnership,  together with affiliates,  has initiated litigation in various
official  forums in India and the United States  against two  defaulting  Indian
airline  lessees to repossess  Partnership  property and to recover  damages for
failure to pay rent and failure to maintain such property in accordance with the
relevant lease  contracts.  The  Partnership has repossessed all of its property
previously leased to these airlines, causing one of the airline lessees to cease
operations.  In response to the Partnership's  collection  efforts,  the airline
lessees  filed   counter-claims   against  the  Partnership  in  excess  of  the
Partnership's claims against the airlines. The General Partner believes that the
airlines'  counterclaims  are completely  without merit, and the General Partner
will vigorously defend against such counterclaims.

During 2001, an arbitration  between one Indian lessee and the Partnership  took
place and the Partnership was awarded a settlement.  The General Partner and the
lessee  are in the  process  of  negotiating  the  settlement  in a manner  that
benefits all parties  involved.  The General  Partner  decided not to accrue the
amount of the settlement  because  collection of the  settlement is remote.  The
General  Partner  will  continue  to try  to  collect  the  full  amount  of the
settlement.

During 2001, the General Partner has decided to minimize its collection  efforts
from the other Indian  lessee in order to save the  Partnership  from  incurring
additional  expenses  associated with trying to collect from a lessee that has a
limited ability to pay.

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

9. LIQUIDATION AND SPECIAL DISTRIBUTIONS

On January 1, 2000,  the  General  Partner  began the  liquidation  phase of the
Partnership and commenced an orderly  liquidation of the Partnership assets. The
General Partner is actively marketing the remaining equipment portfolio with the
intent  of  maximizing  sale  proceeds.  During  the  liquidation  phase  of the
Partnership  the  equipment  will continue to be leased under  operating  leases
until sold. The amounts  reflected for assets and liabilities of the Partnership
have not been adjusted to reflect  liquidation  values. The equipment  portfolio
continues to be carried at the lower of depreciated cost or fair value less cost
to  dispose.   Although  the  General  Partner  estimates  that  there  will  be
distributions after liquidation of assets and liabilities, the amounts cannot be
accurately  determined prior to actual liquidation of the equipment.  Upon final
liquidation, the Partnership will be dissolved.

The  Partnership is not permitted to reinvest  proceeds from the  disposition of
equipment.  These  proceeds,  in excess of operational  cash  requirements,  are
periodically paid out to limited partners in the form of special  distributions.
No special  distributions  were paid in the first quarter of 2002 and 2001.  The
sales and liquidations occur because of the determination by the General Partner
that it is the appropriate  time to maximize the return on an asset through sale
of that  asset,  and,  in some  leases,  the  ability of the lessee to  exercise
purchase options.



<PAGE>



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


(I) RESULTS OF OPERATIONS

COMPARISON  OF PLM  EQUIPMENT  GROWTH FUND III'S (THE  PARTNERSHIP'S)  OPERATING
RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001


(A) Owned Equipment Operations

Lease  revenues  less  direct  expenses  (defined  as repairs  and  maintenance,
equipment  operating and asset-specific  insurance  expenses) on owned equipment
decreased  during the three  months  ended March 31,  2002  compared to the same
period of 2001.  Gains or losses from the sale of equipment,  interest and other
income,  and certain  expenses such as depreciation and amortization and general
and  administrative  expenses relating to the operating  segments (see Note 6 to
the unaudited  condensed  financial  statements),  are not included in the owned
equipment  operation  discussion  because these expenses are indirect in nature,
not a result of  operations  but the result of owning a portfolio of  equipment.
The following  table presents lease revenues less direct expenses by segment (in
thousands of dollars):
<TABLE>
<CAPTION>
                                          For the Three Months
                                            Ended March 31,
                                        2002               2001
                                   -------------------------------------

<S>                                <C>                <C>
Railcars                           $         1,093    $         1,171
Trailers                                        55                 48
Marine containers                                7                 12
Aircraft                                        --                160
</TABLE>

Railcars:  Railcar lease revenues and direct expenses were $1.5 million and $0.4
million,  respectively,  for the quarter  ended March 31, 2002  compared to $1.7
million and $0.5 million for the quarter ended March 31, 2001.  The reduction in
lease  revenue  and  direct  expenses  in 2002  compared  to 2001 was due to the
disposition of railcars over the past year.

Trailers:  Trailer lease revenues and direct expenses were $0.1 million and $0.1
million,  respectively,  for the quarter ended March 31, 2002,  compared to $0.1
million and $45,000, respectively, during the same period of 2001.

Aircraft:  Aircraft  lease  revenues and direct  expenses  were $0.2 million and
$25,000,  respectively,  during the quarter ended March 31, 2001.  There were no
aircraft  lease revenues and expenses in the quarter ended March 31, 2002 as the
Partnership sold its wholly owned aircraft in 2001.

(B) Indirect Expenses Related to Owned Equipment Operations

Total  indirect  expenses of $0.7  million for the quarter  ended March 31, 2002
decreased from $1.3 million for the same period of 2001.  Significant  variances
are explained as follows:

     (i) A $0.4 million decrease in general and administrative  expenses was due
     to a $0.2 million  reduction in professional  services in the first quarter
     of 2002 compared to the same period of 2001 and a $0.1 million reduction in
     allocations  from the General  Partner due to the  reduction in the size of
     the equipment portfolio.

     (ii) A decrease of $0.2 million in depreciation and  amortization  expenses
     in the first  quarter of 2002  compared to the same period in 2001 reflects
     the disposition of Partnership assets during 2002 and 2001.

(C) Net Gain on Disposition of Owned Equipment

The net gain on the disposition of owned equipment for the first quarter of 2002
was $0.2 million, resulting from the disposition of marine containers,  railcars
and  trailers,  with an aggregate  net book value of $0.4 million for  aggregate
proceeds of $0.6 million. The net gain on the disposition of owned equipment for
the first quarter of 2001 was $3.8 million,  resulting  from the  disposition of
aircraft,  marine containers,  railcars and trailers, with an aggregate net book
value of $1.6 million for aggregate proceeds of $5.4 million.

(D)  Equity in Net Income  (Loss) of an  Unconsolidated  Special-Purpose  Entity
(USPE)

Equity in net income (loss) of USPEs represents the  Partnership's  share of the
net income (loss) generated from the operation of jointly-owned assets accounted
for under the equity  method of  accounting.  This  entity was a single  purpose
entity  that  had  no  debt.   Net  income   generated  from  the  operation  of
jointly-owned assets was $34,000 in the quarter ended March 31, 2002 compared to
a loss of $10,000 in the same period of 2001.

As of March 31, 2002 and 2001,  the  Partnership  had no  remaining  interest in
entities that owned equipment.  The Partnership's share of revenues and expenses
in jointly owned equipment was $34,000 and $0,  respectively  compared to $6,000
and $16,000,  respectively,  for the quarter ended March 31, 2001 The revenue in
2002 related to insurance proceeds from a marine vessel in which the Partnership
previously had an interest.

(E) Net Income

As a result of the foregoing,  the Partnership had net income of $0.7 million in
the first  quarter of 2002  compared to net income of $3.9  million in the first
quarter of 2001.  The  Partnership's  ability to operate and  liquidate  assets,
secure leases,  and re-lease those assets whose leases expire is subject to many
factors.  Therefore,  the  Partnership's  performance  in the three months ended
March 31, 2002 is not  necessarily  indicative of future  periods.  In the first
quarter  of 2002,  the  Partnership  distributed  $4.7  million  to the  limited
partners or $0.48 per depository unit.

(II) CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires the General Partner
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent  assets and liabilities at the date
of the financial  statements  and the reported  amounts of revenues and expenses
during the reporting  period.  On a regular basis,  the General  Partner reviews
these estimates including those related to asset lives and depreciation methods,
impairment  of  long-lived  assets,   allowance  for  doubtful   accounts,   and
contingencies  and  litigation.  These  estimates  are  based on our  historical
experience and on various other assumptions  believed to be reasonable under the
circumstances.  Actual results may differ from these  estimates  under different
assumptions or  conditions.  The General  Partner  believes,  however,  that the
estimates,  including those for the above-listed  items, are reasonable and that
actual  results will not vary  significantly  from the  estimated  amounts.  The
General Partner believes the following critical  accounting  policies affect the
more  signifigant  judgments  and  estimates  used  in  the  preparation  of our
financial statements:

Asset  lives  and  depreciation  methods:  The  Partnership's  primary  business
involves the purchase and  subsequent  lease of  long-lived  transportation  and
related  equipment.  The General Partner has chosen asset lives that it believes
correspond to the economic life of the related  asset.  The General  Partner has
chosen  a  deprecation  method  that it  believes  matches  the  benefit  to the
Partnership from the asset with the associated costs.  These judgments have been
made based on the General Partner's expertise in each equipment segment that the
Partnership  operates. If the asset life and depreciation method chosen does not
reduce the book value of the asset to at least the  potential  future cash flows
from the asset to the Partnership, the Partnership would be required to record a
loss on revaluation. Likewise, if the net book value of the asset was reduced by
an amount greater than the economic value has deteriorated,  the Partnership may
record a gain on sale upon final disposition of the asset.

Impairment of long-lived assets: On a regular basis, the General Partner reviews
the carrying value of its equipment and investments in USPEs to determine if the
carrying value of the assets may not be recoverable in  consideration of current
economic conditions. This requires the General Partner to make estimates related
to  future  cash  flows  from  each  asset as well as the  determination  if the
deterioration  is  temporary  or  permanent.  If these  estimates or the related
assumptions  change in the  future,  the  Partnership  may be required to record
additional impairment charges.

Allowance  for doubtful  accounts:  The  Partnership  maintains  allowances  for
doubtful  accounts for  estimated  losses  resulting  from the  inability of the
lessees to make the lease  payments.  These estimates are primarily based on the
amount of time that has lapsed  since the related  payments  were due as well as
specific  knowledge  related to the ability of the lessees to make the  required
payments.  If the  financial  condition  of the  Partnership's  lessees  were to
deteriorate,  additional  allowances could be required that would reduce income.
Conversely,  if the  financial  condition  of the lessees  were to improve or if
legal  remedies to collect past due amounts were  successful,  the allowance for
doubtful accounts may need to be reduced and income would be increased.

Contingencies  and litigation:  The Partnership is subject to legal  proceedings
involving  ordinary and routine  claims  related to its  business.  The ultimate
legal and financial  liability  with respect to such matters cannot be estimated
with  certainty and requires the use of estimates in recording  liabilities  for
potential litigation settlements.  Estimates for losses from litigation are made
after  consultation  with outside  counsel.  If  estimates  of potential  losses
increase  or the  related  facts and  circumstances  change in the  future,  the
Partnership may be required to record additional litigation expense.

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

For the three  months  ended March 31,  2002,  the  Partnership  generated  $0.7
million in  operating  cash (net cash  provided  by  operating  activities  plus
non-liquidating  distributions  from an USPE) to meet its operating  obligations
and fund  distributions  (total of $5.0 million for the three months ended March
31,  2002,) but also used  undistributed  available  cash from prior periods and
proceeds from equipment dispositions of $4.2 million.

During  the three  months  ended  March 31,  2002,  the  Partnership  sold owned
equipment and received aggregate proceeds of $0.1 million.

During the three months ended March 31, 2002, accounts receivable increased $1.7
million due to an  increase of $1.2  million  related to a  receivable  from the
Partnership's  transfer  agent  related to an over funding of the first  quarter
distribution  and to $0.5 million in receivables  related to asset  dispositions
being outstanding on March 31, 2002. Similar receivables were not outstanding at
December 31, 2001.

During the three  months  ended  March 31,  2002,  accounts  payable and accrued
expenses  decreased $0.2 million due to the payment of $0.2 million in the first
quarter of 2002 for an aircraft  repair that was accrued for as of December  31,
2001.

The General  Partner has not  planned  any  expenditure,  nor is it aware of any
contingencies  that  would  cause the  Partnership  to  require  any  additional
capital.

The Partnership is in its active liquidation phase. As a result, the size of the
Partnership's remaining equipment portfolio and, in turn, the amount of net cash
flows from  operations will continue to become  progressively  smaller as assets
are sold.  Significant  asset sales may result in special  distributions  to the
partners.

The amounts  reflected for assets and  liabilities of the  Partnership  have not
been adjusted to reflect  liquidation  values.  The equipment  portfolio that is
actively being marketed for sale by the General Partner  continues to be carried
at the lower of depreciated  cost or fair value less cost of disposal.  Although
the General Partner  estimates that there will be  distributions to the partners
after final disposal of assets and settlement of liabilities, the amounts cannot
be accurately determined prior to actual disposal of the equipment.

(IV) OUTLOOK FOR THE FUTURE

The Partnership  entered its  liquidation  phase on January 1, 2000. The General
Partner is seeking to selectively re-lease or sell assets as the existing leases
expire. Sale decisions may cause the operating performance of the Partnership to
decline over the remainder of its life. The General  Partner filed a certificate
of dissolution on behalf of the Partnership  with the Secretary of State for the
State  of  California  in  December  2000,  and  following   completion  of  the
liquidation of the  Partnership,  the General Partner will file a certificate of
cancellation.

Several  factors  may  affect the  Partnership's  operating  performance  in the
remainder  of  2002  and  beyond,  including  changes  in the  markets  for  the
Partnership's  equipment and changes in the regulatory environment in which that
equipment operates.

Liquidation of the Partnership's equipment will cause a reduction in the size of
the  equipment  portfolio and may result in a reduction of  contribution  to the
Partnership.  Other factors affecting the Partnership's contribution in the year
2002 include:

1.   The  Partnership's  fleet  of  both  standard  dry and  specialized  marine
     containers  is in excess of twelve  years of age and is generally no longer
     suitable  for use in  international  commerce  either  due to its  specific
     physical condition, or lessees preferences for newer equipment.  Demand for
     the  Partnership's  marine containers will continue to be weak due to their
     age.

2.   Railcar  loadings  in North  America  have  weakened  over  the past  year.
     Utilization and lease rates have been decreasing over this period.  Railcar
     contribution  may  decrease in 2002 as existing  leases  expire and renewal
     leases are negotiated.

3.   Industry-wide  utilization of intermodal trailers decreased 8% in the first
     quarter of 2002  compared  to the first  quarter  of 2001.  This has led to
     lower  contribution  from the  Partnership's  trailers as  existing  leases
     expire and renewals are negotiated.

The  ability  of the  Partnership  to  realize  acceptable  lease  rates  on its
equipment in the different equipment markets is contingent on many factors, such
as specific market conditions and economic activity, technological obsolescence,
and government or other regulations.  The  unpredictability of these factors, or
of their  occurrence,  makes it  difficult  for the  General  Partner to clearly
define trends or influences that may impact the performance of the Partnership's
equipment.  The General Partner continually  monitors both the equipment markets
and the performance of the Partnership's equipment in these markets. The General
Partner  may  decide to reduce the  Partnership's  exposure  to those  equipment
markets in which it  determines  that it cannot  operate  equipment  and achieve
acceptable rates of return.

The  Partnership  intends to use cash flow from  operations  and  proceeds  from
disposition of equipment to satisfy its operating requirements, maintain working
capital reserves, and pay cash distributions to the unitholders.

(V) FORWARD-LOOKING INFORMATION

Except for the historical  information contained herein, this Form 10-Q contains
forward-looking  statements  that  involve  risks  and  uncertainties,  such  as
statements of the Partnership's plans, objectives, expectations, and intentions.
The  cautionary  statements  made in this  Form  10-Q  should  be read as  being
applicable  to all related  forward-looking  statements  wherever they appear in
this Form 10-Q. The  Partnership's  actual results could differ  materially from
those discussed here.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The  Partnership's  primary market risk exposure is currency  devaluation  risk.
During the first quarter of 2002, 67% of the Partnership's  total lease revenues
equipment  came  from  non-United   States  domiciled   lessees.   Most  of  the
Partnership's  leases  require  payment  in  United  States  currency.  If these
lessees'  currency   devalues  against  the  U.S.  dollar,   the  lessees  could
potentially  encounter  difficulty in making the U.S. dollar  denominated  lease
payments.


<PAGE>



                          PART II -- OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)  Exhibits

              None.

         (b)  Reports on Form 8-K

              None.





















                      (This space intentionally left blank)



<PAGE>




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



                                    PLM EQUIPMENT GROWTH FUND III


                                    By: PLM Financial Services, Inc.
                                        General Partner




Date:  May 7, 2002                  By: /s/ Stephen M. Bess
                                        ----------------------------------------
                                        Stephen M. Bess
                                        President and Current Chief Accounting
                                        Officer