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

                                    FORM 10-K

     [X]  Annual  Report  Pursuant  to  Section  13 or 15(d)  of the  Securities
          Exchange Act of 1934 For the fiscal year ended December 31, 2001.

     [ ]  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 1-10553
                             -----------------------

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

                     California                             94-3041013
           (State or other jurisdiction of               (I.R.S. Employer
           incorporation or organization)               Identification No.)

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

        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 ______

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will
not be contained,  to the best of registrant's knowledge, in definitive proxy or
information  statements  incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [X]

Aggregate market value of voting stock:  N/A

Indicate the number of units outstanding of each of the issuer's classes of
depositary units, as of the latest practicable date:


            Class                                  Outstanding at March 25, 2002
            -----                                  -----------------------------
   Limited partnership depositary units:                     7,381,165
   General Partnership units:                                      1

An index of  exhibits  filed with this Form 10-K is  located  at page 18.
Total number of pages in this report: 45






                                     PART I

ITEM 1. BUSINESS

(A) Background

On April 2, 1987, PLM Financial Services,  Inc. (FSI or the General Partner),  a
wholly-owned  subsidiary of PLM International,  Inc. (PLM International or PLM),
filed a  Registration  Statement  on Form S-1 with the  Securities  and Exchange
Commission  with respect to a proposed  offering of 7,500,000  depositary  units
(the units) in PLM Equipment  Growth Fund II, a California  limited  partnership
(the Partnership,  the Registrant, or EGF II). The Partnership's offering became
effective on June 5, 1987.  FSI, as General  Partner,  owns a 5% interest in the
Partnership.  The  Partnership  engages  in  the  business  of  investing  in  a
diversified  equipment  portfolio  consisting  primarily  of  used,  long-lived,
low-obsolescence  capital  equipment that is easily  transportable  by and among
prospective users.

The Partnership's primary objectives are:

     (1) to maintain a diversified  portfolio of  long-lived,  low-obsolescence,
high  residual-value  equipment which was purchased with the net proceeds of the
initial  partnership  offering,  supplemented  by debt  financing,  and  surplus
operating cash during the investment phase of the Partnership.  All transactions
of over $1.0 million  must be approved by the PLM  International  Credit  Review
Committee  (the  Committee),  which is made up of members  of PLM  International
Senior  Management.  In determining a lessee's  creditworthiness,  the Committee
will  consider,  among other  factors,  its financial  statements,  internal and
external credit ratings, and letters of credit;

     (2) to generate sufficient net operating cash flow from lease operations to
meet liquidity  requirements  and to generate cash  distributions to the limited
partners  until  such  time  as  the  General  Partner   commences  the  orderly
liquidation of the  Partnership  assets or, unless the Partnership is terminated
earlier, upon sale of all Partnership property or by certain other events;

     (3) to selectively  sell equipment when the General Partner  believes that,
due to market conditions,  market prices for equipment exceed inherent equipment
values or that expected future benefits from continued ownership of a particular
asset will have an adverse effect on the  Partnership.  As the Partnership is in
the  liquidation  phase,  proceeds  from these sales,  together  with excess net
operating cash flow from operations  (net cash provided by operating  activities
plus distributions from unconsolidated  special-purpose  entities (USPEs)), less
reasonable reserves are used to pay distributions to the partners;

     (4) to  preserve  and protect the value of the  portfolio  through  quality
management,  maintaining  the  portfolio's  diversity and constantly  monitoring
equipment markets;

The  offering  of the Units of the  Partnership  closed on March 18,  1988.  The
General  Partner  contributed  $100 for its 5% general  partner  interest in the
Partnership. On November 20, 1990, the units of the Partnership began trading on
the  American  Stock  Exchange  (AMEX).  Thereupon  each  unitholder  received a
depositary receipt  representing  ownership of the number of units owned by such
unitholder.  The General Partner delisted the Partnership's  units from the AMEX
on April 8, 1996. The last day for trading on the AMEX was March 22, 1996.

As of December 31, 2001, there were 7,381,165 depositary units outstanding.

On  January  1, 1999,  the  Partnership  entered  its  liquidation  phase and in
accordance  with the limited  partnership  agreement,  the  General  Partner has
commenced an orderly  liquidation of the Partnership's  assets.  The liquidation
phase will end on  December  31,  2006,  unless the  Partnership  is  terminated
earlier upon sale of all of the equipment or by certain other events.






Table  1,  below,  lists  the  equipment  and  the  cost  of  equipment  in  the
Partnership's portfolio, as of December 31, 2001 (in thousands of dollars):



                                     TABLE 1

 Units                    Type                                       Manufacturer                           Cost
- ----------------------------------------------------------------------------------------------------------------------

Owned equipment held for operating leases:

                                                                                                
    185      Box railcars                                         Various                                $     3,525
    118      Mill gondolas railcars                               Various                                      3,340
    112      Pressurized tank railcars                            Various                                      3,131
     26      Covered hopper railcars                              ACF Industries                                 408
     15      Nonpressurized tank railcars                         Various                                        301
    612      Dry piggyback trailers                               Various                                      9,404
     45      Refrigerated marine containers                       Various                                      1,010
                                                                                                         --------------

                Total owned equipment held for operating lease                                           $    21,119 (1)
                                                                                                         ==============

(1) Includes equipment  purchased with the proceeds from capital  contributions,
undistributed cash flow from operations,  and Partnership  borrowings.  Includes
costs   capitalized   subsequent  to  the  date  of  acquisition  and  equipment
acquisition  fees paid to PLM  Transportation  Equipment  Corporation  (TEC),  a
wholly owned  subsidiary of FSI. All equipment was used equipment at the time of
purchase.



Railcars  are  leased  under  operating  leases  with terms of six months to six
years.  The   Partnership's   marine  containers  are  leased  to  operators  of
utilization-type  leasing  pools that include  equipment  owned by  unaffiliated
parties.  In such instances,  revenues received by the Partnership  consist of a
specified  percentage of revenues  generated by leasing the pooled  equipment to
sublessees,  after  deducting  certain direct  operating  expenses of the pooled
equipment.

The lessees of the equipment include Cronos, Elgin, Joliet & Eastern Railway and
Kankakee, Beaverville & Southern Railroad (KBS).

(B) Management of Partnership Equipment

The  Partnership  has entered into an equipment  management  agreement  with PLM
Investment  Management,  Inc.  (IMI), a wholly owned  subsidiary of FSI, for the
management  of  the  Partnership's   equipment.   The  Partnership's  management
agreement with IMI is to co-terminate  with the dissolution of the  Partnership,
unless the limited  partners vote to terminate the agreement  prior to that date
or at the  discretion  of the  General  Partner.  IMI has agreed to perform  all
services  necessary to manage the equipment on behalf of the  Partnership and to
perform or contract for the  performance of all  obligations of the lessor under
the Partnership's  leases. In consideration for its services and pursuant to the
partnership agreement,  IMI is entitled to a monthly management fee (see Notes 1
and 2 to the audited financial statements).

(C) Competition

(1) Operating Leases versus Full Payout Leases

The equipment owned by the Partnership is leased out on an operating lease basis
wherein the rents received  during the initial  noncancelable  term of the lease
are insufficient to recover the  Partnership's  purchase price of the equipment.
The short- to mid-term nature of operating  leases  generally  commands a higher
rental rate than  longer-term,  full payout leases and offers  lessees  relative
flexibility in their equipment  commitment.  In addition,  the rental obligation
under an operating lease need not be capitalized on the lessee's balance sheet.

The Partnership  encounters  considerable  competition from lessors that utilize
full payout leases on new  equipment,  i.e.  leases that have terms equal to the
expected  economic  life  of  the  equipment.  While  some  lessees  prefer  the
flexibility offered by a shorter-term  operating lease, other lessees prefer the
rate  advantages  possible with a full payout lease.  Competitors may write full
payout  leases  at  considerably  lower  rates  and for  longer  terms  than the
Partnership offers, or larger competitors with a lower cost of capital may offer
operating leases at lower rates,  which may put the Partnership at a competitive
disadvantage.

(2) Manufacturers and Equipment Lessors

The Partnership competes with equipment manufacturers who offer operating leases
and full payout leases.  Manufacturers may provide  ancillary  services that the
Partnership cannot offer, such as specialized  maintenance  services  (including
possible substitution of equipment),  training,  warranty services, and trade-in
privileges.

The  Partnership  also  competes  with many  equipment  lessors,  including  ACF
Industries,  Inc.  (Shippers Car Line Division),  GATX, General Electric Railcar
Services Corporation, and other investment programs that lease the same types of
equipment.

(D) Demand

The Partnership currently operates in three primary operating segments:  railcar
leasing,  trailer leasing and marine container leasing.  Each  equipment-leasing
segment  engages in  short-term  to  mid-term  operating  leases to a variety of
customers.  The  Partnership  equipment  is  used  to  transport  materials  and
commodities rather than people.

The following  section describes the international and national markets in which
the Partnership's capital equipment operates:

(1) Railcars

(a) Box Railcars

Boxcars are primarily used to transport paper and paper products. Carloadings of
forest  products in North America  decreased  over 2% in 2001,  compared to 2000
volumes.  During  2001 the lessee  returned  the  Partnership's  boxcars,  which
remained off lease at year-end.  These cars have a smaller  load  capacity  than
those currently in demand for paper service. Depending upon the market for these
cars over the coming months, they will either be offered for sale or re-lease.

(b) Mill Gondolas Railcars

Mill gondola  railcars are typically used to transport scrap steel for recycling
from steel processors to small steel mills called minimills. Demand for steel is
cyclical  and moves in tandem  with the  growth or  contraction  of the  overall
economy.  Within the United  States,  carloadings  for the commodity  group that
includes scrap steel decreased over 12% in 2001, compared to 2000 volumes.

(c) Pressurized Tank Railcars

Pressurized  tank cars are used to transport  liquefied  petroleum  gas (natural
gas) and  anhydrous  ammonia  (fertilizer).  The US markets  for natural gas are
industrial  applications,  residential use,  electrical  generation,  commercial
applications,  and  transportation.  Natural gas consumption is expected to grow
over the next few years as most new electricity  generation capacity planned for
is expected to be natural gas fired. Within the fertilizer industry, demand is a
function of several  factors,  including  the level of grain  prices,  status of
government  farm subsidy  programs,  amount of farming  acreage and mix of crops
planted,  weather patterns,  farming practices,  and the value of the US dollar.
Population growth and dietary trends also play an indirect role.

On an  industry-wide  basis,  North American  carloadings of the commodity group
that  includes  petroleum and  chemicals  decreased  over 5% in 2001 compared to
2000. Even with this decrease in industry-wide  demand,  the utilization of this
type of railcar within the Partnership  continued to be in the 98% range through
2001.






(d) Covered Hopper (Grain) Railcars

Demand for covered hopper railcars,  which are specifically  designed to service
the grain industry,  continued to experience  weakness during 2001;  carloadings
were down 2% when compared to 2000 volumes. The US agribusiness  industry serves
a domestic  market  that is  relatively  mature,  the future  growth of which is
expected to be consistent but modest.  Most domestic grain rail traffic moves to
food  processors,  poultry  breeders,  and feedlots.  The more  volatile  export
business, which accounts for approximately 30% of total grain shipments,  serves
emerging and developing  nations.  In these  countries,  demand for protein-rich
foods  is  growing  more  rapidly  than  in the  United  States,  due to  higher
population  growth,  a rapid pace of  industrialization,  and rising  disposable
income.  Other factors contributing to the softness in demand for covered hopper
cars are the large  number of new cars  built  during the last few years and the
more efficient utilization of covered hoppers by the railroads.

(e) General Purpose (Nonpressurized) Tank Railcars

These railcars are used to transport bulk liquid  commodities  and chemicals not
requiring pressurization, such as certain petroleum products, liquefied asphalt,
lubricating  oils,  molten sulfur,  vegetable oils, and corn syrup.  The overall
health of the market for these types of  commodities is closely tied to both the
US and  global  economies,  as  reflected  in  movements  in the Gross  Domestic
Product, personal consumption expenditures,  retail sales, and currency exchange
rates.  The  manufacturing,  automobile,  and  housing  sectors  are the largest
consumers of chemicals.  Within North America, 2001 carloadings of the commodity
group that  includes  chemicals  and  petroleum  products fell over 5% from 2000
levels. Utilization of the Partnership's nonpressurized tank cars decreased from
90% at the beginning of 2001 to 85% at year-end.

(2) Intermodal (Piggyback) Trailers

Intermodal  trailers  are used to  transport  a variety  of dry goods by rail on
flatcars,  usually for  distances  of over 400 miles.  Over the past five years,
intermodal   trailers  have  continued  to  be  rapidly  displaced  by  domestic
containers  as  the  preferred   method  of  transport  for  such  goods.   This
displacement  occurs because  railroads  offer  approximately  20% lower freight
rates on domestic  containers compared to trailer rates. During 2001, demand for
intermodal  trailers was much more volatile than historic  norms.  Unusually low
demand  occurred  over the  second  half of the year  due to a  rapidly  slowing
economy and low rail freight rates for 53-foot domestic  containers.  Due to the
decline in demand,  which  occurred over the latter half of 2001,  shipments for
the year,  within the intermodal  trailer market,  declined  approximately  10%,
compared  to the prior year.  Average  utilization  of the entire US  intermodal
fleet rose from 73% in 1998 to 77% in 1999, and then declined to 75% in 2000 and
further declined to a record low of 63% in 2001.

The General  Partner  continued  its  aggressive  marketing  program in a bid to
attract new customers for the  Partnership's  intermodal  trailers  during 2001.
Even with these efforts,  average  utilization of the  Partnership's  intermodal
trailers for the year 2001 dropped 8% to approximately  73%, still 10% above the
national average.

The trend towards using domestic  containers  instead of intermodal  trailers is
expected to accelerate in the future. Overall,  intermodal trailer shipments are
forecast  to  decline  by 10%  to 15% in  2002,  compared  to  2001,  due to the
anticipated  continued weakness of the overall economy.  As such, the nationwide
supply of intermodal trailers is expected to have approximately  25,000 units in
surplus for 2002.  Maintenance costs have increased  approximately 10% from 2000
due to improper repair methods performed by the railroads' vendors and billed to
owners.  For the  Partnership's  intermodal  fleet,  the  General  Partner  will
continue to seek to expand its customer base while  minimizing  trailer downtime
at  repair  shops  and  terminals.  Significant  efforts  will  continue  to  be
undertaken to reduce maintenance costs and cartage costs.

(3) Marine Containers

The  Partnership's  fleet of both standard dry and specialized  containers is in
excess  of 12 years of age,  and is  generally  no  longer  suitable  for use in
international  commerce,  either due to its specific physical condition,  or the
lessees' preferences for newer equipment.  As individual containers are returned
from their  specific  lessees,  they are being  marketed  for sale on an "as is,
where is" basis.  The market for such sales,  although highly dependent upon the
specific location and type of container,  has softened somewhat in the last year
primarily due to the worldwide  recession.  In addition to this overall softness
in residual values, the Partnership has continued to experience reduced residual
values on the sale of refrigerated  containers,  due primarily to  technological
obsolescence associated with this equipment's refrigeration machinery.

(E) Government Regulations

The use,  maintenance,  and  ownership  of equipment  are  regulated by federal,
state,  local, or foreign  government  authorities.  Such regulations may impose
restrictions and financial burdens on the Partnership's  ownership and operation
of  equipment.  Changes  in  government  regulations,   industry  standards,  or
deregulation  may also  affect  the  ownership,  operation,  and  resale  of the
equipment.  Substantial  portions of the Partnership's  equipment  portfolio are
either registered or operated internationally.  Such equipment may be subject to
adverse  political,   government,  or  legal  actions,  including  the  risk  of
expropriation  or loss arising from  hostilities.  Certain of the  Partnership's
equipment is subject to extensive  safety and operating  regulations,  which may
require its removal from service or extensive modifications of such equipment to
meet  these  regulations,   at  considerable  cost  to  the  Partnership.   Such
regulations include but are not limited to:

(1) the Montreal  Protocol on Substances that Deplete the Ozone Layer and the US
Clean Air Act  Amendments  of 1990,  which  call for the  control  and  eventual
replacement  of  substances   that  have  been  found  to  cause  or  contribute
significantly to harmful effects to the  stratospheric  ozone layer and that are
used extensively as refrigerants in refrigerated marine cargo containers.

(2)  The US  Department  of  Transportation's  Hazardous  Materials  Regulations
regulates the classification and packaging  requirements of hazardous  materials
that apply particularly to the Partnership's tank railcars. The Federal Railroad
Administration  has mandated that  effective July 1, 2000 all tank railcars must
be  re-qualified  every ten years  from the last  test  date  stenciled  on each
railcar to insure tank shell  integrity.  Tank shell  thickness,  weld seams and
weld  attachments  must be inspected and repaired if necessary to re-qualify the
tank  railcar for  service.  The average  cost of this  inspection  is$3,600 for
jacketed tank railcars and $1,800 for non-jacketed tank railcars.  This does not
include any necessary  repairs.  This  inspection is to be performed at the next
scheduled tank test and every ten years  thereafter.  The Partnership  currently
owns 128 of this  type of  railcars.  As of  December  31,  2001,  12 have  been
inspected and no significant defects have been discovered.

As of December  31,  2001,  the  Partnership  was in  compliance  with the above
government  regulations.   Typically,   costs  related  to  extensive  equipment
modifications to meet government regulations are passed on to the lessee of that
equipment.

ITEM 2. PROPERTIES

The Partnership  neither owns nor leases any properties other than the equipment
it has purchased.  As of December 31, 2001, the Partnership owned a portfolio of
transportation  and  related  equipment  as  described  in Item I,  Table 1. The
Partnership  acquired equipment with the proceeds of the Partnership offering of
$150.0 million, proceeds from debt financing of $35.0 million and by reinvesting
a portion of its operating cash flow in additional equipment.

The Partnership  maintains its principal office at 120 Montgomery Street,  Suite
1350, San Francisco, California 94104. All office facilities are provided by FSI
without reimbursement by the Partnership.

ITEM 3. LEGAL PROCEEDINGS

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



During 2001, the General Partner decided to minimize its collection efforts from
the India  lessee in order to save the  Partnership  from  incurring  additional
expenses  associated  with trying to collect  from a lessee that has no apparent
ability to pay.

ITEM   4.   SUBMISSION   OF   MATTERS   TO   A   VOTE   OF   SECURITY    HOLDERS

No matters were submitted to a vote of the Partnership's limited partners during
the fourth quarter of its fiscal year ended December 31, 2001.


                                     PART II

ITEM 5. MARKET FOR THE PARTNERSHIP'S EQUITY AND RELATED DEPOSITARY UNIT MATTERS

Pursuant  to the terms of the  partnership  agreement,  the  General  Partner is
entitled  to a 5%  interest  in the  profits,  losses and  distributions  of the
Partnership.  The General  Partner is the sole holder of such interest.  Special
allocations  of income  are made to the  General  Partner  equal to the  deficit
balance,  if any, in the capital  account of the  General  Partner.  The General
Partner's annual allocation of net income will generally be equal to the General
Partner's  cash  distributions  paid  during the  current  year.  The  remaining
interests in the profits, losses and distributions of the Partnership are owned,
as of December 31, 2001, by the 6,062 unit holders of units in the Partnership.

There are several  secondary markets that will facilitate sales and purchases of
depositary  units.  Secondary markets are characterized as having few buyers for
depository units and,  therefore,  are generally viewed as inefficient  vehicles
for the sale of depositary units.  Presently,  there is no public market for the
units and none is likely to develop.

The Partnership is listed on the OTC Bulletin Board under the symbol GFYPZ.

To prevent the units from being considered  publicly traded and thereby to avoid
taxation of the Partnership as an association treated as a corporation under the
Internal  Revenue Code, the limited  partnership  units will not be transferable
without  the  consent  of the  General  Partner,  which may be  withheld  in its
absolute discretion. The General Partner intends to monitor transfers of limited
partnership  units in an effort to ensure that they do not exceed the percentage
or number permitted by certain safe harbors  promulgated by the Internal Revenue
Service. A transfer may be prohibited if the intended transferee is not a United
States  citizen or if the  transfer  would  cause any  portion of the units of a
"Qualified  Plan" as defined by the Employee  Retirement  Income Security Act of
1974 and Individual Retirement Accounts to exceed the allowable limit.














                      (the space intentionally left blank)





ITEM 6. SELECTED FINANCIAL DATA

Table 2, below, lists selected financial data for the Partnership:

                                     TABLE 2

                        For the Years Ended December 31,
   (In thousands of dollars, except weighted-average depositary unit amounts)



                                                2001          2000         1999           1998           1997
                                             --------------------------------------------------------------------

Operating results:
                                                                                      
  Total revenues                             $   3,823     $   7,878    $   6,367      $  13,567     $   12,748
  Net gain on disposition of equipment             929         2,448          328          5,990          1,922
  Equity in net income (loss) of
    unconsolidated special-purpose
    entities                                        --         1,304         (448)        (1,484)          (519)
  Net income                                        42         4,207          934          6,031          2,695

At year-end:
  Total assets                               $   5,533     $   7,535    $   8,858      $  12,474     $   18,631
  Total liabilities                                302           983        1,202          1,207          4,906
  Notes payable                                     --            --           --             --          2,500

Cash distribution                            $   1,363     $   4,534    $   4,545      $   4,604     $    6,216
Special distribution                         $      --     $     777    $      --      $   3,885     $       --

Total cash distribution                      $   1,363     $   5,311    $   4,545      $   8,489     $    6,216

Cash distribution representing a
    return of capital to the limited
    partners                                 $   1,295     $   1,104    $   3,611      $   2,458     $    3,709

Per weighted-average depositary unit:

Net income (loss)                            $   (0.00)(1) $    0.53 (1)$    0.10 (1)  $    0.76 (1) $     0.30 (1)

Cash distribution                            $    0.18     $    0.58    $    0.58      $    0.59     $     0.80
Special distribution                         $      --     $    0.10    $      --      $    0.50     $       --

Total cash distribution                      $    0.18     $    0.68    $    0.58      $    1.09     $     0.80

Cash distribution representing a
    return of capital to the limited
    partners                                 $    0.18     $    0.15    $    0.49      $    0.33     $     0.50

(1) After a  reduction  of income of $0.1  million  ($0.01 per  weighted-average
depositary  unit) in 2001 and  2000,  representing  special  allocations  to the
General  Partner.  After a  reduction  of  income  of $0.2  million  ($0.02  per
weighted-average  depositary unit) in 1999,  representing special allocations to
the General  Partner.  After reductions in net income of $0.1 million ($0.02 per
weighted-average   depositary  unit)  in  1998,  and  $0.4  million  ($0.05  per
weighted-average  depositary unit) in 1997 representing  special  allocations to
the General Partner.








ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

(A) Introduction

Management's  discussion  and  analysis of  financial  condition  and results of
operations  relates to the financial  statements of PLM Equipment Growth Fund II
(the Partnership).  The following  discussion and analysis of operations focuses
on the  performance of the  Partnership's  equipment in the various  segments in
which  it  operates  and  its  effect  on the  Partnership's  overall  financial
condition.

(B) Results of Operations -- Factors Affecting Performance

(1) Re-leasing Activity and Repricing Exposure to Current Economic Conditions

The exposure of the Partnership's  equipment  portfolio to repricing risk occurs
whenever the leases for the equipment expire or are otherwise terminated and the
equipment must be remarketed.  Major factors influencing the current market rate
for the  Partnership's  equipment  include  supply  and  demand  for  similar or
comparable  types of transport  capacity,  desirability  of the equipment in the
leasing market,  market conditions for the particular  industry segment in which
the  equipment  is  to be  leased,  overall  economic  conditions,  and  various
regulations  concerning the use of the equipment.  Equipment that is idle or out
of  service  between  the  expiration  of one  lease  and  the  assumption  of a
subsequent  lease can result in a reduction of contribution to the  Partnership.
The Partnership  experienced re-leasing or repricing activity in 2001 across its
railcar, trailer, and marine container portfolios.

     (a) Railcars:  The  relatively  short  duration of most leases  exposes the
railcars to  considerable  re-leasing  activity.  As of December 31,  2001,  the
Partnership had 223 railcars off-lease. Additional railcar leases will expire in
2002.  The  Partnership's  railcar lease  revenue  declined  approximately  $2.2
million  from 2000 to 2001 due to the sale and  disposition  of railcars  during
2000 and 2001.

     (b) Trailers:  The Partnership's trailer portfolio operates with short-line
railroad  systems.  The  relatively  short  duration  of most  leases  in  these
operations  exposes  the  trailers  to  considerable  re-leasing  activity.  The
Partnership's  lease revenue decreased  approximately  $0.3 million from 2000 to
2001 primarily due to the sale and disposition of trailers during 2000 and 2001.

     (c)  Marine  containers:   The  Partnership's  remaining  marine  container
portfolio operates in  utilization-based  leasing pools and, as such, is exposed
to considerable repricing activity. As of December 31, 2001, the Partnership had
7  marine   containers   off-lease   that  are  being  marketed  for  sale.  The
Partnership's marine container contributions declined approximately $0.1 million
from 2000 to 2001 primarily due to the disposition of marine  containers in 2000
and 2001.

(2) Equipment Liquidations

Liquidation of Partnership  equipment  represents a reduction in the size of the
equipment  portfolio  and may  result  in a  reduction  of  contribution  to the
Partnership.  During the year ended December 31, 2001, the  Partnership  sold or
disposed of marine  containers,  trailers,  and railcars,  with an aggregate net
book value of $0.1 million,  for proceeds of $0.7 million.  Included in the gain
on sale calculation were unused repair reserves of $0.3 million.

(3) Equipment Valuation

In accordance  with Financial  Accounting  Standards  Board (FASB)  Statement of
Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of
Long-Lived  Assets and Long-Lived  Assets to be Disposed of," (SFAS No. 121) the
General  Partner  reviews  the  carrying  value of the  Partnership's  equipment
portfolio  at least  quarterly  and  whenever  circumstances  indicate  that the
carrying value of an asset may not be recoverable  due to expected future market
conditions.  If the projected  undiscounted cash flows and the fair market value
of the equipment are less than the carrying  value of the  equipment,  a loss on
revaluation  is recorded.  No reductions to the equipment  carrying  values were
required for the years ended December 31, 2001, 2000, or 1999.

In October 2001,  FASB issued SFAS No. 144,  "Accounting  for the  Impairment or
Disposal of  Long-Lived  Assets",  which  replaces  SFAS No.  121.  SFAS No. 144
provides  updated  guidance  concerning the  recognition  and  measurement of an
impairment loss for certain types of long-lived  assets,  expands the scope of a
discontinued  operation to include a component of an entity and  eliminates  the
current  exemption to consolidation  when control over a subsidiary is likely to
be  temporary.  SFAS No. 144 is  effective  for  fiscal  years  beginning  after
December 15, 2001.

The  Partnership  will apply the new rules on accounting  for the  impairment or
disposal of long-lived  assets  beginning in the first quarter of 2002, and they
are not anticipated to have an impact on the Partnership's earnings or financial
position.

(C) Financial Condition -- Capital Resources and Liquidity

The General Partner purchased the Partnership's initial equipment portfolio with
capital raised from its initial equity offering and permanent debt financing. No
further capital contributions from the original partners are permitted under the
terms of the  limited  partnership  agreement.  As of  December  31,  2001,  the
Partnership had no outstanding indebtedness. The Partnership relies on operating
cash flow to meet its operating  obligations and make cash  distributions to the
limited partners.

For the year ended December 31, 2001, the Partnership  generated $0.1 million in
cash from its operating activities,  and also used undistributed  available cash
from prior periods and asset sale proceeds to make distributions  (total in 2001
of $1.4 million) to the partners.

During the year ended  December 31, 2001,  the  Partnership  sold or disposed of
marine containers,  trailers,  nd railcars,  with an aggregate net book value of
$0.1  million,  for  proceeds  of $0.7  million.  Included  in the  gain on sale
calculation are unused repair reserves of $0.3 million.

Accounts  receivable  decreased  $0.1 million during the year ended December 31,
2001 due to the decrease in lease revenue caused by the reduction in the size of
the equipment portfolio.

Accounts payable  decreased $0.1 million during the year ended December 31, 2001
due to the decrease in payments to vendors  resulting  from by the  reduction in
the size of the equipment portfolio.

The  Partnership's  reserve for repairs and lessee  deposits  decreased  by $0.4
million  during  the year ended  December  31,  2001.  A $0.3  million  decrease
resulted from  containers  being sold and the unused portion of the reserves for
repairs  for those  marine  containers  being  included in the gain on sale from
these marine containers. A $0.2 million decrease resulted from the determination
that  future  repairs  to marine  container  portfolio  would not be made  which
resulted in the Partnership taking the remaining reserve into income.

The General  Partner has not  planned any  expenditures,  nor is it aware of any
contingencies  that would  cause it to require  any  additional  capital to that
mentioned above.

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
Partnership  after final disposal of assets and settlement of  liabilities,  the
amounts  cannot  be  accurately  determined  prior  to  actual  disposal  of the
equipment.

(D) 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 including  intangibles,  allowance for doubtful
accounts,   reserves   related  to  legally  mandated   equipment   repairs  and
contingencies and litigation. These estimates are based on the General Partner's
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  significant  judgments and estimates  used in the  preparation  of the
Partnership's 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,  investments  in  unconsolidated  special
purpose entities and intangible assets to determine if the carrying value of the
asset 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.

Reserves for repairs:  The Partnership  accrues for legally  required repairs to
equipment  such as dry  docking  for  marine  vessels  and engine  overhauls  to
aircraft engines over the period prior to the required repairs.  The amount that
is reserved for is based on the General  Partner's  expertise in each  equipment
segment, the past history of such costs for that specific piece of equipment and
discussions  with  independent,  third party  equipment  brokers.  If the amount
reserved for is not adequate to cover the cost of such repairs or if the repairs
must be performed  earlier than the General Partner  estimated,  the Partnership
would incur additional repair and maintenance or equipment operating expenses.

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.

(E) Results of Operations -- Year-to-Year Detailed Comparison

(1)  Comparison  of the  Partnership's  Operating  Results  for the Years  Ended
December 31, 2001 and 2000.

(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 year ended December 31, 2001 compared to the same period of
2000. Gains or losses from the sale of equipment,  interest and other income and
certain  expenses such as depreciation and general and  administrative  expenses
relating  to  the  operating  segments  (see  Note 5 to  the  audited  financial
statements),  are not  included  in the  owned  equipment  operation  discussion
because  they are  indirect  in nature and not a result of  operations,  but the
result of owning a portfolio of equipment.  The following  table  presents lease
revenues less direct expenses by equipment type (in thousands of dollars):


                                  For the Years
                               Ended December 31,
                                                    2001              2000
                                                 ----------------------------

                                                            
        Trailers                                 $   785          $  1,217
        Railcars                                     401             1,983
        Marine containers                            (25)               75


Trailers:  Trailer lease revenues and direct expenses were $1.6 million and $0.8
million,  respectively,  for the year ended December 31, 2001,  compared to $1.9
million and $0.7  million,  respectively,  during the same  period of 2000.  The
decrease in trailer contribution was due to the sale of 32% of the Partnership's
trailers during 2000.

Railcars:  Railcar lease revenues and direct expenses were $1.1 million and $0.7
million,  respectively,  for the year ended December 31, 2001,  compared to $3.3
million and $1.3  million,  respectively,  during the same  period of 2000.  The
decrease in railcar contribution during the year ended December 31, 2001 was due
to the disposition of railcars during 2000 and 2001.

Marine  containers:  Marine  container  lease  revenues were  ($24,000) and $0.1
million  during the years ended  December 31, 2001 and 2000,  respectively.  The
decrease in marine  container  contribution  in the year ended December 31, 2001
was due to the  disposition of marine  containers in 2000 and 2001. The negative
lease  revenues  during the year ended  December  31,  2001 was caused by actual
lease  revenues  in 2000  being  less  than had been  previously  reported.  The
Partnership  receives  its  actual  amount of marine  container  lease  revenues
managed in  equipment  pools  approximately  90 days  following  the end of each
quarter.  Estimates are made for each quarter's lease revenues that are trued up
to the actual results in the following quarter.

(b) Indirect Expenses Related to Owned Equipment Operations

Total  indirect  expenses of $2.2  million for the year ended  December 31, 2001
decreased from $2.9 million for the same period in 2000.  Significant  variances
are explained as follows:

     (i) A $0.5  million  decrease  in  depreciation  expense  from 2000  levels
reflects the effect of equipment dispositions during 2001 and 2000.

     (ii) A $0.2 million decrease in general and administrative expenses was due
to the reduction in the size of the Partnership's equipment portfolio.

     (iii) A $0.1  million  decrease in  management  fees was due to lower lease
revenues  earned  during the year ended  December 31, 2001  compared to the same
period of 2000.

     (iv) A $0.1 million  increase in the  provision  for bad debts was based on
the General Partner's  evaluation of the collectability of receivables  compared
to the same period of 2000.

(c) Net Gain on Disposition of Owned Equipment

Net gain on  disposition  of  equipment  for the year ended  December  31,  2001
totaled $0.9 million, and resulted from the sale of marine containers, trailers,
and  railcars,  with an aggregate net book value of $0.1 million for proceeds of
$0.7 million.  Included in the gain on sale are unused  repair  reserves of $0.3
million.  Net gain on  disposition  of equipment for the year ended December 31,
2000  totaled  $2.4  million,   which  resulted  from  the  disposal  of  marine
containers,  trailers,  and  railcars,  with an aggregate net book value of $0.8
million, for proceeds of $3.3 million.





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

Equity in net income of an unconsolidated  special-purpose entity represents the
Partnership's  share of the net income  generated  from the operation of jointly
owned assets  accounted for under the equity method (see Note 4 to the financial
statements). This entity was a single purpose entity that did not have any debt.

As of December  31, 2001 and 2000,  the  Partnership  had no interests in USPEs.
During the year ended  December  31, 2000,  net income of $1.3 million  resulted
from the gain on sale of the Partnership's interest in the USPE of $1.4 million,
partially offset by depreciation  expense,  direct expenses,  and administrative
expenses of $0.1 million.

(e) Net Income

As a result of the foregoing,  the  Partnership's net income was $42,000 for the
year ended  December  31, 2001,  compared to net income of $4.2  million  during
2000. The Partnership's  ability to operate and liquidate assets, secure leases,
and re-lease  those assets whose leases expire is subject to many  factors,  and
the  Partnership's  performance  in the  year  ended  December  31,  2001 is not
necessarily  indicative of future periods.  In the year ended December 31, 2001,
the Partnership  distributed $1.3 million to the limited partners,  or $0.18 per
weighted-average limited partnership unit.

(2)  Comparison  of the  Partnership's  Operating  Results  for the Years  Ended
December 31, 2000 and 1999.

(a) Owned Equipment Operations

Lease  revenues  less  direct  expenses  (defined  as  repair  and  maintenance,
equipment  operating  expense and  asset-specific  insurance  expenses) on owned
equipment  decreased  during the year ended December 31, 2000,  when compared to
the same period of 1999. The following table presents lease revenues less direct
expenses by segment (in thousands of dollars):


                                                         For the Years Ended
                                                             December 31,
                                                        2000             1999
                                                      --------------------------
                                                                 
        Railcars                                      $  1,983         $  2,571
        Trailers                                         1,217            1,540
        Marine containers                                   75              160


Railcars:  Railcar lease revenues and direct expenses were $3.3 million and $1.3
million,  respectively,  for 2000,  compared to $3.6  million and $1.0  million,
respectively, during 1999. Lease revenue decreased approximately $0.3 million in
2000,  compared to the same period of 1999, due to more cars being  off-lease in
2000 compared to 1999.  Railcar  expenses  increased by $0.3 million due repairs
required  on a group of  railcars  in 2000 which were being  marketed  for sale.
Similar repairs were not required in 1999.

Trailers:  Trailer lease revenues and direct expenses were $2.0 million and $0.7
million,  respectively,  for 2000,  compared to $2.2  million and $0.7  million,
respectively,  during 1999. Lease revenue decreased  approximately  $0.3 million
from 1999 to 2000 primarily due to the sale and disposition of trailers in 2000.

Marine  containers:  Marine  container lease revenues were $0.1 and $0.2 million
for 2000 and 1999,  respectively.  The decrease in marine container contribution
was  primarily  due to a group of marine  containers  that were off lease during
2000 that were on lease in 1999.

(b) Indirect Expenses Related to Owned Equipment Operations

Total  indirect  expenses of $2.9  million for the year ended  December 31, 2000
decreased from $3.3 million for the same period of 1999.  Significant  variances
are explained as follows:

     (i) A $0.4  million  decrease  in  depreciation  expense  from 1999  levels
reflects the effect of asset sales in 2000 and 1999.

     (ii) The $0.1 million  decrease in bad debt expense was due to the recovery
of an  outstanding  receivable  in the year ended  December 31,  2000,  that had
previously  been  reserved as a bad debt.  A similar  recovery  did not occur in
1999.

(c) Net Gain on Disposition of Owned Equipment

Net gain on  disposition  of  equipment  for the year ended  December  31,  2000
totaled $2.4 million,  which  resulted  from the disposal of marine  containers,
trailers,  and railcars,  with an aggregate net book value of $0.8 million,  for
proceeds of $3.3 million. For the year ended December 31, 1999, the $0.3 million
net gain on  disposition  of  equipment  resulted  from the  disposal  of marine
containers,  trailers,  and  railcars,  with an aggregate net book value of $0.4
million, for proceeds of $0.7 million.

(d) Equity in Net Income (Loss) of an USPE

Equity  in  net  income  (loss)  of  an  unconsolidated  special-purpose  entity
represents the  Partnership's  share of the net income (loss) generated from the
operation of  jointly-owned  assets  accounted  for under the equity method (see
Note 4 to the financial  statements).  This entity was a single purpose that did
not have any debt.

The  Partnership's  remaining  50% interest in an entity that owned a commercial
aircraft  was off lease  during  1999 and was sold in March 2000 for a gain $1.4
million.  The Partnership's  USPE had no revenues and expenses were $0.1 million
in 2000:  in 1999  revenues  and expenses  were $0.1  million and $0.5  million,
respectively.

(e) Net Income

As a result of the foregoing,  the Partnership's net income for the period ended
December  31,  2000 was $4.2  million,  compared  to net income of $0.9  million
during  the same  period in 1999.  The  Partnership's  ability  to  operate  and
liquidate assets,  secure leases,  and re-lease those assets whose leases expire
during  the  life  of the  Partnership  is  subject  to  many  factors,  and the
Partnership's performance in the year ended December 31, 2000 is not necessarily
indicative  of  future  periods.  In the  year  ended  December  31,  2000,  the
Partnership  distributed  $5.0  million to the  limited  partners,  or $0.68 per
weighted-average depositary unit.

(F) Geographic Information

Certain  of the  Partnership's  equipment  operates  in  international  markets.
Although these operations expose the Partnership to certain currency, political,
credit, and economic risks, the General Partner believes these risks are minimal
or has  implemented  strategies  to control the risks.  Currency  risks are at a
minimum because all invoicing,  with the exception of a small number of railcars
operating in Canada,  is conducted in US dollars.  Political risks are minimized
generally  through the avoidance of  operations in countries  that do not have a
stable judicial system and established  commercial business laws. Credit support
strategies  for lessees  range from  letters of credit  supported by US banks to
cash  deposits.  Although these credit support  mechanisms  generally  allow the
Partnership  to  maintain  its lease  yield,  there are  risks  associated  with
slow-to-respond  judicial  systems  when legal  remedies  are required to secure
payment or repossess equipment. Economic risks are inherent in all international
markets  and the  General  Partner  strives to  minimize  this risk with  market
analysis prior to committing equipment to a particular geographic area. Refer to
Note 6 to the financial statements for information on the revenues,  net income,
and net book value of equipment in various geographic regions.

Revenues and net operating  income  (loss) by geographic  region are impacted by
the time period the asset is owned and the useful life ascribed to the asset for
depreciation  purposes.  Net  income  (loss)  from  equipment  is  significantly
impacted  by  depreciation  charges,  which are  greatest  in the early years of
ownership due to the use of the double-declining balance method of depreciation.
The relationships of geographic revenues,  net income (loss), and net book value
of equipment are expected to  significantly  change in the future as assets come
off  lease and  decisions  are made to either  redeploy  the  assets in the most
advantageous geographic location, or sell the assets.

The Partnership's  owned equipment on lease to US-domiciled  lessees consists of
trailers and railcars.  During 2001, lease revenues generated by owned equipment
in the United States accounted for 77% of the lease revenues generated by wholly
and jointly owned  equipment,  while  generating  net  operating  income of $0.4
million.

The  Partnership's  equipment leased to  Canadian-domiciled  lessees consists of
railcars.  During 2001,  lease revenues  generated by owned  equipment in Canada
accounted  for 24% of the lease  revenues  generated  by the wholly and  jointly
owned equipment, while generating a net loss of $0.4 million

In 2001, marine containers,  which were leased in various regions throughout the
year,  accounted  for (1%) of the lease  revenues from  equipment in 2001.  This
equipment  generated net income of $0.5 million in 2001.  The  Partnership  sold
marine  containers  in 2001  for a gain of $0.4  million.  Additionally,  repair
reserves for marine containers of $0.2 million were taken into income in 2001.

(G) Inflation

Inflation had no significant impact on the Partnership's operations during 2001,
2000, or 1999.

(H) Forward-Looking Information

Except for historical  information contained herein, the discussion in this Form
10-K 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-K should be read as
being applicable to all related forward-looking  statements wherever they appear
in this Form 10-K. The Partnership's actual results could differ materially from
those discussed here.

(I) Outlook for the Future

Since the Partnership is in its active  liquidation  phase,  the General Partner
will be seeking to  selectively  re-lease or sell assets as the existing  leases
expire.  Sale decisions will cause the operating  performance of the Partnership
to decline over the remainder of its life.  Throughout the remaining life of the
Partnership,  the Partnership may periodically make special distributions to the
partners as asset sales are completed.

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  marine  containers  is in excess of twelve
     years of age and is no longer  suitable for use in  international  commerce
     either due to its specific physical condition,  or lessee's 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.
     During 2001,  utilization and lease rates decreased.  Railcar  contribution
     may  decrease in 2002 as  existing  leases  expire and  renewal  leases 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 General Partner  continually  monitors
both the equipment markets and the performance of the Partnership's equipment in
these  markets.  The  General  Partner  may make an  evaluation  to  reduce  the
Partnership's  exposure  to  equipment  markets in which it  determines  that it
cannot operate equipment and achieve acceptable rates of return.

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

The other factors  affecting the  Partnership's  contribution in 2002 and beyond
include:

(1) Repricing Risk

Certain of the Partnership's  trailers,  railcars, and marine containers will be
remarketed  in 2002 as existing  leases  expire,  exposing  the  Partnership  to
repricing   risk/opportunity.   Additionally,   the   Partnership   entered  its
liquidation  phase on January 1, 1999, and has commenced an orderly  liquidation
of the  Partnership's  assets.  The General  Partner intends to re-lease or sell
equipment at  prevailing  market  rates;  however,  the General  Partner  cannot
predict  these  future  rates  with  any  certainty  at this  time,  and  cannot
accurately assess the effect of such activity on future Partnership performance.

(2) Impact of Government Regulations on Future Operations

The General  Partner  operates the  Partnership's  equipment in accordance  with
current applicable regulations (see Item 1, Section E, Government  Regulations).
However, the continuing implementation of new or modified regulations by some of
the  authorities  mentioned  previously,  or others,  may  adversely  affect the
Partnership's  ability to continue to own or operate equipment in its portfolio.
Additionally,  regulatory  systems  vary  from  country  to  country,  which may
increase the burden to the Partnership of meeting regulatory  compliance for the
same equipment  operated  between  countries.  Ongoing changes in the regulatory
environment,  both in the US and  internationally,  cannot be predicted with any
accuracy and preclude the General  Partner from  determining  the impact of such
changes on Partnership operations, or sale of equipment.

The US Department of Transportation's  Hazardous Materials Regulations regulates
the classification and packaging  requirements of hazardous materials that apply
particularly to Partnership's tank railcars. The Federal Railroad Administration
has mandated that effective July 1, 2000 all tank railcars must be  re-qualified
every ten years from the last test date stenciled on each railcar to insure tank
shell integrity.  Tank shell thickness, weld seams, and weld attachments must be
inspected and repaired if necessary to re-qualify  the tank railcar for service.
The average cost of this  inspection  is $3,600 for jacketed  tank  railcars and
$1,800 for non-jacketed tank railcars, not including any necessary repairs. This
inspection  is to be  performed  at the next  scheduled  tank test and every ten
years thereafter.  The Partnership  currently owns 128 of this type of railcars.
As of December 31, 2001, 12 have been inspected and no significant  defects have
been discovered.

(3) Distributions

During the active  liquidation  phase,  the Partnership  will use operating cash
flow and proceeds from the sale of equipment to meet its  operating  obligations
and, to the extent available,  make  distributions to the partners.  In the long
term,  changing market conditions and used equipment values preclude the General
Partner from accurately determining the impact of future re-leasing activity and
equipment sales on Partnership performance and liquidity.

(4) Liquidation

Liquidation of the Partnership's equipment represents a reduction in the size of
the  equipment  portfolio and may result in a reduction of  contribution  to the
Partnership.

Since  the  Partnership  is in its  active  liquidation  phase,  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 potential special distributions
to unitholders.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Partnership's  primary market risk exposure is that of currency  devaluation
risk.  During 2001,  23% of the  Partnership's  total lease  revenues  came from
non-United  States  domiciled  lessees.  Most of the leases  require  payment in
United States (US) currency.  If these lessees' currency devalues against the US
dollar,  the lessees  could  potentially  encounter  difficulty in making the US
dollar denominated lease payments.









ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The  financial  statements  for the  Partnership  are  listed  in the  Index  to
Financial Statements included in Item 14(a) of this Annual Report on Form 10-K.

ITEM 9.   CHANGES IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON ACCOUNTING AND
          FINANCIAL DISCLOSURES

     (A)  Disagreements with Accountants on Accounting and Financial Disclosures

          None

     (B)  Changes in Accountants

          In September 2001, the General Partner  announced that the Partnership
          had engaged  Deloitte & Touche LLP as the  Partnership's  auditors and
          had dismissed KPMG, LLP. KPMG LLP issued  unqualified  opinions on the
          1999  and  2000  financial  statements.  During  1999 and 2000 and the
          subsequent  interim periods  preceding such  dismissal,  there were no
          disagreements with KPMG LLP on any matter of accounting  principles or
          practices,  financial  statement  disclosure,  or  auditing  scope  or
          procedures.


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF PLM FINANCIAL SERVICES, INC.

As of the date of this annual  report,  the directors and executive  officers of
PLM Financial  Services,  Inc. (and key executive  officers of its subsidiaries)
are as follows:

Name                      Age     Position
- ------------------------- ------- ----------------------------------------------


Gary D. Engle             52      Director, PLM Financial Services, Inc., PLM
                                  Investment Management Inc., and PLM
                                  Transportation Equipment Corp.

James A. Coyne            41      Director and Secretary, PLM Financial Services
                                  Inc., PLM Investment Management, Inc., and PLM
                                  Transportation Equipment Corp.

Stephen M. Bess           55      President and Director, PLM Financial Services
                                  Inc., PLM Investment Management Inc., and PLM
                                  Transportation Equipment Corp.


Gary D. Engle was  appointed  a Director  of PLM  Financial  Services,  Inc.  in
January 2002. He was appointed a director of PLM International, Inc. in February
2001. He is a director and President of MILPI.  Since  November  1997, Mr. Engle
has been Chairman and Chief Executive Officer of Semele Group Inc. ("Semele"), a
publicly traded company.  Mr. Engle is President and Chief Executive  Officer of
Equis  Financial  Group  ("EFG"),  which he  joined  in 1990 as  Executive  Vice
President.  Mr. Engle purchased a controlling  interest in EFG in December 1994.
He is also President of AFG Realty, Inc.

James A. Coyne was appointed a Director and Secretary of PLM Financial  Services
Inc. in April 2001.  He was  appointed a director of PLM  International,  Inc in
February  2001. He is a director,  Vice  President  and Secretary of MILPI.  Mr.
Coyne has been a director, President and Chief Operating Officer of Semele since
1997. Mr. Coyne is Executive Vice  President of Equis  Corporation,  the general
partner of EFG. Mr. Coyne joined EFG in 1989,  remained until 1993, and rejoined
in November 1994.

Stephen M. Bess was appointed a Director of PLM Financial Services, Inc. in July
1997.  Mr. Bess was  appointed  President  of PLM  Financial  Services,  Inc. in
October  2000. He was appointed  President  and Chief  Executive  Officer of PLM
International,  Inc. in October 2000.  Mr. Bess was  appointed  President of PLM
Investment  Management,  Inc.  in August  1989,  having  served  as Senior  Vice
President of PLM Investment  Management,  Inc. beginning in February 1984 and as
Corporate Controller of PLM Financial Services,  Inc. beginning in October 1983.
He served as Corporate  Controller of PLM, Inc.  beginning in December 1982. Mr.
Bess was  Vice  President-Controller  of  Trans  Ocean  Leasing  Corporation,  a
container  leasing  company,  from  November  1978 to November  1982,  and Group
Finance  Manager  with the Field  Operations  Group of  Memorex  Corporation,  a
manufacturer  of computer  peripheral  equipment,  from October 1975 to November
1978.

The directors of PLM Financial Services, Inc. are elected for a one-year term or
until their successors are elected and qualified.  No family relationships exist
between any director and executive officer of PLM Financial Services,  Inc., PLM
Transportation Equipment Corp., or PLM Investment Management, Inc.

ITEM 11. EXECUTIVE COMPENSATION

The Partnership has no directors, officers, or employees. The Partnership has no
pension,  profit  sharing,  retirement,  or similar benefit plan in effect as of
December 31, 2001.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     (A)  Security Ownership of Certain Beneficial Owners

          The  General  Partner is  entitled to a 5% interest in the profits and
          losses (subject to certain allocations of income) and distributions of
          the Partnership. As of December 31, 2001, no investor was known by the
          General  Partner to  beneficially  own more than 5% of the  depositary
          units of the Partnership.

     (B)  Security Ownership of Management

          Neither  the  General  Partner and its  affiliates  nor any  executive
          officer or director of the General  Partner and its affiliates own any
          depository units of the Partnership as of December 31, 2001.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

          Transactions with Management and Others

          During 2001,  management  fees to IMI were $0.1 million.  During 2001,
          the  Partnership  reimbursed FSI and its  affiliates  $0.2 million for
          administrative  services  and data  processing  expenses  performed on
          behalf of the Partnership.














                      (this space intentionally left blank)









                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

     (A)  1. Financial Statements

          The financial statements listed in the accompanying Index to Financial
          Statements are filed as part of this Annual Report on Form 10-K.

          2. Financial Statements required under Regulation S-X Rule 3-09.

          The following financial statements are filed as exhibits of the Annual
          Report on Form 10-K.

              a.  East West 925

     (B)  Reports on Form 8-K

              None.

     (C)  Exhibits

          4.   Limited  Partnership  Agreement of  Registrant,  incorporated  by
               reference to the Partnership's Registration Statement on Form S-1
               (Reg. No.  33-13113),  which became effective with the Securities
               and Exchange Commission on June 5, 1987.

          4.1  Amendment,  dated  November  18,  1991,  to  Limited  Partnership
               Agreement of the  Partnership,  incorporated  by reference to the
               Partnership's   Annual   Report  on  Form  10-K  filed  with  the
               Securities and Exchange Commission on March 30, 1993.

          10.1 Management   Agreement  between  Registrant  and  PLM  Investment
               Management,  Inc., incorporated by reference to the Partnership's
               Registration  Statement on Form S-1 (Reg.  No.  33-13113),  which
               became  effective with the Securities and Exchange  Commission on
               June 5, 1987.

        Financial Statements required under Regulation S-X Rule 3-09.

        99.1 East West 925





                                   SIGNATURES

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

The Partnership has no directors or officers.  The General Partner has signed on
behalf of the Partnership by a duly authorized officer.


Date:  March 25, 2002        PLM EQUIPMENT GROWTH FUND II
                             PARTNERSHIP

                             By:  PLM Financial Services, Inc.
                                  General Partner


                             By:  /s/ Stephen M. Bess
                                  -----------------------------------
                                  Stephen M. Bess
                                  President and Current Chief Accounting Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  directors of the  Partnership's  General
Partner on the dates indicated.


NAME                     CAPACITY                      DATE


/s/ Gary D. Engle        Director, FSI                 March 25, 2002
- --------------------
Gary D. Engle

/s/ James A. Coyne
- --------------------
James A. Coyne           Director, FSI                 March 25, 2002

/s/ Stephen M. Bess
- --------------------
Stephen M. Bess          Director, FSI                 March 25, 2002










                          PLM EQUIPMENT GROWTH FUND II
                             (A Limited Partnership)
                          INDEX TO FINANCIAL STATEMENTS

                                  (Item 14(a))


                                                                         Page

Independent auditors' reports                                           21-22

Balance sheets as of December 31, 2001 and 2000                            23

Statements of income for the years ended
     December 31, 2001, 2000, and 1999                                     24

Statements of changes in partners' capital for the years
     ended December 31, 2001, 2000, and 1999                               25

Statements of cash flows for the years ended
     December 31, 2001, 2000, and 1999                                     26

Notes to financial statements                                           27-35


All financial statement schedules have been omitted, as the required information
is  not  pertinent  to  the  registrant  or is  not  material,  or  because  the
information required is included in the financial statements and notes thereto.





INDEPENDENT AUDITORS' REPORT




The Partners
PLM Equipment Growth Fund II:

We have audited the  accompanying  balance sheet of PLM Equipment Growth Fund II
("the  Partnership")  as of  December  31, 2001 and the  related  statements  of
income,  partners'  capital  and cash  flows  for the  year  then  ended.  These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We have  conducted our audit in accordance  with  auditing  standards  generally
accepted in the United States of America.  Those standards  require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our  opinion,  such  financial  statements  present  fairly,  in all material
respects, the financial position of the Partnership as of December 31, 2001, and
the  results  of its  operations  and its cash  flows for the year then ended in
conformity with accounting principles generally accepted in the United States of
America.

As  described  in  Note 1 to  the  financial  statements,  the  Partnership,  in
accordance with the limited partnership agreement, entered its liquidation phase
on January 1, 1999 and has commenced an orderly  liquidation of the  Partnership
assets.  The Partnership will terminate on December 31, 2006,  unless terminated
earlier upon sale of all equipment or by certain other events.


/s/ Deloitte & Touche LLP


Certified Public Accountants

Tampa, Florida
March 8, 2002

























INDEPENDENT AUDITORS' REPORT




The Partners
PLM Equipment Growth Fund II:

We have audited the  accompanying  balance sheet of PLM Equipment Growth Fund II
("the  Partnership")  as of  December  31, 2000 and the  related  statements  of
income, changes in partners' capital and cash flows for each of the years in the
two-year  period ended  December 31, 2000.  These  financial  statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

As described in Note 1 to the financial  statements,  PLM Equipment  Growth Fund
II,  in  accordance  with  the  limited  partnership   agreement,   entered  its
liquidation phase on January 1, 1999 and has commenced an orderly liquidation of
the Partnership  assets.  The  Partnership  will terminate on December 31, 2006,
unless terminated earlier upon sale of all equipment or by certain other events.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of PLM Equipment Growth Fund II as
of December 31, 2000,  and the results of its  operations and its cash flows for
each of the years in the two-year  period ended December 31, 2000, in conformity
with accounting principles generally accepted in the United States of America.


/s/ KPMG LLP

SAN FRANCISCO, CALIFORNIA
March 2, 2001






                          PLM EQUIPMENT GROWTH FUND II
                             (A Limited Partnership)
                                 BALANCE SHEETS
                                  December 31,
                 (in thousands of dollars, except unit amounts)





                                                                                    2001                 2000
                                                                                 ---------------------------------
ASSETS

                                                                                               
Equipment held for operating lease, at cost                                      $  21,119           $   24,727
Less accumulated depreciation                                                      (18,146)             (20,483)
                                                                                 ---------------------------------
    Net equipment                                                                    2,973                4,244

Cash and cash equivalents                                                            1,958                2,538
Accounts receivable, less allowance for doubtful
    accounts of $89 in 2001 and $57 in 2000                                            584                  718
Prepaid expenses and other assets                                                       18                   35
                                                                                 ---------------------------------

      Total assets                                                               $   5,533           $    7,535
                                                                                 =================================

LIABILITIES AND PARTNERS' CAPITAL

Liabilities
Accounts payable and accrued expenses                                            $     260           $      482
Due to affiliates                                                                       42                   52
Lessee deposits and reserve for repairs                                                 --                  449
                                                                                 ---------------------------------
   Total liabilities                                                                   302                  983
                                                                                 ---------------------------------

Commitments and contingencies

Partners' capital
Limited partners (7,381,165 depositary units as of
   December 31, 2001 and 2000)                                                       5,231                6,552
General Partner                                                                         --                   --
                                                                                 ---------------------------------
    Total partners' capital                                                          5,231                6,552
                                                                                 ---------------------------------

      Total liabilities and partners' capital                                    $   5,533           $    7,535
                                                                                 =================================





















                 See accompanying notes to financial statements.



                          PLM EQUIPMENT GROWTH FUND II
                             (A Limited Partnership)
                              STATEMENTS OF INCOME
                        For the Years Ended December 31,
         (in thousands of dollars, except weighted-average unit amounts)





                                                                           2001            2000            1999
                                                                        --------------------------------------------
REVENUES

                                                                                              
Lease revenue                                                           $   2,673       $   5,338      $    5,949
Interest and other income                                                     221              92              90
Net gain on disposition of equipment                                          929           2,448             328
                                                                        --------------------------------------------
   Total revenues                                                           3,823           7,878           6,367
                                                                        --------------------------------------------

EXPENSES

Depreciation                                                                1,127           1,581           1,933
Repairs and maintenance                                                     1,377           1,915           1,537
Equipment operating expenses                                                  121             119             120
Insurance expense                                                             123              67              42
Management fees to affiliate                                                  132             269             295
General and administrative expenses to affiliate                              171             234             271
Other general and administrative expenses                                     699             848             757
Provision for (recovery of) bad debts                                          31             (58)             30
                                                                        --------------------------------------------
   Total expenses                                                           3,781           4,975           4,985
                                                                        --------------------------------------------

Equity in net income (loss) of unconsolidated
    special-purpose entity                                                     --           1,304            (448)
                                                                        --------------------------------------------

      Net income                                                        $      42       $   4,207      $      934
                                                                        ============================================

PARTNERS' SHARE OF NET INCOME (LOSS)

Limited partners                                                        $     (26)      $   3,942      $      707
General Partner                                                                68             265             227
                                                                        --------------------------------------------

      Total                                                             $      42       $   4,207      $      934
                                                                        ============================================

Limited Partner's net (loss) income per weighted-average
    depositary unit                                                     $   (0.00)      $    0.53      $     0.10
                                                                        ============================================

Cash distribution                                                       $   1,363       $   4,534      $    4,545
Special cash distribution                                                      --             777              --
                                                                        --------------------------------------------
Total distribution                                                      $   1,363       $   5,311      $    4,545
                                                                        ============================================

Per weighted-average depositary unit:
Cash distribution                                                       $    0.18       $    0.58      $     0.58
Special cash distribution                                                      --            0.10              --
                                                                        --------------------------------------------
Total distribution                                                      $    0.18       $    0.68      $     0.58
                                                                        ============================================






                 See accompanying notes to financial statements.


                          PLM EQUIPMENT GROWTH FUND II
                             (A Limited Partnership)
                   STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
              For the Years Ended December 31, 2001, 2000, and 1999
                            (in thousands of dollars)



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

                                                                                           
  Partners' capital as of December 31, 1998                    $   11,267         $      --         $   11,267

Net income                                                            707               227                934

Cash distribution                                                  (4,318)             (227)            (4,545)
                                                               --------------------------------------------------

  Partners' capital as of December 31, 1999                         7,656                --              7,656

Net income                                                          3,942               265              4,207

Cash distribution                                                  (4,308)             (226)            (4,534)

Special distribution                                                 (738)              (39)              (777)
                                                               --------------------------------------------------

  Partners' capital as of December 31, 2000                         6,552                --              6,552

Net (loss) income                                                     (26)               68                 42

Cash distribution                                                  (1,295)              (68)            (1,363)
                                                               --------------------------------------------------

  Partners' capital as of December 31, 2001                    $    5,231         $      --         $    5,231
                                                               ==================================================
























                 See accompanying notes to financial statements.


                          PLM EQUIPMENT GROWTH FUND II
                             (A Limited Partnership)
                            STATEMENTS OF CASH FLOWS
                        For the Years Ended December 31,
                            (in thousands of dollars)




OPERATING ACTIVITIES                                                        2001            2000           1999
                                                                        --------------------------------------------

                                                                                               
Net income                                                              $       42      $    4,207      $     934
Adjustments to reconcile net income to net cash
    provided by operating activities:
  Depreciation                                                               1,127           1,581          1,933
  Net gain on disposition of equipment                                        (929)         (2,448)          (328)
  Equity in net (loss) income of an unconsolidated special-
      purpose entity                                                            --          (1,304)           448
  Changes in operating assets and liabilities:
    Accounts receivable, net                                                   144             158            125
    Prepaid expenses and other assets                                           17              12            (17)
    Accounts payable and accrued expenses                                      (98)            130             --
    Due to affiliates                                                          (11)            (15)           (16)
    Lessee deposits and reserve for repairs                                   (162)           (334)            11
                                                                        --------------------------------------------
      Net cash provided by operating activities                                130           1,987          3,090
                                                                        --------------------------------------------

INVESTING ACTIVITIES
Proceeds from disposition of equipment                                         653           3,297            691
Distribution from liquidation of an unconsolidated
    special-purpose entity                                                      --           1,827             --
Additional investments in unconsolidated special-purpose
    entity                                                                      --            (156)          (322)
Payments for capital improvements                                               --              --             (6)
                                                                        --------------------------------------------
      Net cash provided by investing activities                                653           4,968            363
                                                                        --------------------------------------------

FINANCING ACTIVITIES
Cash distribution paid to limited partners                                  (1,295)         (4,308)        (4,318)
Cash distribution paid to General Partner                                      (68)           (226)          (227)
Special distribution paid to limited partners                                   --            (738)            --
Special distribution paid to General Partner                                    --             (39)            --
                                                                        --------------------------------------------
      Net cash used in financing activities                                 (1,363)         (5,311)        (4,545)
                                                                        --------------------------------------------

Net (decrease) increase in cash and cash equivalents                          (580)          1,644         (1,092)
Cash and cash equivalents at beginning of year                               2,538             894          1,986
                                                                        --------------------------------------------
Cash and cash equivalents at end of year                                $    1,958      $    2,538      $     894
                                                                        ============================================
















                 See accompanying notes to financial statements.





                          PLM EQUIPMENT GROWTH FUND II
                              A Limited Partnership
                          NOTES TO FINANCIAL STATEMENTS


1.   BASIS OF PRESENTATION

Organization

PLM  Equipment   Growth  Fund  II,  a  California   limited   partnership   (the
Partnership), was formed on March 30, 1987. The Partnership engages primarily in
the business of owning,  leasing,  or otherwise  investing in predominately used
transportation  and related  equipment.  The Partnership  commenced  significant
operations  in June 1987.  PLM  Financial  Services,  Inc.  (FSI) is the General
Partner  of  the   Partnership.   FSI  is  a  wholly  owned  subsidiary  of  PLM
International, Inc. (PLM International).

The Partnership,  in accordance with its limited partnership agreement,  entered
its  liquidation  phase  on  January  1,  1999,  and has  commenced  an  orderly
liquidation  of the  Partnership's  assets (see Note 10). The  Partnership  will
terminate on December 31, 2006, unless  terminated  earlier upon the sale of all
equipment or by certain other events. The General Partner may no longer reinvest
cash flows and  surplus  funds in  equipment.  All future cash flows and surplus
funds  after  payment  of  operating  expenses,  if  any,  are  to be  used  for
distributions  to  partners,  except to the extent used to  maintain  reasonable
reserves.  During the liquidation phase, the Partnership's  assets will continue
to be  recorded at the lower of the  carrying  amount or fair value less cost to
sell.

FSI  manages  the  affairs of the  Partnership.  The cash  distributions  of the
Partnership  are generally  allocated 95% to the limited  partners and 5% to the
General Partner (see Net Income (Loss) and  Distributions  per Depository  Unit,
below).  Net income is allocated to the General Partner to the extent  necessary
to cause the General Partner's capital account to equal zero. Such allocation of
income may not  cumulatively  exceed five  ninety-fifths of the aggregate of the
capital  contributions  made by the limited partners and the  reinvestment  cash
available  for  distribution.   The  General  Partner  is  also  entitled  to  a
subordinated incentive fee equal to 7.5% of surplus distributions, as defined in
the limited  partnership  agreement,  remaining after the limited  partners have
received  a  certain  minimum  rate of  return.  The  General  Partner  does not
anticipate that this fee will be earned.

ESTIMATES

The accompanying financial statements have been prepared on the accrual basis of
accounting in accordance with accounting  principles  generally  accepted in the
United  States of  America.  This  requires  management  to make  estimates  and
assumptions  that  affect  the  reported  amounts  of  assets  and  liabilities,
disclosures  of contingent  assets and  liabilities at the date of the financial
statements,  and the  reported  amounts  of  revenues  and  expenses  during the
reporting period. Actual results could differ from those estimates.

OPERATIONS

The  equipment  of the  Partnership  is managed  under a  continuing  management
agreement by PLM Investment Management, Inc. (IMI), a wholly owned subsidiary of
FSI. IMI receives a monthly management fee from the Partnership for managing the
equipment  (see  Note 2).  FSI,  in  conjunction  with its  subsidiaries,  sells
equipment to investor  programs and third  parties,  manages  pools of equipment
under agreements with the investor  programs,  and is a general partner of other
programs.

ACCOUNTING FOR LEASES

The  Partnership's  leasing  operations  generally  consist of operating leases.
Under the operating lease method of accounting,  the leased asset is recorded at
cost and  depreciated  over its  estimated  useful  life.  Rental  payments  are
recorded as revenue over the lease term as earned in accordance  with  Statement
of Financial  Accounting  Standards (SFAS) No. 13, "Accounting for Leases" (SFAS
No.13).  Lease  origination costs are capitalized and amortized over the term of
the lease.





                          PLM EQUIPMENT GROWTH FUND II
                              A Limited Partnership
                          NOTES TO FINANCIAL STATEMENTS

1.   BASIS OF PRESENTATION (continued)

DEPRECIATION

Depreciation of  transportation  equipment held for operating leases is computed
on the  double-declining  balance method,  taking a full month's depreciation in
the month of  acquisition,  based upon  estimated  useful  lives of 15 years for
railcars  and 12 years for other types of  equipment.  The  depreciation  method
changes  to   straight-line   when  annual   depreciation   expense   using  the
straight-line  method exceeds that  calculated by the  double-declining  balance
method.  Acquisition  fees  have  been  capitalized  as part of the  cost of the
equipment.  Major  expenditures  that are expected to extend the useful lives or
reduce future operating expenses of equipment are capitalized and amortized over
the estimated remaining life of the equipment.

TRANSPORTATION EQUIPMENT

Equipment held for operating leases is stated at cost.

In accordance  with SFAS No. 121,  "Accounting  for the Impairment of Long-Lived
Assets and  Long-Lived  Assets to be Disposed  of," (SFAS No. 121),  the General
Partner reviewed the carrying value of the Partnership's  equipment portfolio at
least quarterly and whenever  circumstances  indicate that the carrying value of
an asset may not be recoverable due to expected future market conditions. If the
projected undiscounted cash flows and the fair market value of the equipment are
less  than  the  carrying  value  of the  equipment,  a loss on  revaluation  is
recorded.  No reductions  were  required to the carrying  value of the equipment
during 2001, 2000, or 1999.

In October 2001, the Financial  Accounting  Standards Board issued SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets", (SFAS No. 144)
which replaces SFAS No. 121. SFAS No. 144 provides updated  guidance  concerning
the  recognition  and  measurement  of an  impairment  loss for certain types of
long-lived  assets,  expands the scope of a discontinued  operation to include a
component of an entity and  eliminates  the current  exemption to  consolidation
when  control  over a  subsidiary  is likely to be  temporary.  SFAS No.  144 is
effective for fiscal years beginning after December 15, 2001.

The  Partnership  will apply the new rules on accounting  for the  impairment or
disposal of long-lived  assets  beginning in the first quarter of 2002, and they
are not anticipated to have an impact on the Partnership's earnings or financial
position.

INVESTMENT IN UNCONSOLIDATED SPECIAL-PURPOSE ENTITY

The  Partnership  had an interest in an  unconsolidated  special-purpose  entity
(USPE) that owned an  aircraft.  This was a single  purpose  entity that did not
have any debt.  This interest was accounted  for using the equity  method.  This
aircraft was sold in the first quarter of 2000.

The  Partnership's  investment  in  the  USPE  included  acquisition  and  lease
negotiation  fees  paid  by  the  Partnership  to PLM  Transportation  Equipment
Corporation (TEC), a wholly owned subsidiary of FSI. The Partnership's  interest
in the USPE was managed by IMI.  The  Partnership's  equity  interest in the net
income (loss) of the USPE is reflected net of management fees paid or payable to
IMI and the amortization of acquisition and lease negotiation fees paid to TEC.







                          PLM EQUIPMENT GROWTH FUND II
                              A Limited Partnership
                          NOTES TO FINANCIAL STATEMENTS

1.  BASIS OF PRESENTATION  (continued)

REPAIRS AND MAINTENANCE

Repair and maintenance costs to railcars and trailers are usually the obligation
of the  Partnership.  Maintenance  costs  for  the  marine  containers  are  the
obligation  of the  lessee.  If they are not  covered  by the  lessee,  they are
generally  charged against  operations as incurred.  The  Partnership  took into
income $0.2 million in 2001 related to marine  container  repair  reserves.  The
Partnership  determined  that  there  would be no future  repairs  made to these
marine containers.  The $0.2 million is included in interest and other income on
the statements of income.

NET INCOME  AND DISTRIBUTIONS PER DEPOSITARY UNIT

Cash  distributions  are  allocated  95% to the limited  partners  and 5% to the
General  Partner  and  may  include  amounts  in  excess  of  net  income.  Cash
distributions  of the  Partnership  are  generally  allocated 95% to the limited
partners and 5% to the General  Partner and may include amounts in excess of net
income. The limited partners' net income is allocated among the limited partners
based on the number of limited  partnership  units owned by each limited partner
and  on  the  number  of  days  of  the  year  each  limited  partner  is in the
Partnership.  During 2001, the General Partner received a special  allocation of
income of $0.1 million ($0.1 million in 2000 and $0.2 million in 1999) in excess
of its pro-rata ownership share.

Cash  distributions are recorded when paid. Cash  distributions  relating to the
fourth  quarter of 2000 and 1999 of $1.1  million  ($0.15  per  weighted-average
depositary unit) were paid during the first quarter of 2001 and 2000. There were
no  distributions  paid  relating  to the  fourth  quarter  of 2001 in the first
quarter of 2002.

Cash  distributions to investors in excess of net income are considered a return
of capital.  Cash  distributions to the limited  partners of $1.3 million,  $1.1
million and $3.6 million in 2001, 2000, and 1999,  respectively,  were deemed to
be a return of capital.

NET INCOME PER WEIGHTED-AVERAGE DEPOSITARY UNIT

Net income per  weighted-average  depositary  unit was  computed by dividing net
income  attributable  to  limited  partners  by the  weighted-average  number of
depositary  units deemed  outstanding  during the period.  The  weighted-average
number of depositary  units deemed  outstanding  during the years ended December
31, 2001, 2000, and 1999 were 7,381,165.

CASH AND CASH EQUIVALENTS

The Partnership considers highly liquid investments that are readily convertible
to known  amounts of cash with  original  maturities  of three months or less as
cash  equivalents.  The carrying amount of cash  equivalents  approximates  fair
market value due to the short-term nature of the investments.

COMPREHENSIVE INCOME

The  Partnership's  net income was equal to  comprehensive  income for the years
ended December 31, 2001, 2000, and 1999.

2. TRANSACTIONS WITH GENERAL PARTNER AND AFFILIATES

An officer of FSI contributed $100 of the Partnership's  initial capital.  Under
the  equipment  management  agreement,  IMI  receives a monthly  management  fee
attributable  to either owned  equipment or interests in equipment  owned by the
USPEs  equal to the  greater  of (i) 5% of Gross  Revenues  (as  defined  in the
agreement) or (ii) 1/12 of 1/2% of the net book value of the equipment portfolio
subject to certain adjustments. The Partnership management fee in 2001 was based
on lease  revenue.  In 2001,  Partnership  management  fees of $42,000  and $0.1
million, respectively, were payable as






                          PLM EQUIPMENT GROWTH FUND II
                              A Limited Partnership
                          NOTES TO FINANCIAL STATEMENTS

2. TRANSACTIONS WITH GENERAL PARTNER AND AFFILIATES  (continued)

of December 31, 2001 and 2000. The Partnership reimbursed FSI and its affiliates
$0.2  million,  $0.2  million,  and  $0.3  million  in  2001,  2000,  and  1999,
respectively, for data processing expenses and administrative services performed
on behalf of the Partnership. The Partnership's proportional share of the USPE's
administrative and data processing  expenses  reimbursed to FSI were $0, $2,000,
and $6,000 during 2001, 2000 and 1999, respectively.

3. EQUIPMENT

The  components  of  owned  equipment  as of  December  31 were as  follows  (in
thousands of dollars):



EQUIPMENT HELD FOR OPERATING LEASES                         2001                2000
- -----------------------------------                     ----------------------------------

                                                                       
        Railcars                                        $   10,705           $   12,712
        Trailers                                             9,404                9,510
        Marine containers                                    1,010                2,505
                                                        ----------------------------------
                                                            21,119               24,727
        Less accumulated depreciation                      (18,146)             (20,483)
                                                        --------------------------------
          Net equipment                                 $    2,973           $    4,244
                                                        ==================================


Revenues  are  earned  by  placing   equipment  under  operating   leases.   The
Partnership's  marine  containers  are leased to operators  of  utilization-type
leasing pools that include  equipment  owned by  unaffiliated  parties.  In such
instances,   revenues  received  by  the  Partnership  consist  of  a  specified
percentage of revenues  generated by leasing the equipment to sublessees,  after
deducting  certain direct  operating  expenses of the pooled  equipment.  Rental
revenues  for  trailers  are  based on a  per-diem  lease  in the  free  running
interchange with the railroads.

As of December 31, 2001, all owned equipment in the Partnership portfolio was on
lease except for 223 railcars and 7 marine containers with an aggregate net book
value of $0.2  million.  As of December  31,  2000,  all owned  equipment in the
Partnership  portfolio  was on lease,  except  for 203  railcars  and 106 marine
containers with an aggregate net book value of $0.4 million.

During 2001, the General Partner disposed of marine  containers,  trailers,  and
railcars  owned by the  Partnership,  with an  aggregate  net book value of $0.1
million,  for proceeds of $0.7 million.  Included in the gain on sale are unused
repair reserves of $0.3 million.  During 2000, the General  Partner  disposed of
marine  containers,  trailers,  and railcars owned by the  Partnership,  with an
aggregate net book value of $0.8 million, for proceeds of $3.3 million.

There were no reductions to the carrying  values of equipment in 2001,  2000, or
1999.

All owned equipment on lease is being accounted for as operating leases.  Future
minimum  rents under  noncancelable  operating  leases as of  December  31, 2001
during  each of the next five years are $0.6  million in 2002,  $0.4  million in
2003,  $0.4 million in 2004, $0.2 million in 2005, $0.1 million in 2006 and $-0-
thereafter. Per diem and short-term rentals consisting of utilization rate lease
payments  included  in revenue  amounted to  approximately  $1.8  million,  $2.0
million, and $2.5 million in 2001, 2000, and 1999, respectively.






                          PLM EQUIPMENT GROWTH FUND II
                              A Limited Partnership
                          NOTES TO FINANCIAL STATEMENTS

4. INVESTMENT IN UNCONSOLIDATED SPECIAL-PURPOSE ENTITY

The  Partnership  had an interest in a USPE that owned an  aircraft.  This was a
single purpose  entity that did not have any debt. The following  summarizes the
financial  information  for the  special-purpose  entity  and the  Partnership's
interest  therein as of and for the years  ended  December 31 (in  thousands  of
dollars):


                                           2000                       1999
                                        ---------                   --------
                                                 Net                         Net
                                  Total      Interest of       Total     Interest of
                                  USPE       Partnership       USPE      Partnership
- ---------------------------------------------------------------------------------------

                                                           
Net investments                $      --   $           --   $     739  $         368
Net income (loss)                  2,605            1,304        (900)          (448)



The net  investment  in a USPE  consisted  of a 50% interest in a trust owning a
Boeing  737-200A  aircraft (and related  assets and  liabilities)  totaling $0.4
million as of December 31, 1999.  This aircraft was sold in the first quarter of
2000 and the  Partnership  received  liquidating  proceeds from the sale of $1.8
million for its net  investment  of $0.3 million.  In October 1999,  this entity
received a $0.2 million  deposit for the sale of the aircraft.  The buyer failed
to perform  under the terms of the  agreement  and the deposit  was  recorded as
income in 1999.

5. OPERATING SEGMENTS

The  Partnership  operates  or  operated  in four  primary  operating  segments:
aircraft  leasing,  marine  container  leasing,  trailer  leasing,  and  railcar
leasing.  Each  equipment-leasing  segment  engages in  short-term  to  mid-term
operating leases to a variety of customers.

The General Partner evaluates the performance of each segment based on profit or
loss from operations before allocation of general and  administrative  expenses,
and certain other expenses. The segments are managed separately due to different
business strategies for each operation.

The following  tables present a summary of the operating  segments (in thousands
of dollars):


                                            Marine
                                           Container   Trailer    Railcar
    For the Year Ended December 31, 2001    Leasing    Leasing    Leasing    Other (1)   Total
    ------------------------------------    -------    -------    -------    -----       -----

    REVENUES
                                                                      
      Lease revenue                        $   (24)  $  1,596   $  1,101  $     --   $  2,673
      Interest income and other                159         --          3        59        221
      Net gain (loss) on disposition
       of     equipment                        391         22        526       (10)       929
                                          -----------------------------------------------------
        Total revenues                         526      1,618      1,630        49      3,823
                                          -----------------------------------------------------

    EXPENSES
      Operations support                         1        811        700       109      1,621
      Depreciation                              20        530        577        --      1,127
      Management fees to affiliates             (1)        38         95        --        132
      General and administrative expenses        1        284         94       491        870
      Provision for bad debts                    1         21          9        --         31
                                          -----------------------------------------------------
        Total costs and expenses                22      1,684      1,475       600      3,781
                                          -----------------------------------------------------
    Net income (loss)                      $   504   $    (66)  $    155  $   (551)  $     42
                                          =====================================================

    Total assets as of December 31, 2001   $    27   $  2,953   $    577  $  1,976   $  5,533
                                          =====================================================

(1) Includes certain assets not identifiable to a specific segment, such as cash
and prepaid  expenses.  Also includes interest income and costs not identifiable
to a  particular  segment,  such as certain  operations  support and general and
administrative expenses.



                          PLM EQUIPMENT GROWTH FUND II
                              A Limited Partnership
                          NOTES TO FINANCIAL STATEMENTS

5. OPERATING SEGMENTS (continued)


                                                     Marine
                                          Aircraft  Container   Trailer   Railcar
    For the Year Ended December 31, 2000  Leasing    Leasing    Leasing   Leasing     Other (2)  Total
    ------------------------------------  -------    -------    -------   -------     -----      -----

    REVENUES
                                                                             
      Lease revenue                        $    --   $     81   $  1,945  $  3,312   $     --  $  5,338
      Interest income and other                 --         --         --         6         86        92
      Net gain on disposition of                --        182        301     1,965         --     2,448
    equipment
                                          --------------------------------------------------------------
        Total revenues                          --        263      2,246     5,283         86     7,878
                                          --------------------------------------------------------------

    EXPENSES
      Operations support                        --          6        728     1,329         38     2,101
      Depreciation                              --        206        648       727         --     1,581
      Management fees to affiliates             --          4         98       167         --       269
      General and administrative expenses        4          6        332       205        535     1,082
      Recovery of bad debts                     --         --        (21)      (27)       (10)      (58)
                                          --------------------------------------------------------------
        Total costs and expenses                 4        222      1,785     2,401        563     4,975
                                          --------------------------------------------------------------
    Equity in net income of USPE             1,304         --         --        --         --     1,304
                                          --------------------------------------------------------------
    Net income (loss)                      $ 1,300   $     41   $    461  $  2,882   $   (477) $  4,207
                                          ==============================================================

    Total assets as of December 31, 2000   $    --   $    107   $  3,580  $  1,275   $  2,573  $  7,535
                                          ==============================================================




                                                      Marine
                                            Aircraft Container   Trailer   Railcar
    For the Year Ended December 31, 1999    Leasing   Leasing    Leasing   Leasing      Other (2)  Total
    ------------------------------------    -------   -------    -------   -------      ------     -----
    REVENUES
                                                                               
      Lease revenue                         $    --   $    163   $  2,214  $  3,572   $     --   $ 5,949
      Interest income and other                  --         --         --        13         77        90
      Net gain (loss) on disposition of          47        (67)       161       187                  328
    equipment
                                            -------------------------------------------------------------
        Total revenues                           47         96      2,375     3,772         77     6,367
                                            -------------------------------------------------------------

    EXPENSES
      Operations support                         --          3        674     1,001         21     1,699
      Depreciation                               --        332        834       767         --     1,933
      Management fees to affiliates              --          8        109       178         --       295
      General and administrative expenses         5         12        342       208        461     1,028
      (Recovery of) provision for bad debts      --         (1)        10        21         --        30
                                            -------------------------------------------------------------
        Total costs and expenses                  5        354      1,969     2,175        482     4,985
                                            -------------------------------------------------------------
    Equity in net loss of USPE                 (448)        --         --        --         --      (448)
                                            -------------------------------------------------------------
    Net income (loss)                       $  (406)  $   (258)  $    406  $  1,597   $   (405)  $   934
                                            =============================================================

(1)  Includes  certain assets not  identifiable to a specific  segment,  such as
     cash and prepaid  expenses.  Also  includes  interest  income and costs not
     identifiable to a particular  segment,  such as certain  operations support
     and general and administrative expenses.

(2)  Includes  interest  income  and  costs  not  identifiable  to a  particular
     segment,  such as certain operations support and general and administrative
     expenses.


6. GEOGRAPHIC INFORMATION

The   Partnership   owns   certain   equipment   that  is  leased  and  operated
internationally.   A  limited  number  of  the  Partnership's  transactions  are
denominated  in a foreign  currency.  Gains or  losses  resulting  from  foreign
currency  transactions  are  included in the results of  operations  and are not
material.

The Partnership leases or leased its aircraft, railcars, and trailers to lessees
domiciled in three  geographic  regions:  the United States,  Canada,  and South
Asia. Marine containers are leased to multiple lessees in different regions that
operate worldwide.





                          PLM EQUIPMENT GROWTH FUND II
                              A Limited Partnership
                          NOTES TO FINANCIAL STATEMENTS

6. GEOGRAPHIC INFORMATION (continued)

The  table  below  sets  forth  lease  revenues  by  geographic  region  for the
Partnership's  owned equipment,  grouped by domicile of the lessee as of and for
the years ended December 31 (in thousands of dollars):



                                             Owned Equipment
   Region                           2001          2000          1999
- -------------------------------  ----------------------------------------

                                                    
   United States                 $   2,046     $   3,956     $   4,350
   Canada                              651         1,301         1,436
   Rest of the world                   (24)           81           163
                                 ----------------------------------------
       Lease revenues            $   2,673     $   5,338     $   5,949
                                 ========================================


The following  table sets forth net income (loss)  information by region for the
Partnership's  owned equipment and investments in a USPE, grouped by domicile of
the lessee as of and for the years ended December 31 (in thousands of dollars):



                                            Owned Equipment                       Investments in USPE
                                 --------------------------------------- --------------------------------------
Region                              2001          2000         1999         2001         2000          1999
- -------------------------------  --------------------------------------- --------------------------------------

                                                                                 
United States                    $   (429)     $  2,661     $   1,278    $     --     $     --     $       --
Canada                                518           679           767          --           --             --
South Asia                             --            --            --          --        1,304           (448)
Rest of the world                     504            42          (258)         --           --             --
                                 --------------------------------------- --------------------------------------
Regional income (loss)                593         3,382         1,787          --        1,304           (448)
Administrative and other             (551)         (479)         (405)         --           --             --
                                 --------------------------------------- --------------------------------------
    Net income (loss)            $     42      $  2,903     $   1,382    $     --     $  1,304     $     (448)
                                 ======================================= ======================================


The net  book  value  of these  assets  as of  December  31 are as  follows  (in
thousands of dollars):


                                         Owned Equipment                      Investments in USPE
                               ------------------------------------   -------------------------------------
   Region                         2001        2000        1999            2001        2000         1999
   --------------------------- ------------------------------------   -------------------------------------

                                                                             
   United States               $   2,692   $   3,743   $   5,372      $       --   $      --   $       --
   Canada                            255         432         614              --          --           --
   South Asia                         --          --          --              --          --          368
   Rest of the world                  26          69         686              --          --           --
                               ----------------------------------     -------------------------------------
       Net book value          $   2,973   $   4,244   $   6,672      $       --   $      --   $      368
                               ==================================     =====================================


7. CONCENTRATIONS OF CREDIT RISK

No single lessee  accounted for more than 10% of the  consolidated  revenues for
the years  ended  December  31,  2001,  2000 and  1999.  In 2000,  however,  the
Partnership  sold  its  remaining  investment  in a USPE in  which  it had a 50%
interest in an aircraft to Aegro Capital.  The gain from this sale accounted for
14% of the Partnership's revenues from wholly owned equipment in 2000.

As of December 31, 2001 and 2000, the General  Partner  believes the Partnership
had no other  significant  concentrations  of  credit  risk  that  could  have a
material adverse effect on the Partnership.

8. INCOME TAXES

The  Partnership  is not  subject  to  income  taxes,  as any  income or loss is
included  in  the  tax  returns  of the  individual  partners.  Accordingly,  no
provision  for income  taxes has been made in the  financial  statements  of the
Partnership.






                          PLM EQUIPMENT GROWTH FUND II
                              A Limited Partnership
                          NOTES TO FINANCIAL STATEMENTS

8. INCOME TAXES (continued)

As of  December  31,  2001,  the  federal  income tax basis was higher  than the
financial  statement  carrying values of certain assets and liabilities by $14.2
million,  primarily  due to  differences  in  depreciation  methods  and the tax
treatment of underwriting commissions and syndication costs.

9. CONTINGENCIES

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

During 2001, the General Partner decided to minimize its collection efforts from
the India  lessee in order to save the  Partnership  from  incurring  additional
expenses  associated  with trying to collect  from a lessee that has no apparent
ability to pay.

The  Partnership  is involved as plaintiff  or defendant in various  other 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.

10. LIQUIDATION AND SPECIAL DISTRIBUTIONS

On January 1, 1999,  the  General  Partner  began the  liquidation  phase of the
Partnership  with  the  intent  to  commence  an  orderly   liquidation  of  the
Partnership  assets.  The General  Partner is actively  marketing  the remaining
equipment  portfolio  with the  intent  of  maximizing  sale  proceeds.  As sale
proceeds  are  received  the General  Partner  intends to  periodically  declare
special  distributions  to distribute the sale proceeds to the partners.  During
the  liquidation  phase of the  Partnership  the  equipment  will continue to be
leased under  operating  leases until sold.  Operating cash flows, to the extent
they exceed Partnership expenses, may be made from time to time to the partners.
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.  Any excess  proceeds
over expected Partnership  obligations will be distributed to the Partners. Upon
final liquidation, the Partnership will be dissolved.

A special  distribution of $0.8 million ($0.10 per  weighted-average  depositary
unit) was paid in 2000. No special distributions were paid in 2001 and 1999. The
Partnership is not permitted to reinvest  proceeds from sales or liquidations of
equipment.  These  proceeds,  in excess of operational  cash  requirements,  are
periodically paid out to limited partners in the form of special  distributions.
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 the sale of that asset,  and, in some leases,  the ability of the lessee
to exercise purchase options.









                            EQUIPMENT GROWTH FUND II
                              A Limited Partnership
                          NOTES TO FINANCIAL STATEMENTS

11. QUARTERLY RESULTS OF OPERATIONS (unaudited)

The following is a summary of the quarterly  results of operations  for the year
ended December 31, 2001 (in thousands of dollars, except per share amounts):


                                 March        June         September         December
                                  31,         30,             30,               31,            Total
                              ---------------------------------------------------------------------------

Operating results:
                                                                             
  Total revenues              $      921  $      675   $           818   $         1,409    $    3,823
  Net income (loss)                 (338)       (368)               20               728            42

Per weighted-average depositary unit:

Limited partners'
  net income (loss)           $    (0.05) $    (0.05)  $          0.00   $          0.10    $    (0.00)


In the fourth quarter of 2001, the Partnership sold trailers, marine containers,
and railcars for a gain of $0.6 million.

The following is a summary of the quarterly  results of operations  for the year
ended December 31, 2000 (in thousands of dollars, except per share amounts)


                                 March        June         September         December
                                  31,         30,             30,               31,            Total
                              ----------------------------------------------------------------------------

Operating results:
                                                                             
  Total revenues              $    1,494  $    1,910   $         1,590   $         2,884    $    7,878
  Net income                       1,592         624               508             1,483         4,207

Per weighted-average depositary unit:

Limited partners'
  net income                  $     0.21  $     0.07   $          0.06   $          0.19    $     0.53


In the first  quarter of 2000,  the  Partnership  sold its  interest  in a trust
owning an aircraft for a gain of $1.4 million.

In the second quarter of 2000, the Partnership sold trailers, marine containers,
and  railcars  for a gain of $0.5  million.  In the third  quarter of 2000,  the
Partnership sold trailers,  marine  containers,  and railcars for a gain of $0.3
million.

In the fourth quarter of 2000, the Partnership sold trailers, marine containers,
and railcars for a gain of $1.7 million.






                          PLM EQUIPMENT GROWTH FUND II

                                INDEX OF EXHIBITS


  Exhibit                                                                 Page

    4.      Limited Partnership Agreement of Partnership                    *

    4. 1    Amendment to Limited Partnership Agreement of Registrant        *

   10. 1    Management Agreement between Partnership and PLM Investment     *
            Management, Inc.

   99. 1    East West 925.                                                 37-45





































- --------------------------
*Incorporated by reference. See page 18 of this report.