Form 10-KSB
                                 (Final Report)
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                         |X|   Annual report  pursuant to section 13 or 15(d) of
                               the  Securities  Exchange  Act of  1934  (no  fee
                               required) For the Year Ended December 31, 2000

                                       OR

                         |_|   Transition report pursuant to section 13 or 15(d)
                               of the  Securities  Exchange  Act of 1934 (no fee
                               required) For the transition  period from ____ to
                               ____

                        Commission File number 000-19160

                      ATEL Cash Distribution Fund III, L.P.

California                                                          94-3100855
----------                                                          ----------
(State or other jurisdiction of                             (I. R. S. Employer
incorporation or organization)                             Identification No.)

           235 Pine Street, 6th Floor, San Francisco, California 94104
                    (Address of principal executive offices)

        Registrant's telephone number, including area code (415) 989-8800

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

Securities  registered pursuant to section 12(g) of the Act: Limited Partnership
Units

Indicate  by a 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 |_|

State the aggregate market value of voting stock held by  non-affiliates  of the
registrant.
                                  Inapplicable




                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of  Regulation  S-K  (ss.229.405)  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|



                                       1
<PAGE>

                                     PART I

Item 1.  BUSINESS

General Development of Business

ATEL Cash  Distribution  Fund III, L.P. (the  Partnership)  was formed under the
laws of the State of California in September  1989. The  Partnership  was formed
for the purpose of acquiring  equipment to engage in equipment leasing and sales
activities.  The  General  Partners  of  the  Partnership  were  ATEL  Financial
Corporation  (ATEL),  a  California  corporation  and two  individuals,  who are
principals of ATEL Capital Group, the parent of ATEL.

The  Partnership  conducted  a public  offering  of  5,000,000  units of Limited
Partnership  Interest  (Units)  (which was  increased to 7,500,000  Units at the
option of the General  Partners) at a price of $10 per Unit, which terminated on
January 3, 1992.  As of that date,  the  Partnership  had sold an  aggregate  of
7,385,584 Units for a total capitalization of $73,855,840.

As of December 31, 2000, the  Partnership  had disposed of all of its assets and
had ceased operations.

The Partnership's principal objectives were to invest in a diversified portfolio
of  equipment  which would (i)  preserve,  protect and return the  Partnership's
invested  capital;  (ii) generate  substantial  distributions to the partners of
cash  from  operations  and cash from  sales or  refinancing,  with any  balance
remaining after certain minimum  distributions to be used to purchase additional
equipment  during the  reinvestment  period,  which ended  December 31, 1999 and
(iii) provide  significant  distributions  following the reinvestment period and
until all equipment had been sold. The  Partnership  was governed by its Limited
Partnership Agreement.

Narrative Description of Business

The  Partnership  acquired  various  types of  equipment  to lease  pursuant  to
"Operating"  leases and "Full  Payout"  leases,  where  "Operating"  leases were
defined as being leases in which the minimum lease  payments  during the initial
lease term did not  recover  the full cost of the  equipment  and "Full  Payout"
leases  recover such cost. It was the intention of the General  Partners that no
more than 30% of the aggregate  purchase price of equipment  would be subject to
"Operating" leases upon final investment of the Net Proceeds of the Offering and
that no more than 20% of the  aggregate  purchase  price of  equipment  would be
invested in equipment acquired from a single manufacturer.

The Partnership only purchased  equipment for which a lease existed or for which
a lease  would be  entered  into at the time of the  purchase.  The  Partnership
completed its initial  acquisition stage with the investment of the net proceeds
from the public offering of Units in 1992.

The  Partnership's  objective  was to lease a  minimum  of 75% of the  equipment
acquired  with the net  proceeds  of the  offering  to lessees  which (i) had an
aggregate credit rating by Moody's Investor  Service,  Inc. of Baa or better, or
the credit equivalent as determined by the General Partners,  with the aggregate
rating weighted to account for the original  equipment cost for each item leased
or  (ii)  were   established   hospitals  with  histories  of  profitability  or
municipalities.  The balance of the original  equipment  portfolio could include
equipment leased to lessees which,  although deemed  creditworthy by the General
Partners,  would  not  satisfy  the  general  credit  rating  criteria  for  the
portfolio.  In excess of 75% of the equipment  acquired with the net proceeds of
the offering  (based on original  purchase cost) had been leased to lessees with
an  aggregate   credit  rating  of  Baa  or  better  or  to  such  hospitals  or
municipalities.

                                       2
<PAGE>

The General  Partners  sought to limit the amount  invested in  equipment to any
single lessee to not more than 25% of the aggregate  purchase price of equipment
owned at any time  during  the  reinvestment  period.  During  2000,  one lessee
accounted for 95% of the Partnership's lease revenues. During 1999, five lessees
accounted for 26%, 21%, 20%, 16% and 14% of the Partnership's revenues.

The business of the Partnership was not seasonal.

The Partnership had no full time employees.


Item 2.  PROPERTIES

The  Partnership  does not own or lease any real  property,  plant or materially
important physical properties as of December 31, 2000.


Item 3.  LEGAL PROCEEDINGS

No material legal  proceedings are currently  pending against the Partnership or
against  any of its assets.  The  following  is a  discussion  of legal  matters
involving  the  Partnership  but  which  do not  represent  claims  against  the
Partnership or its assets.

On December  31,  1997,  Quaker Coal  Company  requested a  moratorium  on lease
payments from January  through  March 1998.  No lease  payments were made by the
lessee through June of 1998. As a result, the General Partner declared the lease
in default.  Subsequently,  the lessee  cured the  outstanding  payments and all
future lease payments, however, the General Partner refused to waive the default
and insisted on additional damages. The General Partner filed a suit against the
lessee for damages and is currently  awaiting  judgment from the court.  On June
16,  2000,  the  lessee  filed  for  protection  under  Chapter  11 of the  U.S.
Bankruptcy Code.

The  Partnership has filed a stipulation for relief from stay to allow the court
to issue its  ruling,  and has filed a request to  participate  on the  Official
Committee of Unsecured  Creditors.  The  Partnership has succeeded upon securing
the  return of its  equipment,  which has been  liquidated,  netting a sum which
represents  approximately  17% of the original  equipment cost.  Currently,  the
likelihood  of recovery  of amounts  above the payment of the lease rent and the
liquidation of the equipment is speculative and highly uncertain.


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

None


                                     PART II

Item 5.  MARKET FOR REGISTRANT'S LIMITED PARTNERSHIP UNITS AND RELATED
              MATTERS

Market Information

The Units were transferable  subject to restrictions on transfers which had been
imposed  under the  securities  laws of certain  states  and by the  Partnership
Agreement.  However,  as  a  result  of  such  restrictions,  the  size  of  the
Partnership and its investment  objectives,  to the General Partners' knowledge,
no established public secondary trading market developed.

Holders

As of December 31, 2000, a total of 4,922 investors were record holders of Units
in the Partnership.



                                       3
<PAGE>

Dividends

The  Partnership  did not make  dividend  distributions.  However,  the  Limited
Partners of the Partnership  were entitled to certain  distributions as provided
under the Limited Partnership Agreement.

The  General   Partners  had  sole  discretion  in  determining  the  amount  of
distributions;  provided,  however, that the General Partners would not reinvest
in equipment, but would distribute, subject to payment of any obligations of the
Partnership,  such  available  cash  from  operations  and  cash  from  sales or
refinancing  as was  necessary  to  cause  total  distributions  to the  Limited
Partners  for each year during the  reinvestment  period to equal the  following
amounts per unit: $1.20 in 1993; $1.30 in 1994 and 1995; $1.40 in 1996 and 1997;
and $1.50 in 1998 and 1999. The reinvestment period ended December 31, 1999.

In 2000,  the  Partnership  made a single  distribution  of $0.47 per Unit.  The
distribution was made in August 2000.

The rates for monthly distributions from 1999 operations were $.125 per Unit for
monthly  distributions  made from February  through November 1999. The rates for
quarterly  distributions  made in April,  July and  October  1999 were $.375 per
Unit.  An  additional  distribution  was  made to the  holders  of all  Units in
December 1999. The amount of this  distribution  was $.54 for those who had been
receiving  distributions  on a  monthly  basis  and $.665 for those who had been
receiving distributions on a quarterly basis. This brought the total distributed
per Unit to $1.79 for 1999.  Distributions  were from cash flows from operations
and sales proceeds in 1999.

The following table presents summarized  information regarding  distributions to
Limited Partners:

<TABLE>
<CAPTION>
                                              2000      1999    1998     1997     1996
                                              ----      ----    ----     ----     ----
<S>                                          <C>       <C>      <C>      <C>      <C>
Distributions of net income                  $ 0.28    $ 0.01   $ 0.98   $ 0.58   $ 0.38
Return of investment                           0.19      2.03     0.44     0.45     0.87
                                            --------  -------- -------- -------- --------
Distributions per unit                         0.47      2.04     1.42     1.03     1.25
Differences due to timing of distributions        -     (0.25)    0.08    (0.03)   (0.03)
                                            --------  -------- -------- -------- --------
Nominal distribution rates from above        $ 0.47    $ 1.79   $ 1.50   $ 1.00   $ 1.22
                                            ========  ======== ======== ======== ========
</TABLE>

Limited Partners could elect to receive distributions on a monthly basis. Owners
of 2,000 or more units could make the election  without  charge.  Owners of less
than 2,000 units could make the election upon payment of a $20.00 annual fee.


Item 6.  SELECTED FINANCIAL DATA

The following table presents selected  financial data of the Partnership for the
years ended December 31, 2000,  1999,  1998,  1997 and 1996. This financial data
should be read in  conjunction  with the financial  statements and related notes
included under Item 8 of this report.

<TABLE>
<CAPTION>
                                                    2000             1999             1998             1997             1996
                                                    ----             ----             ----             ----             ----
<S>                                               <C>              <C>              <C>              <C>               <C>
Gross Revenues                                    $ 2,446,310      $ 1,342,845      $ 11,007,336     $ 10,433,457      $11,709,770
Net income                                        $ 2,072,176         $ 84,854       $ 7,293,197      $ 4,334,639      $ 2,851,478
Weighted average Units outstanding                  7,375,284        7,375,284         7,376,201        7,376,934        7,376,934
Net income per Unit, based on
   weighted average Units outstanding                  $ 0.28           $ 0.01            $ 0.98           $ 0.58           $ 0.38
Distributions per Unit, based on
   weighted average Units outstanding                  $ 0.47           $ 2.04            $ 1.42           $ 1.03           $ 1.25
Total Assets                                              $ -      $ 1,900,695      $ 17,582,514     $ 22,727,752      $29,791,041
Non-recourse Debt                                         $ -         $ 57,291         $ 413,707      $ 2,497,392      $ 6,068,326
Total Partners' Capital                                   $ -      $ 1,693,011      $ 16,630,778     $ 19,797,739      $23,081,480
</TABLE>



                                       4
<PAGE>

In 1997 and 1996, distributions to Limited Partners were not sufficient to allow
the Partnership to reinvest in additional equipment.


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

Capital Resources and Liquidity

During 2000, the Partnerships primary source of cash was proceeds from the sales
of lease assets.

As of December 31, 2000, the  Partnership  had disposed of all of its assets and
had ceased operations.


Cash Flows

Cash flows from  operations  decreased  from  $779,739 in 1999 to  $(296,737) in
2000, a decrease of $1,076,476. This decrease resulted primarily from a decrease
of operating lease rents of $1,246,703.

Cash  flows from  investing  activities  decreased  from  $4,034,209  in 1999 to
$3,303,599  in 2000,  a decrease of $730,610.  The primary  sources of cash from
investing  activities  are  proceeds  from sales of assets and rents from direct
financing leases.  Sales proceeds decreased by $314,124.  Direct financing lease
rents decreased by $416,486 compared to 1999.

There  were  no  financing  sources  of cash in  2000  or  1999.  Repayments  of
non-recourse  debt  decreased  due to  scheduled  debt  payments.  Cash used for
distributions  to  Limited  Partners  decreased  from  $15,022,621  in  1999  to
$3,500,003  in  2000  as a  result  of the  decrease  of the  per  Unit  rate of
distributions from $1.79 in 1999 to $.47 in 2000.

Results of Operations

As of December 31, 2000,  all of the  Partnership's  assets had been sold. As of
December  31, 1999,  52% and 48% of the  Partnership's  lease  assets  (based on
equipment  cost) were leased to lessees in the mining and utilities  industries,
respectively.  Leases were  subject to the General  Partners'  credit  committee
review.  The leases  provided for the return of the equipment upon default.  The
concentration  of the  Partnership's  assets in these industries is not known to
have had any effect on the Partnership's results of operations.

Net income  increased  from $84,854 in 1999 to $2,072,176 in 2000.  The increase
was  primarily  the result of increased  gains  recognized on the sales of lease
assets  compared to 1999.  This was  partially  offset by decreases in operating
lease revenues. The decrease in those revenues was also a result of the sales of
lease assets.

The  most   significant   change  in  expenses  was  in  depreciation   expense.
Depreciation expense decreased as a result of sales of operating lease assets in
1999 and 2000.

Impact of the Year 2000

The Partnership experienced no significant Year 2000 problems.


Item 7a.  QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

The  Partnership  ceased  operations in 2000 and is no longer  subject to either
market or interest rate risk.


Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See the  Report  of  Independent  Auditors,  Financial  Statements  and Notes to
Financial Statements attached hereto at pages 6 through 13.

                                       5
<PAGE>











                REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS






The Partners
ATEL Cash Distribution Fund III, L.P.


We have audited the accompanying  statements of income of ATEL Cash Distribution
Fund III, L.P. and the related  statements  of changes in partners'  capital and
cash  flows for each of the two years in the 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. 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.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the results of operations of ATEL Cash Distribution Fund
III,  L.P.  and its cash  flows  for each of the two years in the  period  ended
December 31, 2000, in conformity with accounting  principles  generally accepted
in the United States.







                                                          /s/ ERNST & YOUNG LLP
San Francisco, California
January 19, 2001




                                       6
<PAGE>

                      ATEL CASH DISTRIBUTION FUND III, L.P.

                              STATEMENTS OF INCOME

                     YEARS ENDED DECEMBER 31, 2000 AND 1999


<TABLE>
<CAPTION>
Revenues:                                                       2000             1999
                                                                ----             ----
<S>                                                            <C>                 <C>
Leasing activities:
     Operating leases                                             $ 60,000      $ 1,306,703
     Direct financing leases                                         3,438           71,837
     Leveraged leases                                                    -           21,123
     Gain (loss) on sales of equipment                           2,253,471         (369,377)
Other                                                               70,950            5,851
Interest income                                                     58,451          306,708
                                                           ---------------- ----------------
                                                                 2,446,310        1,342,845
                                                           ---------------- ----------------

Expenses:
Equipment and incentive management fees to General Partner         117,699          114,011
Administrative cost reimbursements to General Partner               99,035          205,136
Professional fees                                                   53,545           22,954
Other                                                               52,124           87,156
Depreciation                                                        36,625          752,327
Income taxes and franchise fees                                      9,360           55,651
Interest expense                                                     5,746           20,756
                                                           ---------------- ----------------
                                                                   374,134        1,257,991
                                                           ---------------- ----------------
Net income                                                     $ 2,072,176         $ 84,854
                                                           ================ ================

Net income:
     General Partners                                             $ 20,722            $ 849
     Limited Partners                                            2,051,454           84,005
                                                           ---------------- ----------------
                                                               $ 2,072,176         $ 84,854
                                                           ================ ================

Net income per Limited Partnership unit                             $ 0.28           $ 0.01
Weighted average number of units outstanding                     7,375,284        7,375,284
</TABLE>


                    STATEMENT OF CHANGES IN PARTNERS' CAPITAL

                     YEARS ENDED DECEMBER 31, 2000 AND 1999

<TABLE>
<CAPTION>
                                                                        Limited Partners              General
                                                                        ----------------
                                                                    Units            Amount          Partners           Total
                                                                    -----            ------          --------           -----
<S>                                                                  <C>            <C>                 <C>            <C>
Balance December 31, 1998                                            7,375,284      $ 16,388,235        $ 242,543      $16,630,778
Distributions to limited partners ($2.04  per Unit)                                  (15,022,621)               -      (15,022,621)
Net income                                                                                84,005              849           84,854
                                                                --------------- ----------------- ---------------- ----------------
Balance December 31, 1999                                            7,375,284         1,449,619          243,392        1,693,011
Distributions to limited partners ($0.47  per Unit)                                   (3,500,003)               -       (3,500,003)
Net income                                                                             2,051,454           20,722        2,072,176
Cash transferred to liquidating trust                                                   (177,627)          (1,794)        (179,421)
Other assets and liabilities transferred to liquidating trust                            (84,905)            (858)         (85,763)
Allocation of income on dissolution                                                      261,462         (261,462)               -
                                                                --------------- ----------------- ---------------- ----------------
Balance December 31, 2000                                            7,375,284               $ -              $ -              $ -
                                                                =============== ================= ================ ================
</TABLE>
                             See accompanying notes.

                                       7
<PAGE>

                      ATEL CASH DISTRIBUTION FUND III, L.P.

                            STATEMENTS OF CASH FLOWS

                     YEARS ENDED DECEMBER 31, 2000 AND 1999

<TABLE>
<CAPTION>
Operating activities:                                             2000             1999
                                                                  ----             ----
<S>                                                               <C>             <C>
Net income                                                       $ 2,072,176         $ 84,854
  Adjustment to reconcile net income to net cash (used in)
  provided by operating activities:
     Depreciation                                                     36,625          752,327
     (Gain) loss on sales of equipment                            (2,253,471)         369,377
     Income from investment in leveraged leases                            -          (21,123)
     Changes in operating assets and liabilities:
        Accounts receivable                                           23,635          (18,060)
        Accounts payable, General Partner                                  -         (339,374)
        Accounts payable, other                                     (175,702)           6,228
        Accrued interest                                                   -           (1,363)
        Unearned operating lease income                                    -          (53,127)
                                                             ---------------- ----------------
Net cash (used in) provided by operating activities                 (296,737)         779,739

Investing activities:
Proceeds from sales of lease assets                                3,300,161        3,614,285
Reductions of net investment in direct financing leases                3,438          419,924
                                                             ---------------- ----------------
Net cash provided by investing activities                          3,303,599        4,034,209

Financing activities:
Distributions to limited partners                                 (3,500,003)     (15,022,621)
Cash transferred to liquidating trust                               (179,421)               -
Repayments of non-recourse debt                                      (57,291)        (356,416)
                                                             ---------------- ----------------
Net cash used in financing activities                             (3,736,715)     (15,379,037)
                                                             ---------------- ----------------

Net decrease increase in cash and cash equivalents                  (729,853)     (10,565,089)
Cash and cash equivalents at beginning of period                     729,853       11,294,942
                                                             ---------------- ----------------
Cash and cash equivalents at end of period                               $ -        $ 729,853
                                                             ================ ================


Supplemental disclosures of cash flow information:

Cash paid during the year for interest                               $ 5,746         $ 22,119
                                                             ================ ================

Supplemental disclosure of non-cash transactions:
Net assets transferred to liquidating trust                         $ 85,763              $ -
                                                             ================ ================
</TABLE>




                             See accompanying notes.



                                       8
<PAGE>

                      ATEL CASH DISTRIBUTION FUND III, L.P.

                          NOTES TO FINANCIAL STATEMENTS

                                December 31, 2000


1.  Organization and partnership matters:

ATEL Cash  Distribution  Fund III, L.P. (the  Partnership)  was formed under the
laws of the State of California in September  1989, for the purpose of acquiring
equipment to engage in equipment leasing and sales activities.

Upon the sale of the  minimum  amount of Units of Limited  Partnership  Interest
(Units) of $1,200,000 and the receipt of the proceeds  thereof on March 1, 1990,
the Partnership commenced operations.

The General Partners of the Partnership are ATEL Financial Corporation (ATEL), a
California corporation,  and two individuals, who are principals of ATEL Capital
Group, the parent of ATEL.

The Partnership's  business consisted of leasing various types of equipment.  As
of December 31, 2000, the  Partnership had sold all of its assets and had ceased
operations.

Pursuant to the Limited  Partnership  Agreement,  the General  Partners  receive
compensation  and   reimbursements  for  services  rendered  on  behalf  of  the
Partnership (Note 5).


2.  Summary of significant accounting policies:

Equipment on operating leases:

Equipment  on  operating  leases  was  stated  at cost.  Depreciation  was being
provided by use of the straight-line method over the terms of the related leases
to the equipment's estimated residual values at the end of the leases.

Revenues  from  operating  leases were  recognized  evenly over the lives of the
related leases.

Direct financing leases:

Income from direct financing lease transactions was reported using the financing
method  of  accounting,  in which the  Partnership's  investment  in the  leased
property is reported as a  receivable  from the lessee to be  recovered  through
future  rentals and the  realization of residual  values.  The income portion of
each rental  payment was  calculated so as to generate a constant rate of return
on the net receivable outstanding.

Investment in leveraged leases:

Leases which were financed principally with non-recourse debt at lease inception
and which meet certain other  criteria were  accounted for as leveraged  leases.
Leveraged lease contracts receivable were stated net of the related non-recourse
debt service (which  included  unpaid  principal and aggregate  interest on such
debt) plus estimated residual values.  Unearned income represented the excess of
anticipated  cash flows (after  taking into account the related debt service and
residual  values) over the  investment  in the lease and was  amortized  using a
constant rate of return applied to the net investment  when such  investment was
positive.



                                       9
<PAGE>

                      ATEL CASH DISTRIBUTION FUND III, L.P.

                          NOTES TO FINANCIAL STATEMENTS

                                December 31, 2000


2.  Summary of significant accounting policies (continued):

Statements of cash flows:

For purposes of the Statements of Cash Flows, cash and cash equivalents  include
cash in banks and cash equivalent investments with original maturities of ninety
days or less.

Income taxes:

The  Partnership  does not provide for income  taxes since all income and losses
are the liability of the  individual  partners and are allocated to the partners
for inclusion in their individual tax returns.

The following  reconciles the net income reported in these financial  statements
to the income reported on the Partnership's federal tax return (unaudited):

                                               2000             1999
                                               ----             ----
Net income per financial statements           $ 2,072,176         $ 84,854
Adjustment to depreciation expense                 36,625          148,822
Adjustments to revenues                           992,837        3,532,988
                                         ----------------- ----------------
Net income per federal tax return             $ 3,101,638      $ 3,766,664
                                         ================= ================

Use of estimates:

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  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.
Actual  results  could differ from those  estimates.  Such  estimates  primarily
relate to the determination of residual values at the end of the lease term.

Per unit data:

Net income and distributions per unit are based upon the weighted average number
of units outstanding during the period.



                                       10
<PAGE>

                      ATEL CASH DISTRIBUTION FUND III, L.P.

                          NOTES TO FINANCIAL STATEMENTS

                                December 31, 2000


3.  Investments in equipment and leases:

The Partnership's investments in equipment and leases consist of the following:

<TABLE>
<CAPTION>
                                                                 Depreciation
                                                                  Expense or        Reclass-
                                                December 31,        Lease        ifications or    December 31,
                                                    1999         Amortization     Dispositions        2000
                                                    ----         ------------   - -------------       ----
<S>                                               <C>                <C>            <C>                    <C>
Net investment in operating leases                  $ 735,458        $ (36,625)       $ (698,833)          $ -
Net investment in direct financing leases             348,795           (3,438)         (345,357)            -
Assets held for lease or sale                           2,500                -            (2,500)            -
                                               ---------------  --------------- ----------------- -------------
                                                  $ 1,086,753        $ (40,063)     $ (1,046,690)          $ -
                                               ===============  =============== ================= =============
</TABLE>

Operating leases:

Property on operating lease consists of the following:

<TABLE>
<CAPTION>
                                                                   Reclass-
                               December 31,                      ifications or   December 31,
                                   1999          Additions       Dispositions        2000
                                   ----          ---------       ------------        ----
<S>                              <C>                 <S>           <C>                    <C>
Mining equipment                 $ 3,757,698                       $ (3,757,698)          $ -
Less accumulated depreciation     (3,022,240)        $ (36,625)       3,058,865             -
                              --------------- ----------------- ---------------- -------------
                                   $ 735,458         $ (36,625)      $ (698,833)          $ -
                              =============== ================= ================ =============
</TABLE>

Reserves for losses and impairments:

Activity in the reserve for losses and impairments consists of the following:

                     Balance December 31, 1998             $ 362,173
                     Provision                                     -
                     Charge offs                            (362,173)
                                                      ---------------
                     Balance December 31, 1999                   $ -
                                                      ===============

There was no activity in the reserve for losses and impairments in 2000.


                                       11
<PAGE>

                      ATEL CASH DISTRIBUTION FUND III, L.P.

                          NOTES TO FINANCIAL STATEMENTS

                                December 31, 2000


4.  Related party transactions:

The  terms of the  Limited  Partnership  Agreement  provided  that  the  General
Partners  and/or  Affiliates were entitled to receive certain fees for equipment
acquisition, management and resale and for management of the Partnership.

The  General   Partners   and/or   Affiliates   earned  fees,   commissions  and
reimbursements pursuant to the Limited Partnership Agreement as follows:

<TABLE>
<CAPTION>
                                                                                      2000             1999
                                                                                      ----             ----
<S>                                                                                    <C>              <C>

Incentive  management  fees  (computed  as  5% of  distributions  of  cash  from
operations,  as defined in the  Limited  Partnership  Agreement)  and  equipment
management  fees  (computed as 5% of gross revenues from  operating  leases,  as
defined in the Limited Partnership Agreement plus 2% of gross revenues from full
payout  leases,  as  defined  in the  Limited  Partnership  Agreement)                  $117,699         $114,011


Administrative cost reimbursements to General Partner                                     99,035          205,136
                                                                                 ---------------- ----------------
                                                                                       $ 216,734        $ 319,147
                                                                                 ================ ================
</TABLE>

The  Limited  Partnership  Agreement  allowed  for the  reimbursement  of  costs
incurred  by ATEL  in  providing  administrative  services  to the  Partnership.
Administrative  services  provided  include  Partnership  accounting,   investor
relations,  legal  counsel and lease and equipment  documentation.  ATEL was not
reimbursed  for  services  where it was  entitled  to receive a separate  fee as
compensation  for  such  services,   such  as  acquisition  and  disposition  of
equipment. Reimbursable costs incurred by ATEL were allocated to the Partnership
based upon actual time incurred by employees working on Partnership business and
an allocation of rent and other costs based on utilization studies.

Substantially   all  employees  of  ATEL  record  time  incurred  in  performing
administrative  services on behalf of all of the Partnerships  serviced by ATEL.
ATEL  believes  that the  costs  reimbursed  are the lower of (i)  actual  costs
incurred on behalf of the Partnership or (ii) the amount the  Partnership  would
be required to pay independent parties for comparable administrative services in
the same  geographic  location  and were  reimbursable  in  accordance  with the
Limited Partnership Agreement.



                                       12
<PAGE>

                     ATEL CASH DISTRIBUTION FUND III, L.P.

                          NOTES TO FINANCIAL STATEMENTS

                                December 31, 2000


5.  Partners' capital:

As of  December  31,  2000,  7,375,284  Units were issued and  outstanding.  The
Partnership was authorized to issue up to 7,500,000 Units of Limited Partnership
Interest in addition to the 50 Units issued to the Initial Limited Partners.

The Partnership's Net Profits,  Net Losses, and Tax Credits were to be allocated
99% to the Limited Partners and 1% to the General Partners.

Available Cash from Operations and Cash from Sales and  Refinancing,  as defined
in the Limited Partnership Agreement, were to be distributed as follows:

First, 5% of  Distributions  of Cash from Operations to the General  Partners as
Incentive Management Compensation.

Second,  the balance to the Limited  Partners  until the Limited  Partners  have
received  Aggregate  Distributions in an amount equal to their Original Invested
Capital, as defined,  plus a 10% per annum cumulative  (compounded daily) return
on their Adjusted Invested Capital.

Third, the General Partners will receive as Incentive  Management  Compensation,
the  following:

     (A)  10% of  remaining  Cash  from  Operations  and
     (B) 15% of remaining Cash from Sales or Refinancing.

Fourth, the balance to the Limited Partners.


6.  Concentration of credit risk and major customers:

The Partnership  leased equipment to lessees in diversified  industries.  Leases
were  subject to the  General  Partners'  credit  committee  review.  The leases
provided for the return of the equipment upon default.

As of December 31, 1999, 52% and 48% of the Partnership's lease assets (based on
equipment  cost) were leased to lessees in the utilities and mining  industries,
respectively.

During 2000,  one customer  comprised  95% of the  Partnership's  revenues  from
leases.

During 1999, five customers comprised 26%, 21%, 20%, 16% and 14%,  respectively,
of the Partnership's revenues from leases.





                                       13
<PAGE>

Item 9.  CHANGES IN AND DISAGREEMENTS WITH AUDITORS ON ACCOUNTING AND
               FINANCIAL DISCLOSURES

None


                                    PART III

Item 10.  DIRECTORS AND EXECUTIVE OFFICERS

The  registrant was a Limited  Partnership  and,  therefore,  had no officers or
directors.

All of the  outstanding  capital stock of ATEL Financial  Corporation (a General
Partner) is held by ATEL Capital  Group  ("ACG"),  a holding  company  formed to
control ATEL and affiliated  companies.  The outstanding voting capital stock of
ATEL Capital Group is owned 75% by A. J. Batt and 25% by Dean Cash.

Each of ATEL Leasing Corporation  ("ALC"),  ATEL Equipment  Corporation ("AEC"),
ATEL  Investor  Services  ("AIS") and ATEL  Financial  Corporation  ("AFC") is a
wholly-owned  subsidiary  of ATEL Capital  Group and  performs  services for the
Partnership.  Acquisition  services are  performed for the  Partnership  by ALC,
equipment  management,  lease  administration and asset disposition services are
performed by AEC, investor relations and  communications  services are performed
by AIS and general administrative  services for the Partnership are performed by
AFC. ATEL Securities  Corporation  ("ASC") is a wholly-owned  subsidiary of ATEL
Financial Corporation.

The officers  and  directors of ATEL  Capital  Group and its  affiliates  are as
follows:

A. J. Batt                     Chairman of the Board of Directors of ACG, AFC,
                               ALC, AEC, AIS and ASC; President and Chief
                               Executive Officer of ACG, AFC and AEC

Dean L. Cash                   Director, Executive Vice President and Chief
                               Operating Officer of ACG, AFC, and AEC; Director,
                               President and Chief Executive Officer of ALC, AIS
                               and ASC

Paritosh K. Choksi             Director, Senior Vice President and Chief
                               Financial Officer of ACG, AFC, ALC, AEC and AIS

Donald E. Carpenter            Vice President and Controller of ACG, AFC, ALC,
                               AEC and AIS; Chief Financial Officer of ASC

Vasco H. Morais                Senior Vice President, Secretary and General
                               Counsel for ACG, AFC, ALC, AIS and AEC

A. J. Batt, age 64, founded ATEL in 1977 and has been its president and chairman
of the  board of  directors  since  its  inception.  From  1973 to 1977,  he was
employed by GATX  Leasing  Corporation  as  manager-data  processing  and equity
placement for the lease underwriting department, which was involved in equipment
financing  for  major  corporations.  From  1967 to 1973  Mr.  Batt was a senior
technical representative for General Electric Corporation, involved in sales and
support  services for computer  time-sharing  applications  for corporations and
financial  institutions.  Prior to that time, he was employed by North  American
Aviation as an  engineer  involved in the Apollo  project.  Mr. Batt  received a
B.Sc.  degree with honors in  mathematics  and physics  from the  University  of
British Columbia in 1961.

Dean L. Cash,  age 50, joined ATEL as director of marketing in 1980 and has been
a vice president since 1981,  executive vice president since 1983 and a director
since  1984.   Prior  to  joining  ATEL,   Mr.  Cash  was  a  senior   marketing
representative for Martin Marietta Corporation, data systems division, from 1979
to 1980.  From 1977 to 1979,  he was employed by General  Electric  Corporation,
where he was an applications  specialist in the medical  systems  division and a
marketing  representative in the information  services division.  Mr. Cash was a
systems  engineer  with  Electronic  Data  Systems  from  1975 to 1977,  and was
involved in maintaining and developing software for commercial applications. Mr.
Cash received a B.S.  degree in psychology and mathematics in 1972 and an M.B.A.
degree with a  concentration  in finance in 1975 from Florida State  University.
Mr. Cash is an arbitrator with the American Arbitration Association.



                                       14
<PAGE>

Paritosh K.  Choksi,  age 47,  joined  ATEL in 1999 as a  director,  senior vice
president and its chief financial officer. Prior to joining ATEL, Mr. Choksi was
chief  financial  officer at Wink  Communications,  Inc. from 1997 to 1999. From
1977 to 1997,  Mr. Choksi was with Phoenix  American  Incorporated,  a financial
services and  management  company,  where he held various  positions  during his
tenure, and was senior vice president, chief financial officer and director when
he left the company. Mr. Choksi was involved in all corporate matters at Phoenix
and was  responsible  for Phoenix's  capital market needs. He also served on the
credit  committee  overseeing all corporate  investments,  including its venture
lease  portfolio.  Mr. Choksi was a part of the executive  management team which
caused  Phoenix's  portfolio  to increase  from $50 million in assets to over $2
billion.  Mr.  Choksi  received a bachelor of  technology  degree in  mechanical
engineering  from the Indian  Institute  of  Technology,  Bombay;  and an M.B.A.
degree degree from the University of California, Berkeley.

Donald E. Carpenter, age 52, joined ATEL in 1986 as controller. Prior to joining
ATEL, Mr. Carpenter was an audit supervisor with Laventhol & Horwath,  certified
public accountants in San Francisco, California, from 1983 to 1986. From 1979 to
1983,  Mr.  Carpenter  was an  audit  senior  with  Deloitte,  Haskins  & Sells,
certified public accountants,  in San Jose,  California.  From 1971 to 1975, Mr.
Carpenter was a Supply Corp officer in the U. S. Navy. Mr. Carpenter  received a
B.S. degree in mathematics  (magna cum laude) from California State  University,
Fresno in 1971 and completed a second major in accounting in 1978. Mr. Carpenter
has been a California certified public accountant since 1981.

Vasco H. Morais, age 42, joined ATEL in 1989 as general counsel to provide legal
support in the  drafting  and  reviewing  of lease  documentation,  advising  on
general corporate law matters, and assisting on securities law issues. From 1986
to 1989,  Mr.  Morais was  employed  by the  BankAmeriLease  Companies,  Bank of
America's  equipment leasing  subsidiaries,  providing in-house legal support on
the  documentation  of  tax-oriented  and non-tax  oriented direct and leveraged
lease transactions, vendor leasing programs and general corporate matters. Prior
to the BankAmeriLease  Companies,  Mr. Morais was with the Consolidated  Capital
Companies in the corporate and securities legal department  involved in drafting
and reviewing  contracts,  advising on corporate law matters and  securities law
issues.  Mr.  Morais  received  a B.A.  degree  in 1982 from the  University  of
California in Berkeley,  a J.D.  degree in 1986 from Golden Gate  University Law
School and an M.B.A.  (Finance) in 1997 from Golden Gate University.  Mr. Morais
has been an active member of the State Bar of California since 1986.


Item 11.  EXECUTIVE COMPENSATION

The  registrant was a Limited  Partnership  and,  therefore,  has no officers or
directors.

Set forth hereinafter is a description of the nature of remuneration paid and to
be paid to the  General  Partners  and  their  Affiliates.  The  amount  of such
remuneration paid for the years ended December 31, 2000 and 1999 is set forth in
Item 8 of this report under the caption "Financial  Statements and Supplementary
Data - Notes to the Financial  Statements - Related party transactions," at Note
4 thereof, which information is hereby incorporated by reference.

Selling Commissions

The  Partnership  paid  selling  commissions  in the  amount  of 9.5%  of  Gross
Proceeds, as defined, ($7,016,305), to ATEL Securities Corporation, an affiliate
of the General  Partners . Of this  amount,  $6,455,378  was  reallowed to other
broker/dealers.

Acquisition Fees

Acquisition  fees were paid to the General  Partners  for  services  rendered in
finding,  reviewing and evaluating  equipment to be purchased by the Partnership
and  rejecting  equipment  not  to  be  purchased  by  the  Partnership.   Total
acquisition  fees paid through  December 31, 2000 were  $3,508,152,  the maximum
allowable amount. No such fees were paid in either 2000 or 1999.



                                       15
<PAGE>

Equipment Management Fees

As compensation for its services  rendered  generally in managing or supervising
the management of the  Partnership's  equipment and in supervising other ongoing
services  and  activities  including,  among  others,  broker  assistance,  cash
management,   product  development,   property  and  sales  tax  monitoring  and
preparation of financial  data, the General  Partners or their  affiliates  were
entitled to receive  management  fees which were payable for each fiscal quarter
and are to be in an amount  equal to (i) 5% of the  gross  lease  revenues  from
"operating" leases and (ii) 2% of gross lease revenues from "full payout" leases
which  contain  net lease  provisions.  See Note 5 to the  financial  statements
included at Item 8 of this report for amounts paid.

Incentive Management Fees

As compensation  for its services  rendered in connection with the management of
the  Partnership,  including but not limited to employment  and  supervision  of
supervisory  managing  agents,  insurance  brokers,   equipment  lease  brokers,
accountants and other professional advisors, and for supervising the preparation
of reports and  maintenance of financial and operating data of the  Partnership,
Securities and Exchange Commission and Internal Revenue Service filings, returns
and  reports,  the General  Partners  were  entitled to receive the  Partnership
management  fee which shall be payable  for each fiscal  quarter and shall be an
amount equal to 5% of  distributions  of cash from operations until such time as
the  Limited  Partners  had  received  aggregate   distributions  of  cash  from
operations in an amount equal to their original  invested capital plus a 10% per
annum  return on their  average  adjusted  invested  capital  (as defined in the
Limited Partnership Agreement).  Thereafter, the incentive management fee was to
be 15% of all distributions of cash from operations,  sales or refinancing.  See
Note 5 to the financial statements included at Item 8 of this report for amounts
paid.

Equipment Resale Fees

As compensation for services  rendered in connection with the sale of equipment,
the General  Partners  were entitled to receive an amount equal to the lesser of
(i) 3% of the  sales  price  of the  equipment,  or  (ii)  one-half  the  normal
competitive  equipment sales commission charged by unaffiliated parties for such
services.  Such fee was payable  only after the Limited  Partners had received a
return of their adjusted invested capital (as defined in the Limited Partnership
Agreement) plus 10% of their adjusted invested capital per annum calculated on a
cumulative basis,  compounded  daily,  commencing the last day of the quarter in
which the limited  partner was  admitted to the  Partnership.  No such fees were
accrued or paid.

Equipment Re-lease Fee

As compensation  for providing  re-leasing  services,  the General Partners were
entitled  to  receive  fees equal to 2% of the gross  rentals or the  comparable
competitive rate for such services relating to comparable  equipment,  whichever
is less,  derived from the re-lease  provided  that (i) the General  Partners or
their  affiliates  maintained  adequate  staff to render  such  services  to the
Partnership,  (ii) no such  re-lease  fee was  payable  in  connection  with the
re-lease of equipment to a previous lessee or its affiliates,  (iii) the General
Partners or their  affiliates had rendered  substantial  re-leasing  services in
connection with such re-lease and (iv) the General  Partners or their affiliates
were compensated for rendering equipment management services.

General Partners' Interest in Operating Proceeds

Net income,  net loss and  investment  tax  credits  were  allocated  99% to the
Limited  Partners and 1% to the General  Partners.  See the statements of income
included in Item 8 of this report for the amounts  allocated  to the General and
Limited Partners in 2000 and 1999.




                                       16
<PAGE>

Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
            MANAGEMENT

Security Ownership of Certain Beneficial Owners

At  December  31,  2000,  no  investor  is  known  to the  Partnership  to  hold
beneficially more than 5% of the issued and outstanding Units.

Security Ownership of Management

The General  Partners  are  beneficial  owners of Limited  Partnership  Units as
follows:

<TABLE>
<CAPTION>
         (1)                           (2)                        (3)                             (4)
                               Name and Address of        Amount and Nature of                  Percent
   Title of Class                Beneficial Owner         Beneficial Ownership                 of Class

<S>                             <C>                            <C>                              <C>
Limited Partnership Units       A. J. Batt                     Initial Limited Partner Units    0.0007%
                                 235 Pine Street, 6th Floor     50 Units ($500)
                                  San Francisco, CA 94104       (owned by daughters)
</TABLE>

Changes in Control

The Limited  Partners had the right, by vote of the Limited Partners owning more
than 50% of the  outstanding  limited  Partnership  units,  to  remove a General
Partner.

The General Partners could at any time call a meeting of the Limited Partners or
a vote of the Limited Partners without a meeting,  on matters on which they are
entitled  to vote,  and shall call such  meeting  or for vote  without a meeting
following receipt of a written request therefore of Limited Partners holding 10%
or more of the total outstanding Limited Partnership Units.


Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The responses to Item 8 of this report under the caption  "Financial  Statements
and  Supplemental  Data - Notes to the  Financial  Statements  -  Related  party
transactions"  at Note 5 thereof,  and Item 11 of this report  under the caption
"Executive Compensation," are hereby incorporated by reference.




                                       17
<PAGE>

                                     PART IV

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

                    (a) Financial Statements and Schedules

                           1.  Financial Statements
                               Included in Part II of this report:
                               Report of Independent Auditors
                               Statements of Income for the years ended December
                                    31, 2000 and 1999
                               Statements  of Changes in  Partners'  Capital for
                                    the  years  ended  December  31,  2000  and
                                    1999
                               Statements  of Cash  Flows  for the  years  ended
                                    December  31,  2000 and 1999
                               Notes to  Financial Statements

                           2.  Financial Statement Schedules
                               All schedules for which  provision is made in the
                                  applicable   accounting   regulations  of  the
                                  Securities  and  Exchange  Commission  are not
                                  required under the related instructions or are
                                  inapplicable   and,   therefore,   have   been
                                  omitted.

                    (b) Reports on Form 8-K for the fourth quarter of 2000
                               None

                    (c) Exhibits
                               Agreement of Limited Partnership, incorporated by
                                  reference  to  Exhibits  (3)  and  (4)  to the
                                  Partnership's  Annual  Report  on Form 10K for
                                  the year ended December 31, 1990,  filed March
                                  29, 1991 (File No. 33-31395)


                                       18
<PAGE>

                                   SIGNATURES


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



   Date:       3/23/2001

                                ATEL Cash Distribution Fund III, L.P.
                           (Registrant)


     By:  ATEL Financial Corporation,
          General Partner of Registrant



                     By:  /s/  A. J. Batt
                          --------------------------
                          A. J. Batt,
                          President and Chief Executive Officer



     By:  /s/  A. J. Batt
          ------------------------------------------
          A. J. Batt,
          General Partner of Registrant,
          President and Chief Executive Officer of
          ATEL Financial Corporation (General
          Partner)



     By:   /s/ Dean Cash
          ------------------------------------------
          Dean Cash,
          General Partner of Registrant,
          Executive Vice President of ATEL
          Financial Corporation (General Partner)






                                       19
<PAGE>

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has  been  signed  below  by the  persons  in the  capacities  and on the  dates
indicated.


        SIGNATURE                 CAPACITIES                           DATE



/s/  A. J. Batt         General Partner of registrant; President,      3/23/2001
----------------------- Chairman and Chief Executive officer
A. J. Batt              of ATEL Financial Corporation




 /s/ Dean Cash          General Partner of registrant; Executive Vice  3/23/2001
----------------------- President and director of ATEL Financial
Dean Cash               Corporation



/s/ Paritosh K. Choksi  Principal financial officer of registrant;   3/23/2001
----------------------- principal financial officer and director
Paritosh K. Choksi      of ATEL Financial Corporation




/s/ Donald E. Carpenter Principal accounting officer of registrant;  3/23/2001
----------------------- principal accounting officer of ATEL
  Donald E. Carpenter   Financial Corporation



                                       20
<PAGE>