Form 10-KSB

                       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, 1999

                                       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  are  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.

The Partnership's  principal objectives are to invest in a diversified portfolio
of  equipment  which will (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 has been sold.  The  Partnership  is governed by its Limited
Partnership Agreement.


Narrative Description of Business

The  Partnership  has acquired  various types of equipment to lease  pursuant to
"Operating"  leases  and "Full  Payout"  leases,  where  "Operating"  leases are
defined as being leases in which the minimum lease  payments  during the initial
lease  term do 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.

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  1999,  five lessees
accounted for 26%, 21%, 20%, 16% and 14% of the Partnership's  revenues.  During
1998, one lessee accounted for 25% of the Partnership's lease revenues.



                                       2
<PAGE>

The equipment leasing industry is highly competitive.  Equipment  manufacturers,
corporations, partnerships and others offer users an alternative to the purchase
of most types of equipment with payment terms which vary widely depending on the
lease term and type of  equipment.  The ability of the  Partnership  to keep the
equipment leased and/or operating and the terms of the acquisitions,  leases and
dispositions  of equipment  depend on various  factors (many of which are not in
the  control  of the  General  Partners  or the  Partnership),  such as  general
economic  conditions,  including  the effects of  inflation  or  recession,  and
fluctuations in supply and demand for various types of equipment resulting from,
among other things, technological and economic obsolescence.

The business of the Partnership is not seasonal.

The Partnership has no full time employees.


Equipment Dispositions:

Through December 31, 1999, the Partnership has disposed of certain leased assets
as set forth below:

                                                                   Excess of
       Type of     Original Equipment Cost,                       Rents Over
      Equipment   Excluding Acquisition Fees   Sale Price         Expenses *
      ---------   --------------------------   ----------         ----------
Mining                  $ 21,337,627            $ 6,725,485        $ 13,791,558
Transportation            16,640,314              9,020,414          17,265,371
Other                     11,975,242              8,527,558           8,793,962
Earth moving               8,455,364              3,446,574           9,351,635
Point-of-sale              6,358,094              3,775,309           5,947,266
Food processing            6,014,685              2,406,813           6,061,124
Manufacturing              8,888,272              2,943,527          10,027,704
Materials handling         5,723,806              1,732,632           6,183,758
Furniture & fixtures       3,195,613              1,366,326           2,375,001
Medical                    2,732,652                346,321           2,682,398
Commercial aircraft        2,322,136              1,656,694             226,541
                      ---------------        ---------------    ----------------
                        $ 93,643,805            $41,947,653        $ 82,706,318
                      ===============        ===============    ================

* Includes only those expenses directly related to the production of the related
rents.

Equipment Leasing Activities:

The Partnership has acquired a diversified portfolio of equipment. The equipment
has been leased to lessees in various industries. The following tables set forth
the types of equipment acquired by the Partnership through December 31, 1999 and
the industries to which the assets have been leased.

                               Purchase price excluding   Percentage of total
         Asset types               acquisition fees          acquisitions
         -----------               ----------------          ------------
Earth moving                          $24,102,343                   24.19%
Mining                                 10,018,844                   10.06%
Over-the-road tractors and trailers     9,009,547                    9.04%
Aircraft                                7,571,020                    7.60%
Material handling                       7,355,483                    7.38%
Point-of-sale                           6,343,897                    6.37%
Food processing                         5,947,041                    5.97%
Furniture, fixtures and equipment       4,874,797                    4.89%
Utility                                 4,854,844                    4.87%
Chemicals manufacturing                 4,504,918                    4.52%
Printing                                3,756,764                    3.77%
Medical                                 2,155,489                    2.16%
Other **                                9,134,955                    9.18%
                                   ---------------         ----------------
                                      $99,629,942                  100.00%
                                   ===============         ================

** Individual asset types included in "Other" are less than 2% of the total.

                                       3
<PAGE>

                                   Purchase price excluding Percentage of total
  Industry of lessee                   acquisition fees       acquisitions
  ------------------                   ----------------       ------------
Mining, coal                              $30,687,214                 30.80%
Foods & food processing                     9,321,102                  9.36%
Manufacturing of auto/truck parts           7,455,451                  7.48%
Retail, general                             6,834,152                  6.86%
Utilities                                   5,696,857                  5.72%
Manufacturing, medical instruments          5,275,000                  5.29%
Manufacturing, other                        5,095,798                  5.11%
Transportation, trucking                    4,896,425                  4.91%
Chemicals                                   4,384,918                  4.40%
Printing                                    3,756,764                  3.77%
Insurance                                   2,833,575                  2.84%
Mining, metals                              2,591,961                  2.60%
Other *                                    10,800,725                 10.86%
                                       ---------------       ----------------
                                          $99,629,942                100.00%
                                       ===============       ================

*  Individual  lessee  industries  included in "Other" are less than 2.5% of the
total.

For further information regarding the Partnership's equipment lease portfolio as
of December 31, 1999,  see Note 3 to the financial  statements,  Investments  in
equipment  and  leases,   set  forth  in  Item  8,   Financial   Statements  and
Supplementary Data.


Item 2.  PROPERTIES

The  Partnership  does not own or lease any real  property,  plant or materially
important  physical  properties  other than the equipment  held for lease as set
forth in Item 1.

The General  Partners plan that the Partnership  will sell its remaining  assets
during the first quarter of 2000 and that it will cease  operations by March 31,
2000.  In  accordance  with this plan,  all but one of the  Partnership's  lease
assets had been sold as of February 15,  2000.  These plans will only be carried
out to the extent that economic  conditions are favorable to the Partnership and
only if the General  Partners  deem it to be in the best interest of the Limited
Partners to do so.

Item 3.  LEGAL PROCEEDINGS

No material legal  proceedings are currently  pending against the Partnership or
against any of its assets.


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

Inapplicable.


                                     PART II

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

Market Information

The Units are transferable  subject to restrictions on transfers which have 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 has developed and it is unlikely
that a public trading market will develop in the future.



                                       4
<PAGE>

Holders

As of December 31, 1999, a total of 5,107 investors were record holders of Units
in the Partnership.

Dividends

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

The General  Partners shall have sole  discretion in  determining  the amount of
distributions; provided, however, that the General Partners will not reinvest in
equipment,  but will  distribute,  subject to payment of any  obligations of the
Partnership,  such  available  cash  from  operations  and  cash  from  sales or
refinancing  as may be  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.

The rates for monthly distributions from 1998 operations were $.125 per Unit for
monthly  distributions  made from February  through December 1998 and in January
1999. The rates for quarterly distributions made in April, July and October 1998
and in January  1999 were  $.375 per Unit.  Total  distributions  were $1.50 per
Unit.  Distributions  were from cash flows from operations and sales proceeds in
1998.

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>
                                                    1999             1998             1997             1996             1995
                                                    ----             ----             ----             ----             ----
<S>                                                    <C>              <C>               <C>              <C>              <C>
Distributions of net income                            $ 0.01           $ 0.98            $ 0.58           $ 0.38           $ 0.27
Return of investment                                     2.03             0.44              0.45             0.87             1.13
                                               ---------------  --------------- ----------------- ---------------- ----------------
Distributions per unit                                   2.04             1.42              1.03             1.25             1.40
Differences due to timing of distributions              (0.25)            0.08             (0.03)           (0.03)               -
                                               ---------------  --------------- ----------------- ---------------- ----------------
Nominal distribution rates from above                  $ 1.79           $ 1.50            $ 1.00           $ 1.22           $ 1.40
                                               ===============  =============== ================= ================ ================
</TABLE>

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




                                       5
<PAGE>

Item 6.  SELECTED FINANCIAL DATA

The following table presents selected  financial data of the Partnership for the
years ended December 31, 1999,  1998,  1997, 1996, and 1995. This financial data
should be read in  conjunction  with the financial  statements and related notes
included under Item 8 of this report.

<TABLE>
<CAPTION>
                                          1999             1998             1997             1996             1995
                                          ----             ----             ----             ----             ----
<S>                                     <C>              <C>              <C>              <C>               <C>
Gross Revenues                          $ 1,342,845      $11,007,336      $ 10,433,457     $ 11,709,770      $14,332,795
Net income                                 $ 84,854      $ 7,293,197       $ 4,334,639      $ 2,851,478      $ 2,032,662
Weighted average Units outstanding        7,375,284        7,376,201         7,376,934        7,376,934        7,378,884
Net income per Unit, based on
   weighted average Units outstanding        $ 0.01           $ 0.98            $ 0.58           $ 0.38           $ 0.27
Distributions per Unit, based on
   weighted average Units outstanding        $ 2.04           $ 1.42            $ 1.03           $ 1.25           $ 1.40
Total Assets                            $ 1,900,695      $17,582,514      $ 22,727,752     $ 29,791,041      $41,900,878
Non-recourse Debt                          $ 57,291        $ 413,707       $ 2,497,392      $ 6,068,326      $11,451,641
Total Partners' Capital                 $ 1,693,011      $16,630,778      $ 19,797,739     $ 23,081,480      $29,451,915
</TABLE>

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

The  liquidity of the  Partnership  will vary in the future,  increasing  to the
extent cash flows from leases and proceeds from asset sales exceed expenses, and
decreasing as  distributions  are made to the Limited Partners and to the extent
expenses exceed cash flows from leases and proceeds from asset sales.

As another source of liquidity, the Partnership has contractual obligations with
a diversified group of lessees for fixed lease terms at fixed rental amounts. As
the lease  terms  expire the  Partnership  will sell the  equipment.  The future
liquidity  beyond the  contractual  minimum  rentals  will depend on the General
Partners' success in selling the equipment as it comes off lease.

The  Partnership  participates  with the  General  Partner  and  certain  of its
affiliates  in  a  $95,000,000   revolving  line  of  credit  with  a  financial
institution  that  includes  certain  financial  covenants.  The line of  credit
expires on April 30,  2000.  As of  December  31,  1999 the  Partnership  had no
borrowings  under  this  line of  credit  and  the  remaining  availability  was
$21,857,103.

At December 31, 1999 the Partnership's  reinvestment period ended and there were
no commitments to purchase additional lease assets.

As of December 31, 1999, cash balances consisted of working capital.

The Partnership  currently has available adequate reserves to meet its immediate
cash requirements,  but in the event those reserves were found to be inadequate,
the  Partnership  would  likely be in a position  to borrow  against its current
portfolio  to meet such  requirements.  The  General  Partners  envision no such
requirements for operating purposes.



                                       6
<PAGE>

Through   December  31,  1999,  the  Partnership   had  borrowed   approximately
$32,425,000.  The remaining  unpaid  balance of such  borrowings at December 31,
1999 was $57,291.  The borrowings are non-recourse to the Partnership.  As such,
the only  recourse  the lender has is to the  equipment or  corresponding  lease
acquired with the loan proceeds.  Through  December 31, 1999, debt proceeds were
approximately   40%  of  the  aggregate  cost  of  equipment   acquired  by  the
Partnership.  The Limited Partnership  Agreement limits the amount of additional
debt that the  Partnership  may incur at any point in time. The  Partnership may
only incur  additional debt to the extent that the then  outstanding  balance of
all such  debt,  including  the  additional  debt,  does not  exceed  40% of the
original cost of the lease assets then owned by the  Partnership,  including any
such assets purchased with the proceeds of such additional debt.

The  Partnership  commenced  regular  distributions,  based on cash  flows  from
operations, beginning with the second quarter of 1990. See Items 5 and 6 of this
report for additional information regarding the distributions.

If  inflation  in the general  economy  becomes  significant,  it may affect the
Partnership inasmuch as the residual (resale) values of the Partnership's leased
assets  may  increase  as the costs of similar  assets  increase.  However,  the
Partnership's  revenues from existing  leases would not increase,  as such rates
are  generally  fixed  for  the  terms  of the  leases  without  adjustment  for
inflation.

If interest rates increase  significantly,  the lease rates that the Partnership
can obtain on future  leases will be expected to increase as the cost of capital
is a significant  factor in the pricing of lease  financing.  Leases  already in
place would not be affected by changes in interest rates.

The General  Partners plan that the Partnership  will sell its remaining  assets
during the first quarter of 2000 and that it will cease  operations by March 31,
2000.  In  accordance  with this plan,  all but one of the  Partnership's  lease
assets had been sold as of February 15,  2000.  These plans will only be carried
out to the extent that economic  conditions are favorable to the Partnership and
only if the General  Partners  deem it to be in the best interest of the Limited
Partners to do so.


Cash Flows

Cash flows from  operations  decreased  from  $3,953,216  in 1998 to $779,739 in
1999, a decrease of $3,173,477.  This decrease resulted primarily from decreased
operating lease rents  ($2,720,634)  and decreased direct finance lease revenues
($273,344).  Operating  lease rents remain the  Partnership's  most  significant
source of operating cash flows.

Cash flows from  investing  activities  decreased  from  $10,542,842  in 1998 to
$4,034,209 in 1999, a decrease of $6,508,633.  The primary  sources of cash from
investing  activities  are  proceeds  from sales of assets and rents from direct
financing leases. Sales proceeds decreased by $5,965,818. Direct financing lease
rents decreased by $542,815 compared to 1998.

There  were  no  financing  sources  of cash in  1999  or  1998.  Repayments  of
non-recourse  debt  decreased  due to  scheduled  debt  payments.  Cash used for
distributions  to  Limited  Partners  increased  from  $10,457,123  in  1998  to
$15,022,621  in  1999 as a  result  of the  increase  of the  per  Unit  rate of
distributions from $1.00 in 1997 to $1.50 in 1998 and to $1.79 in 1999.


Results of Operations

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 are  subject to the  General  Partners'  credit  committee
review.  The leases  provide 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 nor is there any
known trend  regarding  these  industries  that would effect its  operations  in
future periods.



                                       7
<PAGE>

Net income  decreased  from  $7,293,197 in 1998 to $84,854 in 1999. The decrease
resulted  from  a  number  of  factors.  During  1998  and  1999,  most  of  the
Partnership's  lease assets were sold.  This  resulted in decreased  revenues in
1999  ($1,342,845)  compared  to 1998  ($11,007,336).  In 1998,  the asset sales
resulted  in gains of  $6,160,019  compared  to a loss on the sales of assets of
$369,377 in 1999.

The most significant change in expenses,  other than depreciation  expense,  was
the reduction in interest  expense of $106,226  ($126,982 in 1998 and $20,756 in
1999).  Interest expense  declined due to scheduled debt payments.  Depreciation
expense  decreased  as a result of sales of  operating  lease assets in 1998 and
1999.

Management  fees have  decreased  from  $640,419 in 1998 to $114,011 in 1999,  a
decrease of $526,408. This decrease is related to the decrease in lease revenues
and to the  decrease in  distributions  of cash from  operations  to the limited
partners.


Impact of the Year 2000

To date, the Partnership  has experienced no significant  year 2000 problems and
the general  partners  believe it does not have  continued  exposure to the year
2000 problem.


Item 7a.  QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

The Partnership,  like most other companies, is exposed to certain market risks,
including  primarily  changes in interest rates.  The  Partnership  believes its
exposure to other market risks including  foreign  currency  exchange rate risk,
commodity  risk and equity price risk are  insignificant  to both its  financial
position and results of operations.

In  general,  the  Partnership  manages its  exposure  to interest  rate risk by
obtaining  fixed rate debt. The fixed rate debt is structured so as to match the
cash flows required to service the debt to the payment  streams under fixed rate
lease receivables.  The payments under the leases are assigned to the lenders in
satisfaction of the debt.  Furthermore,  the Partnership has  historically  been
able to maintain a stable  spread  between its cost of funds and lease yields in
both  periods  of  rising  and  falling  rates.  Nevertheless,  the  Partnership
frequently  funds leases with its floating  rate line of credit and is therefore
exposed to interest  rate risk until fixed rate  financing  is  arranged.  As of
December 31, 1999, the Partnership  had no outstanding  balances on the floating
rate line of credit.

To hedge its interest rate risk related to any  outstanding  variable rate debt,
the  Partnership may enter into interest rate swaps. As of December 31, 1999, no
swaps or other  derivative  financial  instruments were held by the Partnership.
The  Partnership  does not hold or issue  derivative  financial  instruments for
speculative purposes.


Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See the  Report  of  Independent  Auditors,  Financial  Statements  and Notes to
Financial Statements attached hereto at pages 9 through 19.


                                       8
<PAGE>








                REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS






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


We have audited the accompanying  balance sheet of ATEL Cash  Distribution  Fund
III, L.P. as of December 31, 1999, and the related statements of income, changes
in  partners'  capital  and cash  flows for each of the two years in the  period
ended December 31, 1999. 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 financial  position of ATEL Cash  Distribution Fund
III, L.P. at December 31, 1999,  and the results of its  operations and its cash
flows  for each of the two years in the  period  ended  December  31,  1999,  in
conformity with accounting principles generally accepted in the United States.







                                                           /s/ ERNST & YOUNG LLP
San Francisco, California
January 25, 2000


                                       9
<PAGE>

                      ATEL CASH DISTRIBUTION FUND III, L.P.

                                  BALANCE SHEET

                                DECEMBER 31, 1999


                                     ASSETS


Cash and cash equivalents                                           $ 729,853

Accounts receivable                                                    84,089

Investments in equipment and leases                                 1,086,753
                                                              ----------------
Total assets                                                      $ 1,900,695
                                                              ================


                       LIABILITIES AND PARTNERS' CAPITAL



Non-recourse debt                                                    $ 57,291

Accrued interest

Accounts payable                                                      150,393
                                                              ----------------
Total liabilities                                                     207,684

Partners' capital:
     General Partners                                                 243,392
     Limited Partners                                               1,449,619
                                                              ----------------
Total partners' capital                                             1,693,011
                                                              ----------------
Total liabilities and partners' capital                           $ 1,900,695
                                                              ================

                             See accompanying notes.



                                       10
<PAGE>

                      ATEL CASH DISTRIBUTION FUND III, L.P.

                              STATEMENTS OF INCOME

                     YEARS ENDED DECEMBER 31, 1999 AND 1998


<TABLE>
<CAPTION>
Revenues:                                                        1999             1998
                                                                 ----             ----
Leasing activities:
<S>                                                             <C>              <C>
     Operating leases                                           $ 1,306,703      $ 4,027,337
     Direct financing leases                                         71,837          345,081
     Leveraged leases                                                21,123           18,573
     (Loss) gain on sales of equipment                             (369,377)       6,160,019
Other                                                                 5,851           57,089
Interest income                                                     306,708          399,237
                                                            ---------------- ----------------
                                                                  1,342,845       11,007,336
                                                            ---------------- ----------------

Expenses:
Depreciation                                                        752,327        2,557,024
Administrative cost reimbursements to General Partner               205,136          235,984
Equipment and incentive management fees to General Partner          114,011          640,419
Other                                                                87,156           81,161
Income taxes and franchise fees                                      55,651           29,514
Interest expense                                                     20,756          126,982
Professional fees                                                    22,954           25,882
Provision for losses and impairments                                      -           17,173
                                                            ---------------- ----------------
                                                                  1,257,991        3,714,139
                                                            ---------------- ----------------
Net income                                                         $ 84,854      $ 7,293,197
                                                            ================ ================

Net income:
     General Partners                                                 $ 849         $ 72,932
     Limited Partners                                                84,005        7,220,265
                                                            ---------------- ----------------
                                                                   $ 84,854      $ 7,293,197
                                                            ================ ================

Net income per Limited Partnership unit                              $ 0.01           $ 0.98

Weighted average number of units outstanding                      7,375,284        7,376,201
</TABLE>


                    STATEMENT OF CHANGES IN PARTNERS' CAPITAL

                     YEARS ENDED DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
                                                             Limited Partners
                                                             ----------------              General
                                                         Units            Amount          Partners           Total
                                                         -----            ------          --------           -----
<S>              <C> <C>                                  <C>            <C>                 <C>            <C>
Balance December 31, 1997                                 7,376,284      $ 19,628,128        $ 169,611      $19,797,739
Distributions to limited partners ($1.42  per Unit)                       (10,457,123)               -      (10,457,123)
Repurchase of Limited Partnership Units                      (1,000)           (3,035)                           (3,035)
Net income                                                                  7,220,265           72,932        7,293,197
                                                     --------------- ----------------- ---------------- ----------------
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
                                                     =============== ================= ================ ================
</TABLE>

                             See accompanying notes.


                                       11
<PAGE>

                      ATEL CASH DISTRIBUTION FUND III, L.P.

                            STATEMENTS OF CASH FLOWS

                     YEARS ENDED DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
Operating activities:                                                                 1999             1998
                                                                                      ----             ----
<S>                                                                                  <C>              <C>
Net income                                                                              $ 84,854      $ 7,293,197
  Adjustment  to  reconcile  net  income  to  net  cash  provided  by  operating
   activities:
     Depreciation                                                                        752,327        2,557,024
     Loss (gain) on sales of equipment                                                   369,377       (6,160,019)
     Income from investment in leveraged leases                                          (21,123)         (18,573)
     Provision for losses and impairments                                                      -           17,173
     Changes in operating assets and liabilities:
        Accounts receivable                                                              (18,060)         159,006
        Accounts payable, General Partner                                               (339,374)         266,835
        Accounts payable, other                                                            6,228          (49,626)
        Accrued interest                                                                  (1,363)         (10,479)
        Unearned operating lease income                                                  (53,127)        (101,322)
                                                                                 ---------------- ----------------
Net cash provided by operating activities                                                779,739        3,953,216

Investing activities:
Proceeds from sales of lease assets                                                    3,614,285        9,580,103
Reductions of net investment in direct financing leases                                  419,924          962,739
                                                                                 ---------------- ----------------
Net cash provided by investing activities                                              4,034,209       10,542,842

Financing activities:
Distributions to limited partners                                                    (15,022,621)     (10,457,123)
Repayments of non-recourse debt                                                         (356,416)      (2,083,685)
Repurchase of limited partnership units                                                        -           (3,035)
                                                                                 ---------------- ----------------
Net cash used in financing activities                                                (15,379,037)     (12,543,843)
                                                                                 ---------------- ----------------

Net (decrease) increase in cash and cash equivalents                                 (10,565,089)       1,952,215
Cash and cash equivalents at beginning of period                                      11,294,942        9,342,727
                                                                                 ---------------- ----------------
Cash and cash equivalents at end of period                                             $ 729,853      $11,294,942
                                                                                 ================ ================


Supplemental disclosures of cash flow information:

Cash paid during the year for interest                                                  $ 22,119        $ 137,461
                                                                                 ================ ================
</TABLE>



                             See accompanying notes.



                                       12
<PAGE>

                      ATEL CASH DISTRIBUTION FUND III, L.P.

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 1999


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 consists of leasing various types of equipment. As of
December 31, 1999,  the original  terms of the leases ranged from three years to
eight years and nine months.

Pursuant to the Limited  Partnership  Agreement,  the General  Partners  receive
compensation  and   reimbursements  for  services  rendered  on  behalf  of  the
Partnership  (Note 5). The  General  Partners  are  required  to maintain in the
Partnership  reasonable  cash reserves for working  capital,  the  repurchase of
Units and contingencies.


2.  Summary of significant accounting policies:

Equipment on operating leases:

Equipment on operating leases is stated at cost.  Depreciation is 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  are  recognized  evenly  over the life of the
related leases.

Direct financing leases:

Income from direct  financing  lease  transactions  is reported on 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 is calculated so as to generate a constant rate of return on
the net receivable outstanding.

Investment in leveraged leases:

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



                                       13
<PAGE>

                      ATEL CASH DISTRIBUTION FUND III, L.P.

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 1999


2.  Summary of significant accounting policies (continued):

Statements of cash flows:

For purposes of the Statements of Cash Flows, cash and cash equivalents includes
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 tax basis of the  Partnership's  net assets and liabilities  varies from the
amounts presented in these financial statements (unaudited):

Financial statement basis of net assets                         $ 1,693,011
Tax basis of net assets                                          10,823,747
                                                            ----------------
Difference                                                      $ 9,130,736
                                                            ================

The  primary  differences  between  the tax basis of net assets and the  amounts
recorded in the financial  statements are the accounting for  syndication  costs
and  differences  between  the  depreciation   methods  used  in  the  financial
statements and the Partnership's 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):

                                                   1999             1998
                                                   ----             ----
 Net income per financial statements                 $ 84,854      $ 7,293,197
 Adjustment to depreciation expense                   148,822          503,382
 Adjustments to revenues                            3,532,988        2,743,103
 Provision for losses and impairments                       -           17,173
                                             ----------------- ----------------
 Net income per federal tax return                $ 3,766,664     $ 10,556,855
                                             ================= ================

Credit Risk:

Financial   instruments   which   potentially   subject   the   Partnership   to
concentrations  of credit risk  include cash and cash  equivalents  and accounts
receivable.  The  Partnership  places  its  cash  deposits  and  temporary  cash
investments  with  creditworthy,   high  quality  financial  institutions.   The
concentration  of such deposits and temporary cash  investments is not deemed to
create a significant  risk to the  Partnership.  Accounts  receivable  represent
amounts  due from  lessees  in  various  industries,  related  to  equipment  on
operating and direct financing  leases.  See Note 7 for a description of lessees
by industry as of December 31, 1999 and 1998.

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.


                                       14
<PAGE>

                     ATEL CASH DISTRIBUTION FUND III, L.P.

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 1999


2.  Summary of significant accounting policies (continued):

Per unit data:

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

Reserve for losses and impairments:

The  Partnership  maintains a reserve on its investments in equipment and leases
for losses and impairments which are inherent in the portfolio as of the balance
sheet date. The General Partners' evaluation of the adequacy of the allowance is
a judgmental  estimate that is based on a review of individual leases, past loss
experience and other factors.  While the General Partners  believe the allowance
is adequate to cover known losses, it is reasonably  possible that the allowance
may change in the near term.  However,  such  change is not  expected  to have a
material  effect on the financial  position or future  operating  results of the
Partnership.  It is the Partnership's policy to charge off amounts which, in the
opinion  of the  General  Partners,  are not  recoverable  from  lessees  or the
disposition of the collateral.

Reclassifications:

Certain  1998   balances  have  been   reclassified   to  conform  to  the  1999
presentation.


3.  Investments in equipment and leases:

As of December 31, 1999, the  Partnership's  investments in equipment and leases
consist of the following:

<TABLE>
<CAPTION>
                                                                 Depreciation
                                                                  Expense or        Reclass-
                                                                    Lease        ifications or
                                                    1998         Amortization     Dispositions         1999
                                                    ----         ------------   - -------------        ----
<S>                                               <C>               <C>             <C>                 <C>
Net investment in operating leases                $ 4,961,101       $ (752,327)     $ (3,473,316)       $ 735,458
Net investment in direct financing leases           1,114,623         (419,924)         (345,904)         348,795
Assets held for lease or sale                         363,048                -          (360,548)           2,500
Net investment in leveraged leases                    144,944           21,123          (166,067)               -
Reserve for losses and impairments                   (362,173)               -           362,173                -
                                               ---------------  --------------- ----------------- ----------------
                                                  $ 6,221,543     $ (1,151,128)     $ (3,983,662)     $ 1,086,753
                                               ===============  =============== ================= ================
</TABLE>





                                       15
<PAGE>

                      ATEL CASH DISTRIBUTION FUND III, L.P.

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 1999


3.  Investments in equipment and leases (continued):

Operating leases:

Property on operating  lease  consists of the following as of December 31, 1998,
additions and dispositions during 1999 and as of December 31, 1999:

<TABLE>
<CAPTION>
                                 Balance                           Reclass-          Balance
                               December 31,                      ifications or    December 31,
                                   1998          Additions       Dispositions         1999
                                   ----          ---------       ------------         ----
<S>                              <C>                <C>            <C>                 <C>
Mining                           $ 3,757,698                                         $ 3,757,698
Manufacturing                      3,618,000                       $ (3,618,000)               -
Printing                           3,044,659                         (3,044,659)               -
Utilities                          2,839,101                         (2,839,101)               -
Food processing                    2,438,524                         (2,438,524)               -
Medical                            2,155,489                         (2,155,489)               -
Transportation                       628,497                           (628,497)               -
Materials handling                   529,071                           (529,071)               -
Other                                 65,695                            (65,695)               -
                              --------------- ----------------- ---------------- ----------------
                                  19,076,734                        (15,319,036)       3,757,698
Less accumulated depreciation    (14,115,633)       $ (752,327)      11,845,720       (3,022,240)
                              --------------- ----------------- ---------------- ----------------
                                 $ 4,961,101        $ (752,327)    $ (3,473,316)       $ 735,458
                              =============== ================= ================ ================
</TABLE>

Direct financing leases:

As of December 31,  1999,  investment  in direct  financing  leases  consists of
turbine   generating   units.   The  following   lists  the  components  of  the
Partnership's investment in direct financing leases as of December 31, 1999:

Total minimum lease payments receivable                            $ 95,802
Estimated residual values of leased equipment (unguaranteed)        271,733
                                                                ------------
Investment in direct financing leases                               367,535
Less unearned income                                                (18,740)
                                                                ------------
Net investment in direct financing leases                         $ 348,795
                                                                ============

At December 31, 1999,  the aggregate  amounts of future  minimum lease  payments
under operating and direct financing leases are as follows:

           Year ending                         Direct
           December 31,     Operating        Financing          Total
           -------------    ---------        ---------          -----
                    2000       $ 120,000         $ 95,802         $ 215,802
                    2001          20,000                -            20,000
                          ---------------  --------------- -----------------
                               $ 140,000         $ 95,802         $ 235,802
                          ===============  =============== =================



                                       16
<PAGE>

                      ATEL CASH DISTRIBUTION FUND III, L.P.

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 1999


3.  Investments in equipment and leases (continued):

Reserves for losses and impairments:

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

              Balance 12/31/97           $ 613,627
              Charge offs                 (268,627)
              Provision                     17,173
                                    ---------------
              Balance 12/31/98             362,173
              Provision                          -
              Charge offs                 (362,173)
                                    ---------------
              Balance 12/31/99                 $ -
                                    ===============


4.  Non-recourse debt:

At  December  31,  1999,  non-recourse  debt  consists  of a note  payable  to a
financial  institution  of  $57,291.  The note is due in  quarterly  payments of
$29,832 through its due date of June 2000.  Interest on the note is at a rate of
11%.  The note is secured by an  assignment  of lease  payments  and a pledge of
assets.  At December  31,  1999,  the  carrying  value of the pledged  assets is
$348,795.


5.  Related party transactions:

The terms of the Limited Partnership Agreement provide that the General Partners
and/or   Affiliates   are  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>
                                                                                       1999             1998
                                                                                       ----             ----
<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).                      $ 114,011         $640,419fs

Administrative cost reimbursements to General Partner                                     205,136          235,984
                                                                                  ---------------- ----------------
                                                                                        $ 319,147        $ 876,403
                                                                                  ================ ================
</TABLE>

The Limited Partnership Agreement allows 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 is not  reimbursed  for
services where it is entitled to receive a separate fee as compensation for such
services,  such as acquisition and disposition of equipment.  Reimbursable costs
incurred  by ATEL are  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.




                                       17
<PAGE>

                      ATEL CASH DISTRIBUTION FUND III, L.P.

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 1999


5.  Related party transactions (continued):

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 are reimbursable in accordance with the Limited
Partnership Agreement.


6.  Partners' capital:

As of  December  31,  1999,  7,375,284  Units were issued and  outstanding.  The
Partnership is 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 Net Profits, Net Losses, and Tax Credits are 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, shall 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, (B) 15% of remaining Cash from Sales or Refinancing.

Fourth, the balance to the Limited Partners.


7.  Concentration of credit risk and major customers:

The Partnership  leases equipment to lessees in diversified  industries.  Leases
are subject to the General Partners' credit committee review. The leases provide
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 1999, five customers comprised 26%, 21%, 20%, 16% and 14%,  respectively,
of the Partnership's revenues from leases.

During 1998,  one customer  comprised  25% of the  Partnership's  revenues  from
leases.





                                       18
<PAGE>

                      ATEL CASH DISTRIBUTION FUND III, L.P.

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 1999


8.  Line of credit:

The  Partnership  participates  with the  General  Partner  and  certain  of its
Affiliates in a $95,000,000 revolving credit agreement with a group of financial
institutions  which  expires  on April  30,  2000.  The  agreement  includes  an
acquisition  facility and a warehouse  facility which are used to provide bridge
financing  for  assets  on  leases.  Draws on the  acquisition  facility  by any
individual  borrower  are  secured  only by that  borrower's  assets,  including
equipment and related leases.  Borrowings on the warehouse facility are recourse
jointly to certain of the Affiliates, the Partnership and the General Partners.

The Partnership had no borrowings under the agreement during 1999.

The credit agreement  includes certain  financial  covenants  applicable to each
borrower.  The  Partnership  was in compliance with its covenants as of December
31, 1999. At December 31, 1999, $21,857,103 was available under this agreement.


9.  Fair value of financial instruments:

The following  methods and  assumptions  were used to estimate the fair value of
each class of financial  instrument for which it is practicable to estimate that
value.

Cash and cash equivalents:

The carrying amount of cash and cash equivalents approximates fair value because
of the short-term maturity of these instruments.

Non-recourse debt:

The  fair  value  of the  Partnership's  non-recourse  debt is  estimated  using
discounted cash flow analyses,  based on the Partnership's  current  incremental
borrowing rates for similar types of borrowing arrangements.  The estimated fair
value of the  Partnership's  non-recourse  debt at December 31, 1999 is $55,541.


                                       19
<PAGE>

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

Inapplicable.


                                    PART III

Item 10.  DIRECTORS AND EXECUTIVE OFFICERS

The  registrant  is a Limited  Partnership  and,  therefore,  has 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  pursuant to a corporate  restructuring
completed in July 1994. The  outstanding  capital stock of ATEL Capital Group is
owned  73.125% by A. J. Batt and 24.375% by Dean Cash,  and was  obtained in the
restructuring  in  exchange  for  their  capital  interests  in  ATEL  Financial
Corporation. The remaining 2.5% is owned by Paritosh K. Choksi.

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

Carl W. Magnuson               Vice President - Syndication of ALC

Barbara F. Medwadowski         Vice President - Syndication of ALC

James A. Kamradt               Director of Pricing and Syndication of ALC

Thomas D. Sbordone             Senior Vice President - Marketing of ALC

Russell H. Wilder              Vice President - Credit of AEC

John P. Scarcella              Vice President of ASC



                                       20
<PAGE>

A. J. Batt, age 63, 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 49, 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.

Paritosh K.  Choksi,  age 46,  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 from the University of California, Berkeley.

Donald E. Carpenter, age 51, 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 41, 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.



                                       21
<PAGE>

Carl  W.  Magnuson,  age  56,  joined  ATEL in  1994  and is  vice  president  -
syndication for ALC. Mr. Magnuson is responsible for acquiring third party lease
transactions  and debt placement.  Prior to joining ATEL he was a regional group
manager and portfolio  sales manager for Bell  Atlantic  Systems  Leasing for 10
years.  From 1983 to 1984 he was vice president and chief  financial  officer of
the Handi-Kup  Company,  a plastics  manufacturer,  and from 1981 to 1982 he was
controller for the Cyclotron  Corporation,  engaged in nuclear medicine research
and  development.  From 1978 to 1981 he was executive  vice president of Shannon
Financial Corporation, a middle market leasing corporation. From 1975 to 1978 he
was a deputy program manager for the Watkins Johnson Company.  From 1968 to 1973
Mr.  Magnuson was an engineering  duty officer in the U. S. Navy.  Mr.  Magnuson
received a B.S. in Engineering  Science and an M.S. in applied  mathematics from
the    Rensselaer    Polytechnic    Institute,    an    M.S.    in    industrial
engineering/operations research from Stanford University, and an M.B.A. from the
University of California at Berkeley.

Barbara F.  Medwadowski,  age 60,  joined  ATEL in 1997 and is vice  president -
syndication  for ALC. Ms.  Medwadoski is responsible  for acquiring  third party
lease  transactions.  Prior to joining ATEL, she was a syndications  manager for
Mellon US Leasing  (successor to USL Capital and U.S.  Leasing  Corporation) for
nine  years.  From 1985 to 1987,  she was a vice  president  with Great  Western
Leasing where she acquired lease and loan transactions from intermediaries. From
1982 through 1984, she was a portfolio  manager with U.S.  Leasing  Corporation.
Ms. Medwadowski  received an M.B.A.  degree from the University of California at
Berkeley in 1982. From 1964 through 1979, she was a senior  researcher in lipids
and  lipoproteins  at the  University of California  at Berkeley.  In 1964,  she
earned  an  M.S.  degree  in  nutrition  and  in  1961 a B.S.  degree  in  child
development, each from the University of California at Berkeley.

James A. Kamradt,  age 38,  director of pricing and  syndication for ALC, joined
ATEL in 1997. Mr. Kamradt is involved in the pricing of lease  transactions  and
the placement of debt to leverage certain  transactions.  From 1985 to 1997, Mr.
Kamradt managed his own private consulting business,  providing underwriting and
operational services for numerous leasing companies.  Prior to that, Mr. Kamradt
was the national operations officer for the computer leasing division of Phoenix
American;  and regional credit manager for Dana Commercial  Credit  Corporation.
Mr. Kamradt received a B.S. from Michigan Technological University's Engineering
School of Business, and an M.B.A. from Haas School of Business of the University
of California, Berkeley.

Thomas D. Sbordone,  age 41, senior vice  president - marketing for ALC,  joined
ATEL in 1993, as a regional vice  president in the  northeastern  United States.
Mr. Sbordone is currently  responsible for new business  development  within the
eastern  U.S.,  including  management  of filed  sales  personnel  and  directly
interfacing  with  ATEL's  existing  and  prospective  clients  to  achieve  the
company's lease investment  objectives.  Prior to joining ATEL, Mr. Sbordone was
employed, from 1985, by American Finance Group, a Boston-based equipment lessor.
While there, Mr. Sbordone's various responsibilities  involved lease origination
of vendor finance  relationships.  Mr. Sbordone  earned a B.S., with honors,  in
finance and marketing from  Northeastern  University,  and has attended  Bentley
College Graduate School of Business.

Russell  H.  Wilder,  age 45,  joined  ATEL in  1992 as vice  president  of ATEL
Business Credit, a wholly-owned  subsidiary of ACG. Immediately prior to joining
ATEL,  Mr.  Wilder was a personal  property  broker  specializing  in  equipment
leasing  and  financing  and an  outside  contractor  in the areas of credit and
collections.  From 1985 to 1990 he was vice president and manager of leasing for
Fireside Thrift Co., a Teledyne subsidiary,  and was responsible for all aspects
of setting up and  managing  the  department,  which  operated as a small ticket
lease  funding  source.  From  1983 to  1985 he was  with  Wells  Fargo  Leasing
Corporation  as  assistant  vice  president  in the credit  department  where he
oversaw all credit analysis on  transactions in excess of $2 million.  From 1978
to 1983 he was district credit manager with  Westinghouse  Credit  Corporation's
Industrial Group and was responsible for all non-marketing operations of various
district offices. Mr. Wilder holds a B.S. with honors in agricultural  economics
and business  management  from the University of California,  Davis. He has been
awarded the Certified Lease Professional  designation by the Western Association
of Equipment Lessors.



                                       22
<PAGE>

John P. Scarcella,  age 38, joined ATEL Securities as vice president in 1992. He
is involved in the marketing of securities offered by ASC. Prior to joining ASC,
from 1987 to 1991,  he was  employed  by Lansing  Pacific  Fund,  a real  estate
investment  trust in San Mateo,  California  and acted as  director  of investor
relations.   From  1984  to  1987,   Mr.   Scarcella   acted  as  broker  dealer
representative  for Lansing  Capital  Corporation,  where he was involved in the
marketing of direct  participation  programs and REITs. Mr. Scarcella received a
B.S.C.  degree with emphasis in investment finance in 1983 and an M.B.A.  degree
with a concentration in marketing in 1991 from Santa Clara University.


Item 11.  EXECUTIVE COMPENSATION

The  registrant  is 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, 1999 and 1998 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
5 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, 1999 were  $3,508,152,  the maximum
allowable amount.

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 are
entitled to receive  management  fees which are 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 shall be 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  have  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 shall
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.



                                       23
<PAGE>

Equipment Resale Fees

As compensation for services  rendered in connection with the sale of equipment,
the General  Partners shall be 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 is payable only after the Limited  Partners  have 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.  To date, none have
been accrued or paid.

Equipment Re-lease Fee

As compensation  for providing  re-leasing  services,  the General  Partners are
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 have and will maintain  adequate staff to render such services
to the Partnership,  (ii) no such re-lease fee is payable in connection with the
re-lease of equipment to a previous lessee or its affiliates,  (iii) the General
Partners or their affiliates have rendered  substantial  re-leasing  services in
connection with such re-lease and (iv) the General  Partners or their affiliates
are compensated for rendering equipment management services.

General Partners' Interest in Operating Proceeds

Net income, net loss and investment tax credits are 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 1999 and 1998.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Security Ownership of Certain Beneficial Owners

At  December  31,  1999  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 have the right, by vote of the Limited Partners owning more
than 50% of the  outstanding  limited  Partnership  units,  to  remove a General
Partner.



                                       24
<PAGE>

The General Partners may 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 therefor 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.


                                     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

                               Balance Sheet at December 31, 1999

                               Statements of Income for the years ended
                               December 31, 1999 and 1998

                               Statements  of Changes in  Partners'  Capital for
                               the  years  ended  December  31,  1999  and  1998

                               Statements  of Cash  Flows  for the  years  ended
                               December  31,  1999 and 1998

                               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 1999
                               None

                    (c) Exhibits
                               (3)and  (4)  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)

                                       25
<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:       3/22/2000

                                      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)






                                       26
<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;        3/22/2000
------------------------------  President, Chairman and Chief
A. J. Batt                      Executive Officer of ATEL
                                Financial Corporation




 /s/ Dean Cash                 General Partner of registrant;        3/22/2000
------------------------------  Executive Vice President and
Dean Cash                       director of ATEL Financial
                                Corporation



/s/ Paritosh K. Choksi         Principal financial officer of        3/22/2000
------------------------------  registrant; principal financial
Paritosh K. Choksi              officer and director of ATEL
                                Financial Corporation




/s/ Donald E. Carpenter        Principal accounting officer of       3/22/2000
------------------------------  registrant; principal accounting
  Donald E. Carpenter           officer of ATEL Financial
                                Corporation


                                       27