Page 1 of 32


                UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    ---------

                                    FORM 10-K

  X     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
-----   ACT OF 1934 (FEE REQUIRED)

For the fiscal year ended December 31, 1996      Commission File Number 0-15287



                    PHOENIX LEASING CASH DISTRIBUTION FUND II
--------------------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

           California                                    68-0032426
-------------------------------             ------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

2401 Kerner Boulevard, San Rafael, California             94901-5527
--------------------------------------------------------------------------------
(Address of principal executive offices)                  (Zip Code)

Registrant's telephone number, including area code:     (415) 485-4500
                                                        --------------

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

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

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K 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. _______

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                  Yes _X_     No ___

As of December 31, 1996,  379,583  Units of Limited  Partnership  interest  were
outstanding.  No  market  exists  for the  Units  of  Partnership  interest  and
therefore there exists no aggregate market value at December 31, 1996.

                    DOCUMENTS INCORPORATED BY REFERENCE: NONE




<PAGE>


                                                                    Page 2 of 32




                    PHOENIX LEASING CASH DISTRIBUTION FUND II

                          1996 FORM 10-K ANNUAL REPORT


                                TABLE OF CONTENTS


                                                                          Page
                                                                          ----

                                     PART I

Item 1.          Business..............................................     3
Item 2.          Properties............................................     5
Item 3.          Legal Proceedings.....................................     6
Item 4.          Submission of Matters to a Vote of Security Holders...     6


                                     PART II

Item 5.          Market for the Registrant's Securities and Related
                 Security Holder Matters...............................     6
Item 6.          Selected Financial Data...............................     7
Item 7.          Management's Discussion and Analysis of Financial
                 Condition and Results of Operations...................     8
Item 8.          Financial Statements and Supplementary Data...........    11
Item 9.          Disagreements on Accounting and Financial Disclosure
                 Matters...............................................    28


                                    PART III

Item 10.         Directors and Executive Officers of the Registrant....    28
Item 11.         Executive Compensation................................    29
Item 12.         Security Ownership of Certain Beneficial Owners and 
                 Management............................................    29
Item 13.         Certain Relationships and Related Transactions........    30


                                     PART IV

Item 14.         Exhibits, Financial Statement Schedules and Reports on
                 Form 8-K..............................................    30


Signatures       ......................................................    31



<PAGE>
                                                                    Page 3 of 32


                                     PART I

Item 1.       Business.

General Development of Business.

         Phoenix  Leasing  Cash  Distribution  Fund  II,  a  California  limited
partnership (the "Partnership"), was organized on June 28, 1984. The Partnership
was registered  with the Securities  and Exchange  Commission  with an effective
date of November 20, 1986 and shall  continue to operate  until its  termination
date unless dissolved sooner due to the sale of substantially  all of the assets
of the Partnership or a vote of the Limited Partners. The Partnership will reach
the  end of its  term on  December  31,  1997 at  which  time it will  sell  any
remaining assets at public auction and make a final distribution to the partners
of the excess cash, if any. The General  Partner is actively  marketing for sale
the Partnership's  net assets and it is expected,  based on current estimates of
fair market value,  that the net carrying value of those assets will  utlimately
be recovered.  However, the amounts the Partnership will ultimately realize from
the  disposition  of assets could differ from the net carrying value at December
31, 1996.  The General  Partner is Phoenix  Leasing  Incorporated,  a California
corporation. The General Partner or its affiliates also is or has been a general
partner  in  several  other  limited  partnerships  formed to invest in  capital
equipment and other assets.

         The initial  registration was for 300,000 units of limited  partnership
interest  at a price of $250 per unit with an option of  increasing  the  public
offering up to a maximum of 400,000 units.  The  Partnership  sold 386,308 units
for a total capitalization of $96,577,000.  Of the proceeds received through the
offering,  the  Partnership  has  incurred  $11,540,000  in  organizational  and
offering expenses.  The Partnership concluded its public offering on February 4,
1988.

         Phoenix Concept Cablevision Inc. (the "Subsidiary") is a majority owned
subsidiary  of the  Partnership  (hereinafter,  both  entities are  collectively
referred to as the "Consolidated Partnership").  The Subsidiary was formed under
the laws of Nevada on December 22, 1992. The Partnership owns  approximately 58%
of the outstanding  shares of Phoenix Concept  Cablevision  Inc. Phoenix Concept
Cablevision Inc. owns 100% of the outstanding  shares of Concept  Cablevision of
South  Carolina,  Inc., a Delaware  corporation.  Concept  Cablevision  of South
Carolina,  Inc. owns and operates a cable television system located in the state
of South Carolina.

Narrative Description of Business.

         The  Consolidated  Partnership  conducts  its  business in two business
segments:  Equipment  Leasing and  Financing  Operations,  and Cable  Television
System Operations. A discussion of these two segments follows:

Equipment Leasing and Financing Operations.

         From the initial  formation  of the  Partnership  through  December 31,
1996,  the total  investments  in equipment  leases and  financing  transactions
(loans),  including the  Partnership's  pro rata interest in investments made by
joint  ventures,  approximate  $175,590,000.  The average  initial  firm term of
contractual  payments from equipment subject to lease was 32.19 months,  and the
average  initial  net  monthly  payment  rate as a  percentage  of the  original
purchase price was 2.24%. The average initial firm term of contractual  payments
from loans was 82.01 months.

         The  Partnership's  principal  objective is to produce cash flow to the
investors on a  continuing  basis over the life of the  Partnership.  To achieve
this  objective,  the  Partnership  has  invested  in  various  types of capital
equipment and other assets to provide  leasing or financing of the same to third
parties, including Fortune 1000 companies and their subsidiaries,  middle-market
companies,  emerging growth companies, cable television operators and others, on
either  a  long-term  or  short-term  basis.  The  types of  equipment  that the
Partnership has invested in includes  computer  peripherals,  terminal  systems,
small computer systems,  communications equipment, IBM mainframes,  IBM-software
compatible mainframes, office systems, CAE/CAD/CAM equipment, telecommunications
equipment,  cable  television  equipment,  medical  equipment,   production  and
manufacturing equipment and software products.

         The  Partnership  has made secured loans to cable  television  systems,
emerging growth companies,  security monitoring  companies and other businesses.
These loans are asset-based and the Partnership  receives a security interest in
the assets financed.

         The  Partnership's  financing  activities have been concentrated in the
cable  television  industry.  The  Partnership  has made  secured  loans  (notes
receivable)  to  operators  of cable  television  systems  for the  acquisition,
refinancing,  construction,  upgrade  and  extension  of  such  systems  located
throughout the United States. The loans to cable television system operators are
secured  by a  senior  or  subordinated  interest  in the  assets  of the  cable
television  system,  its  franchise   agreements,   subscriber  lists,  material
<PAGE>
                                                                    Page 4 of 32

contracts  and other  related  assets.  In some cases the  Partnership  has also
received  personal  guarantees  from the owners of the systems.  At December 31,
1996, the Partnership's  remaining  investments in notes receivable consist of a
note receivable from one cable television  system operator and a note receivable
from a security  monitoring  company.  The Partnership's net investment in notes
receivable before  consideration of the allowance for losses on notes receivable
approximates 25% of the total assets of the Partnership at December 31, 1996.

         Several  of the  cable  television  system  operators  the  Partnership
provided   financing  to  have   experienced   financial   difficulties.   These
difficulties  are  believed  to have been caused by several  factors  such as: a
significant reduction in the availability of debt from banks and other financial
institutions to finance  acquisitions and operations,  uncertainties  related to
future government  regulation in the cable television  industry and the economic
recession in the United  States.  These  factors have  resulted in a significant
decline in the demand for the  acquisition  of cable  systems  and have  further
caused an overall decrease in the value of many cable television  systems.  As a
result of the  above,  many of the  Partnership's  notes  receivable  from cable
television  system  operators  have gone into  default.  The  result is that the
Partnership  has  not  received  scheduled  payments,  has  had  to  grant  loan
extensions,  has  experienced an increase in legal and  collection  costs and in
some cases, has had to foreclose on the cable television  system.  The impact of
this has been a decrease in the overall return on the Partnership's  investments
in such notes.

         The Partnership has acquired  equipment  pursuant to either "Operating"
leases or "Financing"  leases. At December 31, 1996, 100% of the equipment owned
by the Partnership was classified as Operating leases.  The Partnership has also
provided financing secured by assets in the form of notes receivable.  Operating
leases are  generally  short-term  leases  under which the lessor  will  receive
aggregate  rental  payments in an amount that is less than the purchase price of
the equipment.  Financing leases are generally for a longer term under which the
non-cancelable  rental  payments due during the initial term of the lease are at
least sufficient to recover the purchase price of the equipment.

         Competition.  The General Partner has  concentrated  the  Partnership's
activities in the equipment leasing and financing industry, an area in which the
General  Partner has  developed an  expertise.  The computer  equipment  leasing
industry is  extremely  competitive.  The  Partnership  competes  with many well
established   companies  having   substantially   greater  financial  resources.
Competitive  factors include  pricing,  technological  innovation and methods of
financing (including use of various short-term and long-term financing plans, as
well as the  outright  purchase of  equipment).  Generally,  the impact of these
factors to the  Partnership  would be the  realization  of  increased  equipment
remarketing and storage costs, as well as lower residuals received from the sale
or remarketing of such equipment.

Cable Television System Operations.

         Phoenix  Concept  Cablevision,  Inc. (the  "Subsidiary")  is a majority
owned  subsidiary  of the  Partnership.  The  Subsidiary  was  acquired  through
foreclosure of a defaulted note  receivable to the  Partnership on September 15,
1994. The net carrying value of the  Partnership's  share of this defaulted note
receivable was approximately  $769,000,  which was exchanged for a 58% ownership
interest in this joint venture.  The Partnership owns  approximately  58% of the
outstanding  shares  of  Phoenix  Concept  Cablevision,   Inc.  Phoenix  Concept
Cablevision,  Inc. owns 100% of the outstanding shares of Concept Cablevision of
South Carolina, Inc., which owns and operates a cable television system. Phoenix
Cable Management Inc. (PCMI), an affiliate of the General Partner,  provides day
to day management services in connection with the operation of the system.

         Concept  Cablevision of South Carolina,  Inc. owns and operates a cable
television  system  located  in the  state of South  Carolina,  which  currently
consists of two headend  locations and 81 miles of plant  passing  approximately
3,710 homes and has approximately  1,931 cable subscribers at December 31, 1996.
The cable  television  system serves the  communities of Holly Hill, St. George,
Reevesville,  Eutawville,  certain unincorporated areas in Dorchester County and
other  communities  in Orangeburg  County.  The cable system  operates under six
non-exclusive franchise agreements with each of the stated municipalities. These
cable  franchise  agreements  expire  between  the years 1997 and 2006.  PCMI is
currently  re-negotiating to renew its franchise  agreements which expire during
the years 1996 and 1997.

         Cable  television  systems receive signals  transmitted by nearby radio
and television  broadcast  stations,  microwave relay systems and communications
satellites  and distribute  the signals to  subscribers  via coaxial cable.  The
subscribers pay a monthly fee to the cable television  system for such services.
Cable television  companies  operate under a non-exclusive  franchise  agreement
granted by each local government authority.  As part of the franchise agreement,
the  franchisee  typically pays a portion of the gross revenues of the system to
the local government.

         The Partnership  intends to own,  operate and eventually sell the cable
system.  The cable  television  system is currently being marketed for sale. Any
<PAGE>


                                                                    Page 5 of 32

excess  cash  generated  from  operations  of the cable  system will be used for
upgrades  and  improvements  to the system in order to maximize the value of the
system.  As mentioned  previously,  the amount the  Partnership  will ultimately
realize  could  materially  differ  from the net  carrying  value  of the  cable
television  system at December 31, 1996 as a result of  continued  technological
change affecting the cable television industry.

         Competition.  The Partnership's cable operations competes with numerous
other  companies  with far  greater  financial  resources.  In  addition,  cable
television  franchises are typically  non-exclusive and the Partnership could be
directly  competing with other cable television  systems.  Cable television also
competes  with  conventional   over-the-air   broadcast  television  and  direct
broadcast satellite  transmission.  Future  technological  developments may also
provide additional competitive factors.

         The Telecommunications  Bill passed in 1995 allowed telephone companies
to enter  into  the  cable  television  business  and  vice-versa.  Large  cable
television  systems  that have  upgraded  their  systems  with fiber and two way
capabilities  may find themselves  getting a piece of the much larger  telephone
revenue.  For the  smaller  rural  cable  systems,  such as  those  owned by the
Partnership or through  investments in joint  ventures,  it is unlikely that the
Partnership will enter into telephone services nor will the telephone  companies
try to  seek  our  customers  in the  near  future.  The  systems  owned  by the
Partnership  are too small and not dense  enough to pay for the large  amount of
capital expenditures needed for these services.

         A  favorable  part  of the  bill  is  that  small  cable  systems  were
immediately deregulated from most regulations and that the definition of a small
cable  operator is under 600,000  subscribers.  This allowed small  operators to
raise rates if needed,  and eliminate the need to provide franchise  authorities
with costly rate  filings and  justifications.  The bill also  allowed the local
telephone companies to buy out small cable operators in their own region as well
as to joint venture with small cable operators. During 1995, the General Partner
has observed a renewed market interest in small cable systems.  The final impact
of the Telecommunications Bill will not be known fully until a technical rewrite
is completed and all the legal challenges have been made.

         See Note 15 in the  Partnership's  financial  statements  for financial
information about the Partnership's business segments.

Other.

         A brief  description of the type of assets in which the Partnership has
invested as of December 31, 1996, together with information  concerning the uses
of assets is set forth in Item 2.


Item 2.       Properties.

         The  Partnership  is engaged in the  equipment  leasing  and  financing
industry.  The primary  assets held by the  Partnership  are its  investments in
leases and loans either directly or through its investment in joint ventures.

         As of  December  31,  1996,  the  Partnership  owns  equipment  and has
outstanding  loans to borrowers  with an aggregate  original cost of $8,008,000.
The  equipment  and loans have been made to  customers  located  throughout  the
United States.  The following  table  summarizes the type of equipment  owned or
financed by the Partnership,  including its pro rata interest in joint ventures,
at December 31, 1996.

                                                                   Percentage of
            Asset Types                          Purchase Price(1)  Total Assets
            -----------                          -----------------  ------------
                                              (Amounts in Thousands)

Computer Peripherals                                  $2,429             30%
Reproduction Equipment                                 2,348             29
Financing Related to Cable Television Systems          1,350             17
Telecommunications                                     1,038             13
Mainframes                                               525              7
Capital Equipment Leased to Emerging
  Growth Companies                                       250              3
Financing of Security Monitoring System Companies         57              1
Small Computer Systems                                    11           --
                                                      ------           ----

TOTAL                                                 $8,008            100%
                                                      ======           ====
<PAGE>


                                                                    Page 6 of 32


(1) These amounts include the Partnership's pro rata interest in equipment joint
    ventures of $1,454,000 and original cost  of outstanding loans of $1,406,000
    at December 31, 1996.

Cable Television System Operations.

         The  Subsidiary's   principal  plants  and  real  property  consist  of
electronic  headend  equipment,  its plant (cable) and two parcels of land.  The
Subsidiary's headends are located on the two parcels of land.


Item 3.       Legal Proceedings.

         The  Registrant is not a party to any pending legal  proceedings  which
would have a material adverse impact on its financial position.


Item 4.       Submission of Matters to a Vote of Security Holders.

         No matters were  submitted to a vote of Limited  Partners,  through the
solicitation of proxies or otherwise, during the year covered by this report.


Item 5.       Market for the Registrant's Securities and Related Security Holder
              Matters.

         (a)  The Registrant's  limited  partnership  interests are not publicly
              traded.   There  is  no  market  for  the   Registrant's   limited
              partnership interests and it is unlikely that any will develop.

         (b)  Approximate number of equity security investments:

                                                        Number of Unit Holders
                            Title of Class              as of December 31, 1996
                  ----------------------------------    -----------------------

                  Limited Partners                                9,100

<PAGE>

                                                                    Page 7 of 32


                                     PART II


Item 6.       Selected Financial Data.


                                  1996      1995    1994 (1)    1993      1992
                                  ----      ----    --------    ----      ----
                              (Amounts in Thousands Except for Per Unit Amounts)


Total Income                   $  1,878  $  2,868  $  5,095  $  5,613  $ 10,706

Net Income (Loss)                   679     1,164     2,925     1,570    (1,540)

Total Assets                      6,513     6,150     6,338     6,922    10,168

Distributions to Partners           239       949     3,796     3,794    14,269

Net Income (Loss) per Limited
  Partnership Unit                 1.77      3.04      7.63      4.09     (4.01)

Distributions per Limited
  Partnership Unit                  .63      2.50     10.00      9.99     37.54


(1)     Commencing in 1994, the amounts reflect the consolidated activity of the
Partnership and its subsidiary.

         The above selected  financial  data should be read in conjunction  with
the financial statements and related notes appearing elsewhere in this report.


<PAGE>

                                                                    Page 8 of 32


Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

Results of Operations

         Phoenix  Leasing  Cash   Distribution   Fund  II  and  Subsidiary  (the
Partnership)  reported net income of $679,000 during the year ended December 31,
1996, as compared to net income of  $1,164,000  and  $2,925,000  during 1995 and
1994, respectively. The decrease in net income during 1996, as compared to 1995,
is a result of a decline in total  revenues  which exceeded the decline in total
expenses.  The  decrease  in  earnings  for the year ended  December  31,  1995,
compared  to 1994,  was due to a decrease  in rental  income and the  absence of
income from a settlement, as described below.

         Total  revenues  declined by  $990,000  during  1996,  as compared to a
decline of  $2,227,000  during 1995,  when  compared to the previous  year.  The
decrease  in  total  revenues  for  both  years  is  partially  attributable  to
reductions  in  rental  income  and  gain on sale of  equipment.  Rental  income
decreased by $210,000 and  $1,491,000  for the year ended  December 31, 1996 and
1995,  respectively,  compared  to the  prior  year,  and  the  gain  on sale of
equipment  decreased by $344,000  and $378,000 for 1996 and 1995,  respectively.
The  decline  for  rental  income is a result of a  reduction  in the  amount of
equipment owned by the Partnership.  At December 31, 1996, the Partnership owned
equipment  with an aggregate  original  cost of $5.1  million,  compared to $7.1
million at December 31, 1995 and $16.6 million at December 31, 1994.

         The  decrease  in gain on sale of  equipment  for both 1996 and 1995 is
attributable  to a  reduction  in the  amount of  equipment  sold,  as well as a
decrease in the market value of an aging  equipment  portfolio.  During the year
ended  December 31,  1996,  the  Partnership  sold  equipment  with an aggregate
original  cost of $2  million,  compared to $9.5  million  during the year ended
December  31, 1995 and $22.5  million  during the year ended  December 31, 1994.
Proceeds  received  from the  sale of  equipment  were  $141,000,  $428,000  and
$968,000 for the years ended December 31, 1996, 1995 and 1994, respectively.

         An additional factor  contributing to the decline in total revenues for
the year ended December 31, 1996,  compared to 1995, is the decrease in interest
income from notes receivable of $526,000.  Interest income from notes receivable
was higher than usual  during  1995 as a result of a payoff of a defaulted  note
receivable  from  a  cable  television  system  operator.  The  Partnership  had
suspended the accrual of interest income on this note. Upon payoff, the proceeds
were first applied  against the  outstanding  balance,  with the excess proceeds
being recognized as interest income. Such an event did not occur during 1996.

         Interest income from notes  receivable  increased during the year ended
December 31, 1995,  compared to 1994, due to the  recognition of interest income
that had been deferred until the maturity of the note. This note matured in July
of 1996. The Partnership had been limiting the amount of interest  recognized on
this note to the amount of payments received,  thereby deferring the recognition
of a portion of the deferred interest until the loan was paid off.

         In  addition  to the  declines  in  rental  income  and gain on sale of
equipment  experienced  in 1995,  the  absence of a  settlement,  compared  to a
settlement  of  $1,180,000  during  1994,  also  contributed  to reducing  total
revenues for the year ended December 31, 1995,  compared to 1994. The settlement
income recognized  during 1994 was composed of cash, common stock,  receivables,
assigned  rents  from a pool of  leased  equipment,  and  credits  for goods and
services.

         Total expenses decreased by $468,000 during 1996, compared to 1995, and
decreased  by  $484,000  during  1995,  compared to 1994.  The most  significant
decrease in total  expenses for the year ended  December  31, 1996,  compared to
1995,  came  from  depreciation  and  amortization  expense  and  lease  related
operating expenses.  Depreciation and amortization expense decreased by $205,000
for the year  ended  December  31,  1996,  compared  to the prior year due to an
increasing  portion of the Partnership's  equipment lease portfolio reaching the
end of its depreciable or amortizable term.

         The decrease in lease related  operating  expenses also  contributed to
the decline in total expenses for the year ended December 31, 1996,  compared to
1995, but was a major factor  contributing to the decrease in total expenses for
the year ended  December 31, 1995,  compared to 1994.  Lease  related  operating
expenses  decreased by $196,000  and  $456,000 for 1996 and 1995,  respectively,
compared to the prior year. The decrease in lease related operating expenses for
both years is a result of a decline in maintenance,  administrative and residual
sharing  expenses on the  Partnership's  equipment leased pursuant to a purchase
agreement with the manufacturer of the equipment.  These expenses decreased as a
result of the reduction in the revenues received from this equipment.



<PAGE>


                                                                    Page 9 of 32


         Inflation  affects the  Partnership  in relation to the current cost of
equipment  placed on lease and the residual  values  realized when the equipment
comes off lease and is sold.  During the last several  years  inflation has been
low, thereby having very little impact upon the Partnership.

Cable Television System Operations

         The Partnership owns a majority  interest in a cable television  system
that it received  through the  foreclosure  on a defaulted  note  receivable  on
September 15, 1994. Only the results of operations  since September 15, 1994 are
included in the  consolidated  results of operations of the  Partnership for the
year ended December 31, 1994. As a result,  this cable television system did not
generate significant revenues during 1994. During 1996 and 1995, the Partnership
reported cable subscriber revenues of $566,000 and $589,000,  respectively,  and
total  expenses  of  $582,000  and  $590,000,   respectively,  from  this  cable
television system.

Joint Ventures

         The  Partnership  reported  earnings  from joint  ventures of $379,000,
$342,000  and  $6,000  for the year  ended  December  31,  1996,  1995 and 1994,
respectively.  Earnings from joint ventures remained  relatively the same during
1996 as compared to 1995.  The  considerable  increase in 1995 was a result of a
full year's earnings from the Partnership's  investment in a new equipment joint
venture that was formed on October 28, 1994. There were no significant  earnings
from this joint venture during 1994.

Liquidity and Capital Resources

         The  Partnership's  primary  source of liquidity  comes from  equipment
leasing and financing  activities.  The Partnership has contractual  obligations
with a  diversified  group of  lessees  for fixed  lease  terms at fixed  rental
amounts and will also receive payments on its outstanding notes receivable.  The
Partnership's  future liquidity is dependent upon its receiving  payment of such
contractual obligations. As the initial lease terms expire, the Partnership will
continue  to renew,  remarket or sell the  equipment.  The future  liquidity  in
excess of the  remaining  contractual  obligations  will depend upon the General
Partner's  success in re-leasing and selling the  Partnership's  equipment as it
comes off lease.

         As  another  source  of  liquidity,  the  Partnership  owns a  majority
interest  in a cable  television  company  that it  acquired  ownership  through
foreclosure on a defaulted note  receivable.  This cable  television  company is
expected to generate a positive cash flow,  which will first be used for capital
improvements  and  upgrades to the system in order to  maximize  the value to be
received upon the eventual sale of the system.  Any excess cash from  operations
or the  sale of the  system  will  then be  distributed  to the  Partnership  in
accordance with its ownership  interest.  The cable television system operations
are currently being marketed for sale. Any excess cash generated from operations
of the cable system will be used for upgrades and  improvements to the system in
order to maximize the value of the system. As mentioned  previously,  the amount
the Partnership  will ultimately  realize could  materially  differ from the net
carrying value of the cable system as a result of continued technological change
affecting the cable television industry.

         The Partnership  reported net cash generated by leasing,  financing and
cable television operations of $713,000,  $1,572,000 and $2,052,000 during 1996,
1995 and 1994,  respectively.  The net cash  generated by equipment  leasing and
financing  activities continues to decline as a result of the decrease in rental
income. As previously discussed, the decline in rental income is attributable to
a reduction in the amount of equipment owned by the Partnership.

         Cash  generated by leasing and  financing  activities  were higher than
usual for the year ended December 31, 1995 due to the receipt of a final balloon
payment on one of the Partnership's notes receivable.

         Distributions from joint ventures has become one of the primary sources
of cash generated by the  Partnership.  Cash  distributions  from joint ventures
were $671,000,  $835,000 and $0 for the years ended December 31, 1996,  1995 and
1994, respectively.  A significant portion of the distribution for both 1995 and
1996 is being made by an equipment  joint venture which was formed in October of
1994.

         The  Partnership  owns equipment being held for lease with an aggregate
original cost of $1,896,000,  $2,078,000 and $3,650,000, and a net book value of
$0, $0 and  $36,000,  at December  31, 1996,  1995 and 1994,  respectively.  The
General  Partner  is  actively  engaged,  on  behalf  of  the  Partnership,   in
remarketing and selling the Partnership's off-lease equipment portfolio.

         The cash distributed to partners for the years ended December 31, 1996,
1995  and  1994  were  $239,000,  $949,000  and  $3,796,000,   respectively.  In
accordance  with the Limited  Partnership  Agreement,  the limited  partners are
entitled to 95% of the cash available for  distribution  and the General Partner
<PAGE>


                                                                   Page 10 of 32

is entitled to 5%. The limited  partners  received  distributions  of  $239,000,
$949,000 and $3,796,000  for the years ended  December 31, 1996,  1995 and 1994,
respectively.  The cumulative distributions to Limited Partners are $80,203,000,
$79,964,000 and  $79,015,000 at December 31, 1996, 1995 and 1994,  respectively.
The General Partner did not receive payment for its share of cash  distributions
for the years ended December 31, 1996, 1995 and 1994.  While the General Partner
is entitled to receive 5% of the cash distributions,  it has voluntarily elected
not to receive payment for its share of the cash distributions.

         The Partnership's  asset portfolio  continues to decline as a result of
the ongoing  liquidation  of assets,  and therefore it is expected that the cash
generated  from  operations  will  also  decline.   As  the  cash  generated  by
Partnership operations continues to decline, the rate of cash distributions made
to limited  partners will also decline.  The Partnership made its last quarterly
distribution to partners in January of 1996.  Future  distributions  to partners
will be made on an annual basis with the next distribution  scheduled to be made
on January 15, 1997. The distribution to be made to partners on January 15, 1997
will be slightly  higher than the January  15,  1996  distribution  amount.  The
Partnership  will reach the end of its term on December 31, 1997,  at which time
it  will  sell  any  remaining  assets  at  public  auction  and  make  a  final
distribution  to partners of the excess  cash,  if any.  The General  Partner is
actively  marketing  for sale the  Partnership's  net assets and it is expected,
based on current  estimates of fair market value, that the net carrying value of
those assets will ultimately be recovered.  However, the amounts the Partnership
will ultimately realize from the disposition of assets could differ from the net
carrying value at December 31, 1996.

         The  Partnership  has been adversely  impacted by several  factors that
have resulted in returns and recovery of  investment  in lower than  anticipated
amounts.  The factors impacting the Partnership have been the economic recession
in the United States, the rate of obsolescence of computer equipment, the market
demand and  remarketability  for equipment owned by the Partnership,  aggressive
manufacturer sales practices and a general  unavailability of debt to companies.
All of these  factors  have  resulted in the decline in revenues and the reduced
distributions to partners.

         Cash  generated  from leasing and financing  operations has been and is
anticipated  to  continue to be  sufficient  to meet the  Partnership's  ongoing
operational expenses.

         Forward-looking statements in this report are made pursuant to the safe
harbor  provisions  of the  Private  Securities  Litigation  Reform Act of 1995.
Actual  results could differ from those  anticipated  by some of the  statements
made above. Limited Partners are cautioned that such forward-looking  statements
involve risks and uncertainties including without limitation the following:  (I)
the  Partnership's  plans are subject to change at any time at the discretion of
the General Partner of the Partnership,  (ii) future technological  developments
in the industry in which the Partnership operates, (iii) competitive pressure on
pricing or services,  (iv) substantial  customer defaults or cancellations,  (v)
changes  in  business  conditions  and the  general  economy,  (vi)  changes  in
government regulations affecting the Partnership's core businesses and (vii) the
ability of the Partnership to sell its remaining assets.



<PAGE>


                                                                   Page 11 of 32

















        Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

            PHOENIX LEASING CASH DISTRIBUTION FUND II AND SUBSIDIARY

                          YEAR ENDED DECEMBER 31, 1996



<PAGE>


                                                                   Page 12 of 32


                         REPORT OF INDEPENDENT AUDITORS


The Partners
Phoenix Leasing Cash Distribution Fund II

We have audited the  consolidated  financial  statements of Phoenix Leasing Cash
Distribution Fund II (a California limited partnership) and Subsidiary listed in
the accompanying  index to financial  statements  (Item 14(a)).  Our audits also
included the  financial  statement  schedule  listed in the Index at Item 14(a).
These  financial  statements  and the  schedule  are the  responsibility  of the
Partnership's  management.  Our responsibility is to express an opinion on these
financial statements and the schedule based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable  assurance  about whether the financial  statements  and schedule 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 consolidated financial statements listed in the accompanying
index to financial  statements  (Item  14(a))  present  fairly,  in all material
respects  the   consolidated   financial   position  of  Phoenix   Leasing  Cash
Distribution  Fund II and  Subsidiary  at December  31,  1996 and 1995,  and the
consolidated  results of their  operations  and their cash flows for each of the
three years in the period ended December 31, 1996, in conformity  with generally
accepted  accounting  principles.  Also, in our opinion,  the related  financial
statement  schedule,   when  considered  in  relation  to  the  basic  financial
statements  taken as a whole,  presents  fairly  in all  material  respects  the
information set forth therein.


                                                               ERNST & YOUNG LLP


San Francisco, California
  January 20, 1997



<PAGE>


                                                                   Page 13 of 32


            PHOENIX LEASING CASH DISTRIBUTION FUND II AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS
                 (Amounts in Thousands Except for Unit Amounts)

                                                              December 31,
                                                            1996       1995
                                                            ----       ----
ASSETS

Cash and cash equivalents                                  $3,077     $1,951

Accounts receivable (net of allowance for losses on
   accounts receivable of $18 and $67 at December 31,
   1996 and 1995, respectively)                               137        110

Notes receivable (net of allowance for losses on
   notes receivable of $358 at December 31, 1996
   and 1995)                                                1,263      1,390

Equipment on operating leases and held for lease
   (net of accumulated depreciation of $3,674 and
   $5,061 at December 31, 1996 and 1995, respectively)         81         99

Net investment in financing leases                           --          248

Investment in joint ventures                                  703        995

Cable systems, property and equipment (net of
   accumulated depreciation of $808 and $640 at
   December 31, 1996 and 1995, respectively)                  895        997

Deferred income tax asset                                     115        118

Other assets                                                  242        242
                                                           ------     ------

     Total Assets                                          $6,513     $6,150
                                                           ======     ======

LIABILITIES AND PARTNERS' CAPITAL

Liabilities:

   Accounts payable and accrued expenses                   $  558     $  584

   Minority interest in subsidiary                            447        541
                                                           ------     ------

     Total Liabilities                                      1,005      1,125
                                                           ------     ------

Partners' Capital:

   General Partner                                            111        104

   Limited Partners, 400,000 units authorized,
     386,308 units issued and 379,583 units
     outstanding at December 31, 1996 and 1995              5,328      4,895

   Unrealized gains on available-for-sale securities           69         26
                                                           ------     ------

     Total Partners' Capital                                5,508      5,025
                                                           ------     ------

     Total Liabilities and Partners' Capital               $6,513     $6,150
                                                           ======     ======

                     The accompanying notes are an integral
                            part of these statements.

<PAGE>


                                                                   Page 14 of 32


            PHOENIX LEASING CASH DISTRIBUTION FUND II AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
               (Amounts in Thousands Except for Per Unit Amounts)

                                                For the Years Ended December 31,
                                                   1996      1995      1994
                                                   ----      ----      ----
INCOME

   Rental income                                 $   632   $   842   $ 2,333

   Gain on sale of equipment                          99       443       821

   Equity in earnings from joint ventures            379       342         6

   Interest income, notes receivable                  54       580       300

   Gain on sale of securities                       --        --         203

   Cable subscriber revenue                          566       589       198

   Settlement                                       --        --       1,180

   Other income                                      148        72        54
                                                 -------   -------   -------

     Total Income                                  1,878     2,868     5,095
                                                 -------   -------   -------

EXPENSES

   Depreciation and amortization                     283       488       474

   Lease related operating expenses                  150       346       802

   Program services, cable systems                   183       180        72

   Management fees to General Partner
     and affiliate                                    63       125       161

   Provision for losses on receivables                 6        10         2

   Legal expense                                      85       156       284

   Reimbursed administrative costs to
     General Partner                                 143       162       147

   General and administrative expenses               281       195       204
                                                 -------   -------   -------

     Total Expenses                                1,194     1,662     2,146
                                                 -------   -------   -------

NET INCOME BEFORE MINORITY INTEREST
   AND INCOME TAXES                                  684     1,206     2,949

   Minority interest in earnings
     of subsidiary                                    (1)       (3)       (5)

   Income tax expense of subsidiary                   (4)      (39)      (19)
                                                 -------   -------   -------

NET INCOME                                       $   679   $ 1,164   $ 2,925
                                                 =======   =======   =======

NET INCOME PER LIMITED
   PARTNERSHIP UNIT                              $  1.77   $  3.04   $  7.63
                                                 =======   =======   =======

ALLOCATION OF NET INCOME:

   General Partner                               $     7   $    12   $    29

   Limited Partners                                  672     1,152     2,896
                                                 -------   -------   -------

                                                 $   679   $ 1,164   $ 2,925
                                                 =======   =======   =======

                     The accompanying notes are an integral
                            part of these statements.

<PAGE>

<TABLE>
                                                                                     Page 15 of 32


                    PHOENIX LEASING CASH DISTRIBUTION FUND II AND SUBSIDIARY
                          CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
                         (Amounts in Thousands Except for Unit Amounts)

<CAPTION>
                                              General
                                             Partner's    Limited Partners'   Unrealized   Total
                                               Amount    Units       Amount      Gains     Amount
                                               ------    ------------------      -----     ------
<S>                                            <C>      <C>         <C>          <C>     <C>
Balance, December 31, 1993                     $ 63     379,583     $ 5,592      $--     $ 5,655

Distributions to partners ($10.00 per
   limited partnership unit)                    --         --        (3,796)      --      (3,796)

Net income                                       29        --         2,896       --       2,925
                                               ----     -------     -------      ---     -------

Balance, December 31, 1994                       92     379,583       4,692       --       4,784

Distributions to partners ($2.50 per
   limited partnership unit)                    --         --          (949)      --        (949)

Change for the year in unrealized gains on
   available-for-sale securities                --         --          --         26          26

Net income                                       12        --         1,152       --       1,164
                                               ----     -------     -------      ---     -------

Balance, December 31, 1995                      104     379,583       4,895       26       5,025

Distributions to partners ($.63 per             --         --          (239)      --        (239)
   limited partnership unit)

Change for the year in unrealized gains on      --         --          --         43          43
   available-for-sale securities

Net income                                        7        --           672       --         679
                                               ----     -------     -------      ---     -------

Balance, December 31, 1996                     $111     379,583     $ 5,328      $69     $ 5,508
                                               ====     =======     =======      ===     =======



                                  The accompanying notes are an integral
                                        part of these statements.
</TABLE>
<PAGE>


                                                                   Page 16 of 32


            PHOENIX LEASING CASH DISTRIBUTION FUND II AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Amounts in Thousands)

                                                For the Years Ended December 31,
                                                    1996      1995      1994
                                                    ----      ----      ----
Operating Activities:
   Net income                                      $   679  $ 1,164   $ 2,925
   Adjustments to reconcile net income to net
     cash provided by operating activities:
       Depreciation and amortization                   283      488       474
       Gain on sale of equipment                       (99)    (443)     (821)
       Equity in earnings from joint ventures         (379)    (342)       (6)
       Minority interest in earnings of subsidiary       1        3         5
       Recovery of losses on notes receivable         --         (7)     --
       Provision for losses on accounts receivable       6       17         2
       Gain on sale of securities                     --        (15)     (203)
       Decrease (increase) in accounts receivable      (33)      82        90
       Decrease in accounts payable, accrued
         expenses                                      (26)    (400)     (157)
       Decrease in other assets                          2       29      --
       Settlement                                     --       --        (711)
       Decrease (increase) in deferred income
          tax asset                                     (1)      24        18
       Other                                          --       --          12
                                                   -------  -------   -------
Net cash provided by operating activities              433      600     1,628
                                                   -------  -------   -------

Investing Activities:
   Principal payments, financing leases                153      316       385
   Principal payments, notes receivable                127      656        39
   Proceeds from sale of equipment                     141      428       968
   Proceeds from sale of securities                   --         15       245
   Distributions from joint ventures                   671      835      --
   Purchase of equipment                              --        (32)     (813)
   Investment in notes receivable                     --       --        (106)
   Investment in joint ventures                       --       --         (34)
   Investment in securities                           --       --         (42)
   Cable systems, property and equipment               (65)     (86)     (128)
   Payment of acquisition fees                        --         (1)       (4)
                                                   -------  -------   -------
Net cash provided by investing activities            1,027    2,131       510
                                                   -------  -------   -------

Financing Activities:
   Payments of principal, notes payable               --       --        (174)
   Distributions to minority partners                  (95)     (31)     --
   Distributions to partners                          (239)    (949)   (3,796)
                                                   -------  -------   -------
Net cash used by financing activities                 (334)    (980)   (3,970)
                                                   -------  -------   -------
Increase (decrease) in cash and cash equivalents     1,126    1,751    (1,832)
Cash and cash equivalents, beginning of period       1,951      200     2,032
                                                   -------  -------   -------
Cash and cash equivalents, end of period           $ 3,077  $ 1,951   $   200
                                                   =======  =======   =======

Supplemental Cash Flow Information:
   Cash paid for interest expense                  $  --    $  --     $     3
   Cash paid for income taxes                      $     4  $    16   $     3

                     The accompanying notes are an integral
                            part of these statements.

<PAGE>
                                                                   Page 17 of 32

            PHOENIX LEASING CASH DISTRIBUTION FUND II AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 1996


Note 1.      Organization and Partnership Matters.

        Phoenix  Leasing  Cash  Distribution  Fund  II,  a  California   limited
partnership  (the  "Partnership"),  was  formed on June 28,  1984,  to invest in
capital  equipment of various types and to lease such equipment to third parties
on either a long-term or short-term  basis, and to provide financing to emerging
growth  companies  and cable  television  system  operators.  The  Partnership's
minimum investment requirements were met November 24, 1986. The Partnership will
reach the end of its term on December 31,  1997,  at which time it will sell any
remaining assets at public auction and make a final distribution to the partners
of the excess cash, if any. The General  Partner is actively  marketing for sale
the Partnership's  net assets and it is expected,  based on current estimates of
fair market value,  that the net carrying value of those assets will  ultimately
be recovered.  However, the amounts the Partnership will ultimately realize from
the  disposition  of assets could differ from the net carrying value at December
31, 1996.

        On  September  15,  1994,  the  Partnership,   along  with  three  other
affiliated  partnerships  (collectively  "the  Partnerships"),  entered  into  a
settlement  agreement  with  a  borrower  to  transfer  ownership  of all of the
outstanding stock in a cable television system company to a corporation owned by
the  partnerships  in full  satisfaction  of a defaulted note  receivable to the
partnerships.  As a result of this settlement agreement,  Concept Cablevision of
South  Carolina,  Inc.  transferred  100% of the  outstanding  stock to  Phoenix
Concept Cablevision, Inc., a majority owned (58%) subsidiary of the Partnership.
The net carrying value of the defaulted note, including other capitalized costs,
to the  Partnership at the settlement  date was  approximately  $769,000 and was
carried over (from  in-substance  foreclosed  cable systems) to the basis in the
cable system.  Phoenix  Concept  Cablevision,  Inc. (the  Subsidiary) was formed
under the laws of Nevada on December 22, 1992 (hereinafter,  the Partnership and
the Subsidiary are collectively  referred to as the  Consolidated  Partnership).
The acquisition of Concept  Cablevision of South Carolina Inc. by the Subsidiary
through  foreclosure was accounted for using the "purchase method" of accounting
in which the transfer  price was allocated in accordance  with the relative fair
market value of the assets acquired and liabilities assumed.

        For financial reporting purposes,  Partnership income shall be allocated
as follows:  (a) first,  to the General  Partner until the cumulative  income so
allocated is equal to the cumulative  distributions to the General Partner,  (b)
second, before redemption fees, 1% to the General Partner and 99% to the Limited
Partners  until the  cumulative  income so allocated is equal to any  cumulative
Partnership  loss  and  syndication  expenses  for the  current  and  all  prior
accounting  periods,  and (c) the  balance,  if any,  to the Unit  Holders.  All
Partnership losses shall be allocated, before redemption fees, 1% to the General
Partner and 99% to the Unit Holders.

        The General Partner is entitled to receive 5% of all cash  distributions
until the Limited  Partners have recovered their initial  capital  contributions
plus a cumulative return of 12% per annum. Thereafter,  the General Partner will
receive 15% of all cash  distributions.  In the event the General  Partner has a
deficit balance in its capital  account at the time of partnership  liquidation,
it will be required to contribute the amount of such deficit to the Partnership.
During the year ended December 31, 1992, the General  Partner elected to make an
early contribution of $1,404,000,  and the $189,000 in accrued  distributions to
the General Partner at December 31, 1991 was reversed. In addition,  the General
Partner  did not draw its  share of the  1996,  1995,  1994,  1993 and 1992 cash
available for distribution. As compensation for management services, the General
Partner receives a fee payable quarterly, in an amount equal to 3.5%, subject to
certain  limitations,  of the Partnership's  gross revenues for the quarter from
which such payment is being made,  which  revenues  shall  include,  but are not
limited  to,  rental  receipts,  maintenance  fees,  proceeds  from  the sale of
equipment and interest income.

        Phoenix  Cable  Management  Inc.  (PCMI),  an  affiliate  of the General
Partner,  provides  day  to day  management  services  in  connection  with  the
operation of the  Subsidiary.  The Subsidiary will pay a management fee equal to
four and  one-half  percent of the  System's  monthly  gross  revenue  for these
services.  Revenues  subject to a management fee at the Subsidiary level are not
subject to management fees at the Partnership level.

        The General  Partner  will be  compensated  for  services  performed  in
connection  with the  analysis  of  assets  available  to the  Partnership,  the
selection  of such  assets  and the  acquisition  thereof,  including  obtaining
lessees for the equipment and negotiating and concluding master lease agreements
with certain lessees. As compensation for such acquisition services, the General
Partner will receive a fee equal to 4%, subject to certain  limitations,  of (a)
the purchase price of equipment acquired by the Partnership, or equipment leased
<PAGE>


                                                                   Page 18 of 32

to  customers  by  manufacturers,  the  financing  for which is  provided by the
Partnership,  or (b) financing  provided to businesses such as cable  operators,
emerging growth companies, or security monitoring system companies, payable upon
such  acquisition  or  financing,  as the  case  may be.  Acquisition  fees  are
amortized over the life of the assets principally on a straight-line basis.

        A schedule of compensation  paid and  distributions  made to the General
Partner and affiliate for the years ended December 31 follows:

                                                 1996      1995      1994
                                                 ----      ----      ----
                                                  (Amounts in Thousands)
    Management fees                              $ 63      $125      $161
    Acquisition fees                              --          1         4
                                                 ----      ----      ----

                                                 $ 63      $126      $165
                                                 ====      ====      ====


Note 2.      Summary of Significant Accounting Policies.

       Principles  of  Consolidation.   The  consolidated  financial  statements
include  all  of the  accounts  of  the  Partnership,  and  its  majority  owned
subsidiary,  Phoenix Concept Cablevision Inc., a Nevada  corporation,  since the
date of acquisition,  September 15, 1994. The Partnership owns approximately 58%
of the outstanding  shares of Phoenix Concept  Cablevision  Inc. Phoenix Concept
Cablevision Inc. owns 100% of the outstanding  shares of Concept  Cablevision of
South  Carolina,  Inc., a Delaware  corporation.  All  significant  intercompany
accounts and transactions have been eliminated in the consolidation.

       Leasing Operations.  The Partnership's leasing operations consist of both
financing and operating  leases.  The financing  method of accounting for leases
records as  unearned  income at the  inception  of the lease,  the excess of net
rentals  receivable  and estimated  residual value at the end of the lease term,
over the cost of equipment leased. Unearned income is credited to income monthly
over the term of the lease on a declining basis to provide an approximate  level
rate of return on the unrecovered  cost of the investment.  Initial direct costs
of  consummating  new  leases  are  capitalized  and  included  in the  cost  of
equipment.  The  Partnership  reviews its  estimates of residual  value at least
annually.  If a decline in value has occurred which is other than  temporary,  a
reduction in the investment is recognized currently.

         Under the  operating  method  of  accounting  for  leases,  the  leased
equipment  is recorded as an asset at cost and  depreciated.  The  Partnership's
leased equipment is depreciated primarily on an accelerated  depreciation method
over the estimated  useful life of six years,  except for equipment leased under
vendor  agreements,  which is  depreciated  on a  straight-line  basis  over the
estimated useful life, ranging up to six years.

         The  Partnership's  policy  is  to  review  periodically  the  expected
economic life of its rental  equipment in order to determine the  probability of
recovering its  undepreciated  cost. Such reviews  address,  among other things,
recent and anticipated  technological  developments affecting computer equipment
and competitive factors within the computer  marketplace.  Although  remarketing
rental  rates are  expected to decline in the future with respect to some of the
Partnership's  rental  equipment,  such rentals are expected to exceed projected
expenses and  depreciation.  Where reviews of the equipment  portfolio  indicate
that rentals plus  anticipated  sales  proceeds will not exceed  expenses in any
future period, the Partnership  revises its depreciation  policy and accelerates
depreciation as appropriate.

         Rental  income  for the  year is  determined  on the  basis  of  rental
payments due for the period under the terms of the lease.  Maintenance,  repairs
and minor renewals of the leased equipment are charged to expense.

       Cable  Television  System  Operations.   The  consolidated  statement  of
operations  includes the operating activity of the Subsidiary for the year ended
December  31,  1996,  1995  and for the  period  from  the  date of  acquisition
(September 15, 1994) to December 31, 1994.  The  Subsidiary  owns and operates a
cable television system located in the state of South Carolina,  which currently
consists of two headend  locations and 81 miles of plant  passing  approximately
3,710 homes and has approximately  1,931 cable subscribers at December 31, 1996.
The cable  television  system serves the  communities of Holly Hill, St. George,
Reevesville,  Eutawville,  certain unincorporated areas in Dorchester County and
other  communities  in Orangeburg  County.  The cable system  operates under six
non-exclusive franchise agreements with each of the stated municipalities. These
cable franchise agreements expire between the years 1997 and 2006.

       Property,  cable systems and equipment are carried at cost,  which is not
in excess of the fair market  value,  are  depreciated  using the  straight-line


<PAGE>
                                                                   Page 19 of 32


method  over  the  estimated  service  lives  ranging  from  five to ten  years.
Replacements,  renewals and  improvements  are  capitalized  and maintenance and
repairs are charged to expense as incurred.

       Costs assigned to intangible assets are amortized using the straight-line
method over estimated lives of eight years.

       Cable  television  services  are billed  monthly in  advance.  Revenue is
deferred and recognized as the services are provided.

       The cable television  system  operations are currently being marketed for
sale. Any excess cash generated from operations of the cable system will be used
for  upgrades and  improvements  to the system in order to maximize the value of
the system. As mentioned previously,  the amount the Partnership will ultimately
realize could materially  differ from the net carrying value of the cable system
as a result of continued  technological  change  affecting the cable  television
industry.

       Investments in Joint Ventures.  Minority investments in net assets of the
equipment joint ventures reflect the Consolidated  Partnership's equity basis in
the ventures. Under the equity method of accounting,  the original investment is
recorded at cost and is adjusted  periodically  to  recognize  the  Consolidated
Partnership's   share  of  earnings,   losses,   cash   contributions  and  cash
distributions  after the date of  acquisition.  The net carrying value is not in
excess of the estimated fair market value.

       Investment  in  Available-for-Sale   Securities  .  The  Partnership  has
investments  in  stock  warrants  in  public  companies.   The  Partnership  has
classified its investments in stock warrants as available-for-sale in accordance
with FASB  Statement No. 115,  "Accounting  for Certain  Investments in Debt and
Equity  Securities."  Available-for-sale  securities  are  stated at their  fair
market value, with unrealized gains and losses reported as a separate  component
of partners' capital. The stock warrants held by the Partnership were granted by
certain lessees or borrowers as additional compensation for leasing or financing
equipment.  At the date of grant,  such warrants were determined to have no fair
market value and were recorded at their historical cost of $0.

        Notes  Receivable.  Notes  receivable  generally  are  stated  at  their
outstanding unpaid principal balances, which includes accrued interest. Interest
income is accrued on the unpaid principal balance.

       Impaired Notes Receivable.  Generally, notes receivable are classified as
impaired  and the accrual of interest  on such notes are  discontinued  when the
contractual  payment of  principal  or  interest  has become 90 days past due or
management has serious doubts about further  collectibility  of the  contractual
payments,  even  though  the  loan  may  currently  be  performing.  When a note
receivable is classified as impaired,  income  recognition is discontinued.  Any
payments  received  subsequent  to the  placement of the note  receivable  on to
impaired  status  will  generally  be  applied  towards  the  reduction  of  the
outstanding  note  receivable  balance,  which may  include  previously  accrued
interest as well as principal.  Once the principal and accrued  interest balance
has been reduced to zero,  the  remaining  payments  will be applied to interest
income.  Generally,  notes  receivable  are restored to accrual  status when the
obligation is brought current,  has performed in accordance with the contractual
terms for a  reasonable  period of time and the ultimate  collectibility  of the
total contractual principal and interest is no longer in doubt.

       Allowance  for Losses.  An allowance  for losses is  established  through
provisions for losses charged  against  income.  Notes  receivable  deemed to be
uncollectible  are charged  against the  allowance  for losses,  and  subsequent
recoveries, if any, are credited to the allowance.

        Reclassification.  Certain 1995 and 1994 amounts have been  reclassified
to conform to the 1996 presentation.

       Cash and Cash Equivalents.  Cash and cash equivalents include deposits at
banks,  investments  in money market funds and other  highly  liquid  short-term
investments  with  original  maturities  of less than 90 days.  The  Partnership
places its cash deposits in temporary cash investments with credit worthy,  high
quality  financial  institutions.  The  concentration  of such cash deposits and
temporary  cash  investments  is not deemed to create a significant  risk to the
Partnership.

       Credit  and   Collateral.   The   Partnership's   activities   have  been
concentrated  in  the  equipment  leasing  and  financing  industry.   A  credit
evaluation  is performed  by the General  Partner for all leases and loans made,
with  the  collateral  requirements  determined  on a  case-by-case  basis.  The
Partnership's  loans are generally  secured by the equipment or assets  financed
and, in some cases,  other collateral of the borrower.  In the event of default,
the  Partnership  has the right to foreclose upon the collateral  used to secure
such loans.



<PAGE>


                                                                   Page 20 of 32


       Non-Cash  Investing  Activities.  During the year ended December 31, 1996
and 1995,  the  Partnership  recorded an unrealized  gain on  available-for-sale
securities  which has been  included  in Other  Assets of $43,000  and  $26,000,
respectively.

       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 amounts  reported in the  financial
statements  and  accompanying  notes.  Actual  results  could  differ from those
estimates.

Note 3.      Accounts Receivable.

         Accounts receivable consist of the following at December 31:

                                                            1996      1995
                                                            ----      ----
                                                        (Amounts in Thousands)

    Lease payments                                         $  73     $ 119
    Cable system service                                      68        54
    Property taxes                                            10      --
    Other                                                      4         4
                                                           -----     -----
                                                             155       177

    Less: allowance for losses on accounts receivable        (18)      (67)
                                                           -----     -----

         Total                                             $ 137     $ 110
                                                           =====     =====


Note 4.      Notes Receivable.

         Notes receivable consist of the following at December 31:

                                                             1996      1995
                                                             ----      ----
                                                         (Amounts in Thousands)
Note receivable from a cable television
     system  operator with stated interest
     of 19% per annum, receivable in
     installments of 108 months, collateralized
     by a security interest in the cable system
     assets. This note has a graduated repayment
     schedule followed by a balloon payment.               $ 1,591   $ 1,713

Note receivable from a security monitoring
     company with stated interest at 16% per
     annum, with payments to be taken out of
     the monthly payments received from assigned
     contracts, collateralized by all assets of
     the borrower. At the end of 48 months, the
     remaining balance, if any, is due and payable.             30        35
                                                           -------   -------
                                                             1,621     1,748

Less:  allowance for losses on notes receivable               (358)     (358)
                                                           -------   -------

     Total                                                 $ 1,263   $ 1,390
                                                           =======   =======

         The Partnership's note receivable to a cable television system operator
provides a payment rate in an amount that is less than the contractual  interest
rate. The difference between the payment rate and the contractual  interest rate
is added to the principal and deferred until the maturity date of the note. Upon
maturity of the note,  the original  principal and deferred  interest is due and
payable in full.  Although the  contractual  interest  rates may be higher,  the
amount of interest  being  recognized  on the  Partnership's  outstanding  notes
receivable to cable  television  system operators is being limited to the amount
of the payments received,  thereby deferring the recognition of a portion of the
deferred interest until the loan is paid off.

         At  December  31,  1996,  the  recorded  investment  in notes  that are
considered to be impaired was $1,621,000.  Included in this amount is $30,000 of
impaired  notes  for which the  related  allowance  for  losses is  $23,000  and
$1,591,000  of  impaired  notes for which  there is no  allowance.  The  average


<PAGE>


                                                                   Page 21 of 32


recorded  investment in impaired  loans during the year ended  December 31, 1996
was  approximately  $1,279,000.  The Partnership  recognized  interest income of
$54,000 on impaired notes during the year ended December 31, 1996.

         At  December  31,  1995,  the  recorded  investment  in notes  that are
considered to be impaired was $36,000 for which the related allowance for losses
is $23,000.  The average  recorded  investment in impaired loans during the year
ended December 31, 1995 was approximately  $89,000.  The Partnership  recognized
interest  income of $73,000 on impaired notes during the year ended December 31,
1995.

         The  Partnership  received a settlement on one of its notes  receivable
during  the year  ended  December  31,  1995.  This note  receivable,  which was
impaired,  was  from a  cable  television  operator.  The  Partnership  received
$140,000 as a settlement  for this note  receivable of which $68,000 was applied
towards  the  outstanding  note  receivable  balance and the  remaining  $72,000
applied  towards  interest  income.  There was an allowance  for losses on notes
receivable  of  $7,000  for  this  note  receivable.  Due  to the  receipt  of a
settlement  which exceeded the net carrying value of the note  receivable,  this
allowance was reversed and recognized as income.

         The activity in the allowance for losses on notes receivable during the
years ended December 31, is as follows:

                                                            1996       1995
                                                            ----       ----
                                                        (Amounts in Thousands)
    Beginning balance                                      $ 358     $ 368
         Provision for (recovery of) losses                 --          (7)
         Write downs                                        --          (3)
                                                           -----     -----
    Ending balance                                         $ 358     $ 358
                                                           =====     =====


Note 5.       Equipment on Operating Leases and Investment in Financing Leases.

         Equipment on lease consists primarily of computer peripheral equipment,
telecommunications and reproduction equipment.

         The  Partnership's  operating  leases are for  initial  lease  terms of
approximately 12 to 48 months.  During the remaining terms of existing operating
leases,  the  Partnership  will not  recover all of the  undepreciated  cost and
related expenses of its rental equipment,  and therefore must remarket a portion
of its equipment in future years.

         The Partnership has agreements  with some of the  manufacturers  of its
equipment,  whereby such  manufacturers  will  undertake  to remarket  off-lease
equipment on a best-efforts  basis.  This agreement  permits the  Partnership to
assume the remarketing  function directly if certain conditions contained in the
agreements are not met. For their  remarketing  services,  the manufacturers are
paid a percentage of net monthly rentals.

         The Partnership has entered into direct lease arrangements with lessees
consisting  of  Fortune  1000  companies  and  other   businesses  in  different
industries  located  throughout  the  United  States.   Generally,   it  is  the
responsibility  of the lessee to provide  maintenance on leased  equipment.  The
General Partner  administers the equipment  portfolio of leases acquired through
the direct leasing program. Administration includes the collection of rents from
the lessees and remarketing of the equipment.

         The net  investment  in financing  leases  consists of the following at
December 31:

                                                              1996    1995
                                                              ----    ----
                                                         (Amounts in Thousands)

    Minimum lease payments to be received                    $ --    $ 159
    Estimated residual value of leased
      equipment (unguaranteed)                                 --       95
    Less: unearned income                                      --       (6)
                                                             ------  -----

    Net investment in financing leases                       $ --    $ 248
                                                             ======  =====

    Minimum rentals to be received on  noncancellable  operating leases for
the years ended December 31 are as follows:



<PAGE>


                                                                   Page 22 of 32


                                                                Operating
                                                          (Amounts in Thousands)
         1997..................................                   $105
         1998..................................                      1
         1999 and thereafter...................                    --
                                                                  ----

         Total                                                    $106
                                                                  ====

         The  Partnership  receives  contingent  monthly rental  payments on its
reproduction  equipment  that  is not  included  in the  minimum  rentals  to be
received.  The contingent  monthly  rentals  consist of a monthly rental payment
that is based upon actual  machine usage.  The monthly usage charge  included in
income  for the years  ended  December  31,  1996,  1995 and 1994 was  $108,000,
$196,000 and $376,000, respectively.

         The net book value of equipment held for lease at December 31, 1996 and
1995 amounted to $0.


Note 6.       Cable Systems, Property and Equipment.

         The cost of cable  systems,  property  and  equipment  and the  related
accumulated depreciation consist of the following at December 31:

                                                              1996      1995
                                                              ----      ----
                                                         (Amounts in Thousands)

    Distribution systems                                   $   989   $   960
    Headend equipment                                          344       338
    Building                                                   285       270
    Land                                                        21        21
    Automobiles                                                 64        48
                                                           -------   -------
                                                             1,703     1,637
    Less:  accumulated depreciation                           (808)     (640)
                                                           -------   -------

    Net property, cable systems and equipment              $   895   $   997
                                                           =======   =======

         Depreciation  expense totaled  approximately  $171,000 and $172,000 for
the year ended December 31, 1996 and 1995, respectively.


Note 7.       Investment in Joint Ventures.

Equipment Joint Ventures.

         The  Partnership  owns a limited or  general  partnership  interest  in
equipment joint ventures.  These  investments are accounted for using the equity
method of accounting.  The other partners of the ventures are entities organized
and managed by the General Partner.

         The  purpose of the joint  ventures is the  acquisition  and leasing of
various types of equipment. During the term of the Partnership,  Phoenix Leasing
Cash  Distribution  Fund II has  participated  in the following  equipment joint
ventures:

                                                                  Weighted
         Joint Venture                                       Percentage Interest
         -------------                                       -------------------

         Phoenix Leasing Joint Venture 1990-1                       13.23%
         Phoenix Joint Venture 1994-1                               31.25

             An analysis of the  Partnership's  investment  in  equipment  joint
ventures is as follows:



<PAGE>


                                                                   Page 23 of 32

<TABLE>
<CAPTION>
                          Net Investment                                                Net Investment
                           at Beginning                    Equity In                        at End
Date                        of Period    Contributions      Earnings     Distributions     of Period
----                        ---------    -------------      --------     -------------     ---------
                                                     (Amounts in Thousands)
<S>                          <C>             <C>             <C>             <C>             <C>
Year Ended
 December 31, 1994           $   19          $1,463          $    6          $    0          $1,488
                             ======          ======          ======          ======          ======

Year Ended
 December 31, 1995           $1,488          $    0          $  342          $  835          $  995
                             ======          ======          ======          ======          ======

Year Ended
 December 31, 1996           $  995          $    0          $  379          $  671          $  703
                             ======          ======          ======          ======          ======
</TABLE>
         The aggregate  combined  financial  information of the equipment  joint
ventures as of December 31 and for the years then ended is presented as follows:

                             COMBINED BALANCE SHEETS

                                     ASSETS

                                                             December 31,
                                                            1996      1995
                                                            ----      ----
                                                        (Amounts in Thousands)

    Cash and cash equivalents                              $  372    $  532
    Accounts receivable                                     1,441     1,773
    Operating lease equipment                                 526     1,021
    Other assets                                              512       690
                                                           ------    ------
         Total Assets                                      $2,851    $4,016
                                                           ======    ======

                        LIABILITIES AND PARTNERS' CAPITAL

    Accounts payable                                       $  733    $  918
    Partners' capital                                       2,118     3,098
                                                           ------    ------

         Total Liabilities and Partners' Capital           $2,851    $4,016
                                                           ======    ======


                        COMBINED STATEMENTS OF OPERATIONS

                                     INCOME

                                                For the Years Ended December 31,
                                                   1996      1995       1994
                                                   ----      ----       ----
                                                    (Amounts in Thousands)

    Rental income                                $2,357    $3,595    $ 2,583
    Gain on sale of equipment                       850     1,637      1,096
    Other income                                    131       716         38
                                                 ------    ------    -------

         Total Income                             3,338     5,948      3,717
                                                 ------    ------    -------




<PAGE>


                                                                   Page 24 of 32


                                    EXPENSES

    Depreciation                                    332     1,186      1,248
    Lease related operating expenses              1,385     2,832      2,378
    Management fee to the General Partner           119       286        197
    Other expenses                                  125       268         61
                                                 ------    ------    -------

         Total Expenses                           1,961     4,572      3,884
                                                 ------    ------    -------

         Net Income (Loss)                       $1,377    $1,376    $  (167)
                                                 ======    ======    =======

         As of December 31, 1996 and 1995, the  Partnership's  pro rata interest
in the  equipment  joint  ventures'  net book value of off-lease  equipment  was
$11,000 and $32,000, respectively.

         The General Partner earns a management fee of 3.5% of the Partnership's
respective interest in the gross receipts of the joint venture. Revenues subject
to a management  fee at the joint  venture  level are not subject to  management
fees at the Partnership level.


Note 8.       Accounts Payable and Accrued Expenses.

         Accounts  payable  and accrued  expenses  consist of the  following  at
December 31:

                                                           1996      1995
                                                           ----      ----
                                                       (Amounts in Thousands)

    Equipment lease operations                             $227      $237
    Sales and property taxes                                111       124
    General Partner and affiliates                           50        47
    Other                                                   170       176
                                                           ----      ----

         Total                                             $558      $584
                                                           ====      ====


Note 9.       Settlement.

    On July 1, 1991,  Phoenix  Leasing  Incorporated,  as General Partner to the
Partnership  and  sixteen  other  affiliated  partnerships,  filed  suit  in the
Superior  Court  for the  County  of  Marin,  Case  No.  150016,  against  Xerox
Corporation,  a  corporation  with which the General  Partner  had entered  into
contractual   agreements  for  the  acquisition  and  administration  of  leased
equipment. The lawsuit was settled out of court effective as of October 28, 1994
pursuant to the terms of a Confidential Settlement Agreement and Mutual Release.
The settlement  agreement  generally  provides for  compensation  payable to the
Partnership  and its  affiliates in cash and kind,  including the  assignment by
Xerox of certain goods and services. The agreement further provides for the sale
by Xerox to the  Partnership  and its affiliates of equipment  subject to lease.
The suit that was filed in the Superior Court for the County of Marin,  Case No.
150016, has been dismissed with prejudice on the merits.

    The  Partnership's  pro rata share of the Xerox  settlement was  $1,180,000,
which consists of cash of $469,000, and assigned monthly rentals and credits for
goods and services valued at $711,000.  In addition,  the Partnership  purchased
additional  leased equipment at an aggregate cost of $718,000.  The Partnership,
along with sixteen other affiliated partnerships managed by the General Partner,
contributed  its share of the assigned  monthly  rentals,  credits for goods and
services and purchased  equipment  leases to Phoenix Joint  Venture  1994-1,  in
exchange for an interest in the joint venture.


Note 10.       Income Taxes.

         Federal  and state  income tax  regulations  provide  that taxes on the
income  or loss of the  Partnership  are  reportable  by the  partners  in their
individual income tax returns. Accordingly, no provision for such taxes has been
made in the accompanying financial statements.



<PAGE>


                                                                   Page 25 of 32


         The net differences  between the tax basis and the reported  amounts of
the Partnership's assets and liabilities are as follows at December 31:

                                  Reported Amounts   Tax Basis    Net Difference
                                  ----------------   ---------    --------------
                                              (Amounts in Thousands)
1996
----

         Assets                        $5,852         $6,409         $(557)
         Liabilities                      344            307            37

1995
----

         Assets                        $5,404         $6,033         $(629)
         Liabilities                      380            343            37


         The  Subsidiary  is a  corporation  subject  to state and  federal  tax
regulations.  The  Subsidiary  reports to the taxing  authority  on the  accrual
basis.  When  income and  expenses  are  recognized  in  different  periods  for
financial  reporting  purposes than for income tax purposes,  deferred taxes are
provided for such differences using the liability method.

         For the years ended December 31, the Subsidiary's  income tax provision
includes the following components:

                                                           1996       1995
                                                           ----       ----
                                                       (Amounts in Thousands)

    Current tax benefit (provision)                        $ 0       $(11)
    Deferred tax benefit (provision)                        (4)       (28)
                                                           ---       ----
      Income tax benefit (provision), net                  $(4)      $(39)
                                                           ===       ====

         The income tax  provision  differed  from the  statutory  federal  rate
because of the following:

                                                           1996      1995
                                                           ----      ----
                                                       (Amounts in Thousands)

    Federal income tax benefit (provision),
      based on statutory federal and state
      income tax rate of 37.3%                             $ 70      $(19)
    Depreciation and amortization                           (77)       (9)
    Bad debt expense                                          3       --
    Prior year tax payments                                 --        (11)
                                                           ----      ----
      Total income tax benefit (provision)                 $ (4)     $(39)
                                                           ====      ====

         The  Subsidiary's  net deferred  tax asset as of December 31,  resulted
from the following temporary differences:

                                                            1996     1995
                                                            ----     ----
                                                       (Amounts in Thousands)

    Depreciation and amortization                          $ 30      $105
    Bad debt expense                                          5         3
    Net operating loss carryforward                          80        10
                                                           ----      ----
      Total                                                $115      $118
                                                           ====      ====

         As of December 31, 1996 and 1995, the  Subsidiary's  net operating loss
carryforward  of $215,000 and $26,000,  respectively,  for federal and state tax
reporting   purposes   expires   December   31,  2011  and  December  31,  2010,
respectively.  The  Partnership  has not provided a valuation  allowance for the
deferred  tax  asset as of  December  31,  1996 and  1995  based on the  General
Partner's evaluation of the realization of the benefit is more likely than not.




<PAGE>


                                                                   Page 26 of 32


Note 11.      Related Entities.

         The General Partner and its affiliates serve in the capacity of general
partner in other partnerships, all of which are engaged in the equipment leasing
and financing business.


Note 12.      Reimbursed Costs to the General Partner.

         The General Partner incurs certain  administrative  costs, such as data
processing,   investor   and  lessee   communications,   lease   administration,
accounting,  equipment  storage  and  equipment  remarketing,  for  which  it is
reimbursed by the  Partnership.  These expenses  incurred by the General Partner
are to be  reimbursed at the lower of the actual costs or an amount equal to 90%
of the fair market value for such services.

         The  reimbursed  administrative  costs  to  the  General  Partner  were
$143,000,  $162,000 and $147,000 for the years ended December 31, 1996, 1995 and
1994, respectively. The equipment storage, remarketing and data processing costs
reimbursed to the General Partner during the years ended December 31, 1996, 1995
and 1994 were $8,000, $13,000 and $32,000, respectively.

         In  addition,  the General  Partner  receives a  management  fee and an
acquisition fee (see Note 1).


Note 13.      Net Income and Distributions per Limited Partnership Unit.

         Net income and distributions per limited partnership unit were based on
the Limited  Partners' share of consolidated net income and  distributions,  and
the weighted average number of units  outstanding of 379,583 for the years ended
December 31, 1996,  1995 and 1994.  For the purposes of allocating  consolidated
income and  distributions to each individual  Limited  Partner,  the Partnership
allocates  consolidated net income and distributions  based upon each respective
Limited Partner's ending capital account balance.


Note 14.      Subsequent Events.

         In  January  1997,  cash  distributions  of  $474,000  were made to the
Limited Partners.


Note 15.      Business Segments.

         The  Partnership  currently  operates  in two  business  segments:  the
equipment  leasing  and  financing  industry  and the  cable  TV  industry.  The
operations  in the cable TV industry are for the years ended  December 31, 1996,
1995 and the  period  from  the  date of  acquisition  (September  15,  1994) to
December 31, 1994.  Information about the Partnership's  operations in these two
segments are as follows:

                                                  1996      1995      1994
                                                  ----      ----      ----
                                                   (Amounts in Thousands)

Total Revenues
         Equipment leasing and financing         $1,295    $2,274    $4,896
         Cable TV operations                        583       594       199
                                                 ------    ------    ------
              Total                              $1,878    $2,868    $5,095
                                                 ======    ======    ======

Net Income
         Equipment leasing and financing         $  678    $1,160    $2,918
         Cable TV operations                          1         4         7
                                                 ------    ------    ------
              Total                              $  679    $1,164    $2,925
                                                 ======    ======    ======

Identifiable Assets
         Equipment leasing and financing         $5,244    $4,658    $4,774
         Cable TV operations                      1,269     1,492     1,564
                                                 ------    ------    ------
              Total                              $6,513    $6,150    $6,338
                                                 ======    ======    ======



<PAGE>


Page 27 of 32

Depreciation and Amortization Expense
         Equipment leasing and financing         $   83    $  288    $  424
         Cable TV operations                        200       200        50
                                                 ------    ------    ------
              Total                              $  283    $  488    $  474
                                                 ======    ======    ======

Capital Expenditures
         Equipment leasing and financing         $ --      $   32    $  813
         Cable TV operations                         65        86       128
                                                 ------    ------    ------
              Total                              $   65    $  118    $  941
                                                 ======    ======    ======


Note 16.      Fair Value of Financial Instruments.

         The following  methods and  assumptions  were used to estimate the fair
value of each class of financial  instrument 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 maturity of these instruments.

Notes Receivable
The fair  value of notes  receivable  is  estimated  based on the  lesser of the
discounted  expected  future cash flows using the current rates at which similar
loans would be made to borrowers with similar credit  ratings,  or the estimated
fair value of the underlying collateral.

Securities, Available-for-Sale
The fair values of  investments  in available for sale  securities are estimated
based on quoted market prices.

The estimated  fair values of the  Partnership's  financial  instruments  are as
follows at December 31:

                                                          Carrying
                                                           Amount  Fair Value
                                                           ------  ----------
                                                         (Amounts in Thousands)
1996
----
         Assets
              Cash and cash equivalents                    $3,077    $3,077
              Securities, available-for-sale                   69        69
              Notes receivable                              1,263     1,599


1995
----
         Assets
              Cash and cash equivalents                    $1,951    $1,951
              Securities, available-for-sale                   26        26
              Notes receivable                              1,390     2,786



<PAGE>


                                                                   Page 28 of 32


Item 9.       Disagreements on Accounting and Financial Disclosure Matters.

              None.


                                    PART III

Item 10.      Directors and Executive Officers of the Registrant.

         The  registrant  is  a  limited  partnership  and,  therefore,  has  no
executive  officers or  directors.  The  general  partner of the  registrant  is
Phoenix  Leasing  Incorporated,  a California  corporation.  The  directors  and
executive officers of Phoenix Leasing Incorporated (PLI) are as follows:

         GUS CONSTANTIN,  age 59, is President,  Chief  Executive  Officer and a
Director of PLI. Mr.  Constantin  received a B.S. degree in Engineering from the
University of Michigan and a Master's Degree in Management Science from Columbia
University.  From 1969 to 1972,  he served as Director,  Computer and  Technical
Equipment of DCL Incorporated  (formerly Diebold Computer Leasing Incorporated),
a  corporation  formerly  listed on the  American  Stock  Exchange,  and as Vice
President  and  General  Manager  of DCL  Capital  Corporation,  a  wholly-owned
subsidiary of DCL Incorporated. Mr. Constantin was actively engaged in marketing
manufacturer  leasing programs to computer and medical  equipment  manufacturers
and in directing DCL Incorporated's IBM System/370 marketing  activities.  Prior
to  1969,  Mr.  Constantin  was  employed  by IBM as a data  processing  systems
engineer for four years. Mr. Constantin is an individual general partner in four
active partnerships and is an NASD registered  principal.  Mr. Constantin is the
founder of PLI and the  beneficial  owner of all of the common  stock of Phoenix
American Incorporated.

         PARITOSH K. CHOKSI,  age 43, is Senior Vice President,  Chief Financial
Officer,  Treasurer and a Director of PLI. He has been associated with PLI since
1977.  Mr. Choksi  oversees the finance,  accounting,  information  services and
systems  development  departments of the General  Partner and its Affiliates and
oversees the structuring,  planning and monitoring of the partnerships sponsored
by the General Partner and its Affiliates.  Mr. Choksi graduated from the Indian
Institute of Technology, Bombay, India with a degree in Engineering. He holds an
M.B.A. degree from the University of California, Berkeley.

         GARY W.  MARTINEZ,  age 46, is Senior Vice  President and a Director of
PLI. He has been associated with PLI since 1976. He manages the Asset Management
Department,  which is responsible for lease and loan portfolio management.  This
includes credit analysis,  contract terms, documentation and funding; remittance
application,  change processing and maintenance of customer  accounts;  customer
service, invoicing,  collection,  settlements and litigation;  negotiating lease
renewals,  extensions,  sales and buyouts; and management information reporting.
From 1973 to 1976, Mr.  Martinez was a Loan Officer with Crocker  National Bank,
San  Francisco.  Prior to 1973,  he was an Area Manager with  Pennsylvania  Life
Insurance  Company.  Mr. Martinez is a graduate of California State  University,
Chico.

         BRYANT J. TONG, age 42, is Senior Vice President,  Financial Operations
of PLI. He has been with PLI since 1982.  Mr. Tong is  responsible  for investor
services and overall company  financial  operations.  He is also responsible for
the technical and  administrative  operations of the cash management,  corporate
accounting,  partnership accounting,  accounting systems,  internal controls and
tax  departments,  in addition to Securities  and Exchange  Commission and other
regulatory  agency  reporting.  Prior to his association  with PLI, Mr. Tong was
Controller-Partnership  Accounting with the Robert A. McNeil Corporation for two
years and was an auditor with Ernst & Whinney  (succeeded by Ernst & Young) from
1977 through 1980.  Mr. Tong holds a B.S. in Accounting  from the  University of
California, Berkeley, and is a Certified Public Accountant.

         CYNTHIA  E.  PARKS,  age 41, is Vice  President,  General  Counsel  and
Assistant  Secretary  of PLI.  Prior to joining  PLI in 1984,  she was with GATX
Leasing  Corporation,  and had  previously  been  Corporate  Counsel  for  Stone
Financial  Companies,  and an Assistant  Vice  President of the Bank of America,
Bank Amerilease  Group. She has a bachelor's degree from Santa Clara University,
and earned her J.D. from the University of San Francisco School of Law.

         Neither the General  Partner nor any  Executive  Officer of the General
Partner has any family relationship with the others.

         Phoenix  Leasing  Incorporated  or its  affiliates  and  the  executive
officers of the General  Partner  serve in a similar  capacity to the  following
affiliated limited partnerships:

              Phoenix Leasing American Business Fund, L.P.
              Phoenix Leasing Cash Distribution Fund V, L.P.


<PAGE>


                                                                   Page 29 of 32


              Phoenix Income Fund, L.P.
              Phoenix High Tech/High Yield Fund
              Phoenix Leasing Cash Distribution Fund IV
              Phoenix Leasing Cash Distribution Fund III
              Phoenix Leasing Income Fund VII
              Phoenix Leasing Income Fund VI
              Phoenix Leasing Growth Fund 1982 and
              Phoenix Leasing Income Fund 1977


Item 11.      Executive Compensation.
<TABLE>
         Set forth is the information  relating to all direct  remuneration paid or accrued by the Registrant during
the last year to the General Partner and its affiliate.

<CAPTION>
     (A)                         (B)                                 (C)                                     (D)

                                                                                                         Aggregate of
Name of                        Capacities                       Cash and cash-                           contingent
Individual or                  in which                         equivalent forms                         forms of
persons in group               served                           of remuneration                          remuneration
----------------               -----------                      ---------------                          ------------
                                                     (C1)                             (C2)
                                                                                Securities or
                                                Salaries, fees,                 property insurance
                                                directors' fees,                benefits or reim-
                                                commissions and                 bursement, personal
                                                bonuses                         benefits
                                                ---------------                 -------------------
                                                               (Amounts in Thousands)
<S>                                                      <C>                            <C>                     <C>
Phoenix Leasing
 Incorporated                General Partner             $  37(1)                       $  0                    $ 0

Phoenix Cable
 Management Inc.             Manager                        26(2)                          0                      0
                                                         -----                          ----                    ---

                                                         $  63                          $  0                    $ 0
                                                         =====                          ====                    ===

(1) consists of management and acquisition fees.
(2) consists of management fees.
</TABLE>

Item 12.         Security Ownership of Certain Beneficial Owners and Management.

         (a)  No person  owns of record,  or is known by the  Registrant  to own
              beneficially,  more  than  five  percent  of any  class of  voting
              securities of the Registrant.

         (b)  The General Partner of the Registrant  owns the equity  securities
              of the Registrant set forth in the following table:
<TABLE>
<CAPTION>
              (1)                             (2)                                      (3)
         Title of Class             Amount Beneficially Owned                   Percent of Class
         --------------             -------------------------                   ----------------
     <S>                  <C>                                                         <C>
     General Partner      Represents a 5% interest in the Registrant's profits        100%
     Interest             and distributions, until the Limited Partners have
                          recovered their capital contributions plus
                          a  cumulative  return  of 12%  per  annum,
                          compounded  quarterly,  on the unrecovered
                          portion thereof.  Thereafter,  the General
                          Partner  will  receive 15% interest in the
                          Registrant's profits and distributions.

     Limited Partner
     Interest             336 units                                                   .09%
</TABLE>

<PAGE>


                                                                   Page 30 of 32




Item 13.      Certain Relationships and Related Transactions.

         None.


                                     PART IV

Item 14.      Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

                                                                       Page No.
                                                                       --------
(a)      1.   Financial Statements:

              Consolidated Balance Sheets as of December 31, 1996
                and 1995                                                  13
              Consolidated Statements of Operations for the Years
                Ended December 31, 1996, 1995 and 1994                    14
              Consolidated Statements of Partners' Capital for the
                Years Ended December 31, 1996, 1995 and 1994              15
              Consolidated Statements of Cash Flows for the Years
                ended December 31, 1996, 1995 and 1994                    16
              Notes to Consolidated Financial Statements               17-27

         2.   Financial Statement Schedule:

              Schedule II - Valuation and Qualifying Accounts
              and Reserves                                                32

         All other schedules are omitted because they are not applicable, or not
required,  or because the  required  information  is  included in the  financial
statements or notes thereto.

(b)      Reports on Form 8-K:

         No reports on Form 8-K were filed for the quarter  ended  December  31,
1996.

(c)      Exhibits

         21.  Additional Exhibits

                a)    Listing of all subsidiaries of the Registrant:

                      Phoenix Concept  Cablevision,  Inc., a Nevada  corporation
                        and majority (58%) owned subsidiary.

                b)    Financial Statements for Significant Subsidiaries:

                      Phoenix Joint Venture 1994-1                  E21 1-10

         27.  Financial Data Schedule


<PAGE>


                                                                   Page 31 of 32


                                   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.

                                      PHOENIX LEASING CASH DISTRIBUTION FUND II
                                                   (Registrant)

                                      BY:    PHOENIX LEASING INCORPORATED,
                                             A CALIFORNIA CORPORATION
                                             GENERAL PARTNER


         Date:  March 25, 1997        By:    /S/  GUS CONSTANTIN
                --------------               -------------------
                                             Gus Constantin, President

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

       Signature                         Title                        Date
       ---------                         -----                        ----


/S/  GUS CONSTANTIN      President, Chief Executive Officer and   March 25, 1997
-----------------------  Director of Phoenix Leasing Incorporated --------------
(Gus Constantin)         General Partner


/S/  PARITOSH K. CHOKSI  Chief Financial Officer,                 March 25, 1997
-----------------------  Senior Vice President,                   --------------
(Paritosh K. Choksi)     Treasurer and a Director of
                         Phoenix Leasing Incorporated
                         General Partner


/S/  BRYANT J. TONG      Senior Vice President,                   March 25, 1997
-----------------------  Financial Operations of                  --------------
(Bryant J. Tong)         (Principal Accounting Officer)
                         Phoenix Leasing Incorporated
                         General Partner


/S/  GARY W. MARTINEZ    Senior Vice President and a Director     March 25, 1997
-----------------------  of Phoenix Leasing Incorporated          --------------
(Gary W. Martinez)       General Partner


/S/  MICHAEL K. ULYATT   Partnership Controller                   March 25, 1997
-----------------------  of Phoenix Leasing Incorporated          --------------
(Michael K. Ulyatt)      General Partner


<PAGE>

<TABLE>
                                                                                                 Page 32 of 32


                                  PHOENIX LEASING CASH DISTRIBUTION FUND II AND SUBSIDIARY

                                                         SCHEDULE II
                                                   (Amounts in Thousands)

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

<CAPTION>
              COLUMN A                     COLUMN B       COLUMN C       COLUMN D      COLUMN E       COLUMN F
           Classification                 Balance at     Charged to     Charged to    Deductions     Balance at
                                         Beginning of     Expense         Revenue                      End of
                                            Period                                                     Period
-------------------------------------    -------------   -----------    ----------    -----------    ---------

<S>                                          <C>            <C>           <C>            <C>            <C>
Year ended December 31, 1994
   Allowance for losses on accounts
     receivable                              $453           $  2          $334           $ 38           $ 83
   Allowance for losses on notes
     receivable                               368              0             0              0            368
                                             ----           ----          ----           ----           ----

     Totals                                  $821           $  2          $334           $ 38           $451
                                             ====           ====          ====           ====           ====

Year ended December 31, 1995
   Allowance for losses on accounts
     receivable                              $ 83           $ 17          $  0           $ 33           $ 67
   Allowance for losses on notes
     receivable                               368              0             7              3            358
                                             ----           ----          ----           ----           ----

     Totals                                  $451           $ 17          $  7           $ 36           $425
                                             ====           ====          ====           ====           ====

Year ended December 31, 1996
   Allowance for losses on accounts
     receivable                              $ 67           $  6          $  0           $ 55           $ 18
   Allowance for losses on notes
     receivable                               358              0             0              0            358
                                             ----           ----          ----           ----           ----

     Totals                                  $425           $  6          $  0           $ 55           $376
                                             ====           ====          ====           ====           ====
</TABLE>