Form 10-K

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

               X   Annual  report  pursuant  to  section  13  or  15(d)  of  the
                   Securities Exchange Act of 1934 (fee required)

                   For the Year Ended December 31, 1995

                                                  OR

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

                         Commission File number 0-17631

        ATEL Cash Distribution Fund II, a California Limited Partnership

  California                                                        94-3051991
  (State or other jurisdiction of                            (I. R. S. Employer
  incorporation or organization)                            Identification No.)

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

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

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

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

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


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

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None

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



                                      -1-
<PAGE>

                                     PART I

Item 1:  BUSINESS

General Development of Business

ATEL  Cash  Distribution  Fund  II,  a  California   limited   partnership  (the
Partnership),  was formed under the laws of the State of California on September
30, 1987. The Partnership  was formed for the purpose of acquiring  equipment to
engage in equipment leasing and sales activities.

In a public  offering of 50,000 units of Limited  Partnership  interest  (Units)
(which was increased to 70,000 Units at the option of the General Partners),  at
a price of $500 per Unit, the Partnership  sold an aggregate of 70,000 Units for
a total capitalization of $35,000,000. Of the proceeds received,  $3,325,000 was
paid to ATEL Securities Corporation, a wholly owned subsidiary of ATEL Financial
Corporation  (ATEL),  the  corporate  general  partner,  as  sales  commissions,
$1,751,426  was  paid  to ATEL  as  reimbursements  of  organization  and  other
syndication  costs  and  $29,398,574  was  used  to  acquire  leased  equipment,
including  acquisition  fees paid to ATEL. An  additional  $525,000 was held for
reserves for repurchases of Units and for working capital.

At December 31, 1995, cash balances  consisted of amounts to be distributed from
1995 operations and sales proceeds ($658,289) and working capital reserves.

The Partnership's  principal objectives are to invest in a diversified portfolio
of  equipment  which will (i)  preserve,  protect  and return the  Partnership's
invested  capital;  (ii) generate  substantial  distributions to the partners of
cash  from  operations  and cash from  sales or  refinancing,  with any  balance
remaining after certain minimum  distributions to be used to purchase additional
equipment  during the  reinvestment  period,  ending December 31, 1995 and (iii)
provide  significant  distributions  following the reinvestment period and until
all  equipment  has been  sold.  The  Partnership  is  governed  by its  Limited
Partnership Agreement.

Narrative Description of Business

The  Partnership  has acquired and intends to acquire various types of equipment
and to lease such  equipment  pursuant to  "Operating"  leases and "Full Payout"
leases,  where  "Operating"  leases  are  defined  as being  leases in which the
minimum  lease  payments  during the initial  lease term do not recover the full
cost of the equipment and "Full Payout" leases recover such cost.

The Partnership only purchases equipment for which a lease exists or for which a
lease  will be  entered  into at the  time of the  purchase.  The  Partnership's
reinvestment  period  ended  December  31,  1995.  The  Partnership  may acquire
additional  assets  without  the use of any cash or exposure of any of its other
assets by using 100% financing on a non-recourse basis.

The  Partnership's  objective  was to lease a  minimum  of 75% of the  equipment
acquired  with the net  proceeds of the  offering  to lessees  which (i) have an
aggregate credit rating by Moody's Investor  Service,  Inc. of Baa or better, or
the credit equivalent as determined by the General Partners,  with the aggregate
rating weighted to account for the original equipment cost for each item leased;
or  (ii)  are  established   hospitals  with  histories  of   profitability   or
municipalities.  The balance of the original  equipment  portfolio could include
equipment leased to lessees which,  although deemed  creditworthy by the General
Partners,  would  not  satisfy  the  general  credit  rating  criteria  for  the
portfolio.  At December 31, 1995, in excess of 75% of the equipment acquired had
been leased to lessees  with an aggregate  credit  rating of Baa or better or to
such hospitals or municipalities.

One lessee accounted for 12% of the Partnership's lease revenues during 1995.

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

                                      -2-
<PAGE>

The business of the Partnership is not seasonal.

The Partnership has no full time employees.

Equipment Dispositions:

Through  December 31, 1995, the Partnership has disposed of certain lease assets
as set forth below:
                                                                      Excess of
                                     Acquisition        Sales         Rents Over
Asset Type                              Cost            Price         Expenses *

Aircraft                             $6,742,040      $4,917,002      $1,846,076
Material handling                     5,751,091       2,034,980       5,597,969
Mining                                5,483,450       1,637,044       5,509,990
Food processing                       2,841,988         903,998       3,050,075
Transportation                        2,652,619         986,801       2,699,633
Medical                               1,585,800         514,254       1,603,407
Manufacturing                         1,476,163         197,000       1,580,298
Furniture, fixtures and equipment     1,432,952         390,584       1,521,587
Communications                        1,232,483         689,932         735,482
Data processing                       1,003,917          99,552       1,042,407
Motor vehicles                          638,670         192,982         648,669
Printing                                233,268         110,000         258,130
                                 --------------- --------------- ---------------
                                    $31,074,441     $12,674,129     $26,093,723
                                 =============== =============== ===============

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


Equipment Leasing Activities:

The Partnership has acquired a diversified portfolio of equipment. The equipment
has been leased to lessees in various industries. The following tables set forth
the types of equipment acquired by the Partnership through December 31, 1995 and
the industries to which the assets have been leased.

                          Purchase price excluding           Percentage of total
Asset types                    acquisition fees                     acquisitions

Material handling                $10,469,425                              20.03%
Aircraft                           9,799,805                              18.75%
Food processing                    5,531,182                              10.58%
Mining                             5,395,983                              10.32%
Medical                            4,633,726                               8.86%
Transportation                     4,280,728                               8.19%
Manufacturing                      3,045,461                               5.83%
Furniture, fixtures and
  equipment                        3,474,306                               6.65%
Printing                           2,524,690                               4.83%
Communication                      1,239,467                               2.37%
Data processing                    1,126,472                               2.16%
Motor vehicles                       749,291                               1.43%
                                -------------                       ------------
                                 $52,270,536                             100.00%
                                =============                       ============

                          Purchase price excluding           Percentage of total
Industry of lessee              acquisition fees                 acquisitions

Manufacturing, other              $7,696,525                              14.72%
Medical                            7,480,492                              14.31%
Transportation                     6,247,981                              11.95%
Mining                             6,157,112                              11.78%
Food processing                    5,881,954                              11.25%
Commercial airline                 4,592,040                               8.79%
Other                              4,358,700                               8.34%
Primary metals                     3,933,919                               7.53%
Printing                           2,558,495                               4.89%
Manufacturing, auto/truck          1,831,257                               3.50%
Chemicals                          1,532,061                               2.94%
                                -------------                       ------------
                                 $52,270,536                             100.00%
                                =============                       ============

For further information regarding the Partnership's equipment lease portfolio as
of December 31, 1995,  see Note 3 to the financial  statements,  Investments  in
leases, set forth in Item 8, Financial Statements and Supplementary Data.


                                      -3-
<PAGE>

Item 2.  PROPERTIES

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

Item 3.  LEGAL PROCEEDINGS

No material legal  proceedings are currently  pending against the Partnership or
against  any  of  its  assets  except  for  the  bankruptcy  of  Rocky  Mountain
Helicopters,  Inc. noted below in Part II, Item 7 under the caption  "Results of
Operations"  where the Partnership has undertaken legal action in pursuit of its
unsecured claim.


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

Inapplicable.


                                     PART II

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

Market Information

The Units are transferable  subject to restrictions on transfers which have been
imposed  under  the  securities  laws of  certain  states  and  the  Partnership
Agreement.  However,  as  a  result  of  such  restrictions,  the  size  of  the
Partnership and its investment  objectives,  to the General Partners' knowledge,
no established  public secondary trading market has developed and it is unlikely
that a public trading market will develop in the future.

Holders

As of December 31, 1995, a total of 2,967 investors were record holders of Units
in the Partnership.

Dividends

The Limited Partners of the Partnership are entitled to certain distributions as
provided under the Limited Partnership Agreement.

The  General  Partners  have  sole  discretion  in  determining  the  amount  of
distributions.  However,  since the reinvestment period ended December 31, 1995,
the  General  Partners  are  required to  distribute,  subject to payment of any
obligations of the  Partnership,  such  available cash from  operations and cash
from sales or refinancing.

The rates for  distributions to Limited Partners in April, July and October 1995
and in January 1996 were $18.75, $12.50, $12.50 and $9.05, respectively per Unit
(a total of $52.80  per  Unit).  All  distributions  were from cash  flows  from
operations and sales proceeds in 1995.

The rates for  distributions to Limited Partners in April, July and October 1994
and in January 1995 were each $21.25 per Unit (a total of $85.00 per Unit).  All
distributions were from cash flows from operations and sales proceeds in 1994.

The rates for  distributions to Limited Partners in April, July and October 1993
and in January 1994 were each $20.00 per Unit (a total of $80.00 per Unit).  All
distributions were from cash flows from operations in 1993.

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


<TABLE>
<CAPTION>
                                                 1995            1994             1993            1992           1991
                                                 ----            ----             ----            ----           ----
<S>                                                <C>              <C>             <C>             <C>            <C>
Distributions of net income                        $18.49           $21.00          $15.54          $14.50         $15.81
Return of investment                                49.07            66.05           66.26           61.22          54.09
                                             -------------- ---------------- --------------- --------------- --------------
Distributions per unit                              67.56            87.05           81.80           75.72          69.90
Differences due to timing of
   distributions and due to distribution
   reinvestments                                   (14.76)           (2.05)          (1.80)          (0.72)          0.10
                                             -------------- ---------------- --------------- --------------- --------------
Nominal distribution rates from above              $52.80           $85.00          $80.00          $75.00         $70.00
                                             ============== ================ =============== =============== ==============
</TABLE>


                                      -4-
<PAGE>
Item 6.  SELECTED FINANCIAL DATA

The following table presents selected  financial data of the Partnership for the
years ended December 31, 1991,  1992,  1993,  1994 and 1995. This financial data
should be read in  conjunction  with the financial  statements and related notes
included under Item 8 of this report.

<TABLE>

<CAPTION>
                                                   1995            1994             1993            1992           1991
                                                   ----            ----             ----            ----           ----
<S>                                             <C>             <C>             <C>             <C>            <C>
Gross Revenues                                  $3,645,794       $5,624,499      $7,083,181      $8,260,374     $8,743,176

Net Income                                      $1,307,185       $1,484,900      $1,099,015      $1,025,357     $1,117,799

Weighted average Limited Partnership
   Units (Units) outstanding                        69,979           69,990          70,001          70,001         70,001

Net income per Unit, based on
   weighted average Units outstanding               $18.49           $21.00          $15.54          $14.50         $15.81

Distributions per Unit, based on
   weighted average Units outstanding               $67.56           $87.05          $81.80          $75.72         $69.90

Total Assets                                    $8,404,252      $13,123,098     $20,421,000     $27,646,894    $34,494,031

Total Non-recourse Debt                         $2,965,946       $4,255,444      $6,807,471      $9,298,808    $12,189,768

Total Partners' Capital                         $5,130,875       $8,551,736     $13,161,644     $17,577,696    $21,479,585
</TABLE>


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

Capital Resources and Liquidity

During  the year,  the  Partnership's  primary  sources of  liquidity  were cash
balances  and  cash  flows  from  leasing  operations.   The  liquidity  of  the
Partnership  will vary in the future,  increasing  to the extent cash flows from
operations  and proceeds  from asset sales exceed  expenses,  and  decreasing as
lease assets are acquired, as distributions are made to the Limited Partners and
to the extent  expenses  exceed cash flows from leases and  proceeds  from asset
sales.

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

The Partnership  currently has available adequate reserves to meet its immediate
cash requirements,  but in the event those reserves were found to be inadequate,
the  Partnership  would  likely be in a position  to borrow  against its current
portfolio  to meet such  requirements.  The  General  Partners  envision no such
requirements  for  operating  purposes,  nor have they explored with lenders the
possibility of obtaining loans. There can be no assurance as to the terms of any
such financing or that the Partnership will be able to obtain such loans.

All of the Partnership's non-recourse debt is paid by lease payments assigned to
the lenders. The assigned lease payments match the required payments on the debt
and such payments fully amortize the debt.

As of December 31, 1995,  cash  balances  were  reserved  for  distributions  in
January 1996 ($658,289) and working capital reserves.

As of December 31, 1995, the Partnership had borrowed approximately $21,700,000.
The remaining unpaid balance on those borrowings was  approximately  $2,966,000.
There were no additional  borrowings from December 31, 1995 through February 29,
1996. The  borrowings are  no
n-recourse  to the  Partnership,  that is, the only
recourse of the lender will be to the equipment or corresponding  lease acquired
with the loan proceeds. The Li

mited Partnership Agreement limits such borrowings
to 40% of the total cost of equipment, in aggregate.

No  commitments  of capital  have been or are expected to be made other than for
the  acquisition of additional  equipment as described in Item 1. As of December
31, 1995, the Partnership had no such commitments.


                                      -5-
<PAGE>

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

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

The  Partnership  commenced  regular  distributions,  based on cash  flows  from
operations,  beginning  with the second quarter of 1988.  Distributions  of cash
from 1995  operations  and sales  proceeds were made in April,  July and October
1995 and in  January  1996.  See  Items 5 and 6 of this  report  for  additional
information regarding the distributions.

Cash Flows:

                  1995 vs. 1994

Cash flows from operations  decreased by $1,114,000.  The decrease resulted from
decreased lease revenues  ($2,804,259 in 1995 compared to $5,395,153 in 1994), a
decrease  of  $2,590,894.  This  was  partially  offset  by cash  received  from
bankruptcy   settlements   ($228,033)  and  improved   collections  of  accounts
receivable at the end of 1995 compared to 1994. In 1994, accounts receivable had
increased  by $396,017  and they  decreased  by $606,422 in 1995,  resulting  in
increased  cash  flows  in 1995 of  $1,002,439  compared  to 1994.  Lease  rents
declined as the result of sales of the  underlying  pool of lease  assets at the
end of the  related  lease  terms.  See  further  discussion  under the  heading
"Results of Operations".

Cash  flows from  investing  activities  increased  from  $1,967,923  in 1994 to
$3,180,99 in 1995. In 1994, $2,322,591 was used to purchased lease assets and to
pay related  initial  direct costs.  There were no such  purchases in 1995.  The
largest source of cash from investing  activities in both years was the proceeds
from sales of operating lease assets. These proceeds declined from $2,955,209 in
1994 to  $2,179,490  in 1995.  The second  major  source of cash from  investing
activities is direct financing lease rents which are accounted for as reductions
of the Partnership's  net investment in direct financing  leases.  These amounts
decreased from $1,311,673 in 1994 to $875,730 in 1995.

There were no financing sources of cash in 1995. Repayments of non-recourse debt
have decreased as a result of scheduled debt payments.

                  1994 vs. 1993

Cash flows from operations  decreased by $1,051,000.  The decrease resulted from
lower lease rents in 1994 compared to 1993 ($5,395,000  compared to $6,795,500).
Lease rents decreased due to a decrease in the underlying asset base. Assets are
being sold more rapidly than new assets are being acquired.

Investing sources of cash increased by approximately $890,000. Investing sources
of cash came from the proceeds  from sales of lease assets  ($2,959,500  in 1994
compared  to  $2,643,300  in 1993)  and  from  reductions  in the  Partnership's
investment in direct financing  leases  ($1,312,000 in 1994 compared to $736,000
in 1993).

There were no financing sources of cash in 1994. Repayments of non-recourse debt
have decreased as a result of scheduled debt payments.


Results of Operations

As of March 23,  1988,  subscriptions  for the  minimum  amount of the  offering
($1,200,000) had been received and accepted by the Partnership. As of that date,
the  Partnership   commenced   operations  in  its  primary  business   (leasing
activities).  Operations  resulted  in net  income  of  $1,117,799,  $1,025,357,
$1,099,015,  $1,484,900  and  $1,307,185  in 1991,  1992,  1993,  1994 and 1995,
respectively. The results of operations in future periods may vary significantly
from those of 1995 as the  Partnership's  lease  portfolio of capital  equipment
matures.  Revenues  from leases are  expected  to decline  over the long term as
leased assets come off lease and are sold or re-leased at lower lease rents. The
ultimate  effect on net income is not  determinable as it will depend to a large
degree on the amounts received from the sales of assets and/or from re-leases to
either the same or new lessees once the initial lease terms expire.


                                      -6-
<PAGE>

A number of the Partnership's leases are scheduled to terminate in 1996. If they
are  terminated  as  scheduled,  gross  lease  rents from  operating  and direct
financing leases are expected to decrease by $1,093,000 (from $3,665,000 in 1995
to $2,572,000 in 1996). Depreciation expense related to operating leases is also
expected to decrease.  The ultimate effect on net income will also depend on the
amounts,  if any, of re-lease  rentals  and/or the amounts of proceeds  received
upon sales of the assets.

As of December 31, 1995, 22% (14% in 1994) of total equipment cost was leased to
lessees in the health care industry. Leases are subject to the general partners'
credit committee review. The leases provide for the return of the equipment upon
default.  The concentration of the Partnership's  assets in this industry is not
known to have had any effect on the  Partnership's  results of operations nor is
there any known trend  regarding  this industry that would effect its operations
in future periods.


The  Partnership  continues to have an unsecured  claim against  Rocky  Mountain
Helicopters,  Inc.  (RMH),  a former  lessee of the  Partnership.  RMH filed for
reorganization  under  Chapter  11 of the U.  S.  Bankruptcy  Code in  1993.  In
addition  to the  amounts  previously  received  from  the RMH  bankruptcy,  the
Partnership  received  $77,654 in March 1996 and may receive an additional 5% to
10% of its unsecured claim of $776,654.

                  1995 vs. 1994

Operating  lease  revenues  declined by $2,560,888  (from  $4,912,864 in 1994 to
$2,351,976 in 1995) due to continued  sales of operating lease assets at the end
of their related lease terms. In 1995, the Partnership  realized a gain on lease
assets  sales of $453,960  compared to a loss of $3,239 in 1994. A large part of
the 1995 gain related to the sale of materials  handling  equipment after it was
returned by the lessees upon  termination of the lease. In 1995, the Partnership
sold the  remainder  of the common  stock it had  received as a part of the 1992
Financial News Network (FNN)  bankruptcy  settlement.  The gain realized in 1995
was $128,878 compared to $19,292 in 1994. In 1995, the Partnership also received
additional  cash  payments  from  the  bankruptcies  of FNN and  Rocky  Mountain
Helicopters,  Inc. totaling  $228,033.  No further amounts are expected from the
FNN transaction.

Depreciation  expense has continued to decrease as the Partnership's  underlying
portfolio of operating lease assets is sold at the scheduled terminations of the
related  lease  terms.   Depreciation  decreased  from  $2,963,445  in  1994  to
$1,451,193  in 1995.  Interest  expense has  declined  from  $509,267 in 1994 to
$365,099 in 1995 as the result of scheduled debt payments.  Management  fees are
based on the  Partnership's  lease  rents  received  and on the  amounts of cash
distributed to the limited  partners from its leasing  activities (as defined in
the Limited  Partnership  Agreement).  Both of these  factors  decreased in 1995
compared to 1994 and as a result,  management  fees  decreased  from $313,115 to
$222,936.

                  1994 vs. 1993

Operating  lease  revenues  declined by $1,424,006  (from  $6,336,870 in 1993 to
$4,912,864  in 1994) due to sales of assets in 1993 and 1994.  Direct  financing
lease revenues  increased by $21,150 due to the addition of such assets in 1994.
Other income  increased  by $161,000.  In 1994,  other income  included  fees of
$139,200 imposed on a lessee for the early termination of the lease contract.
There were no such fees in 1993.

Depreciation expense has declined as the amount of equipment on operating leases
(at cost) has declined from $35,604,457 at the end of 1992 to $26,479,548 at the
end of 1993 and to $18,224,077 at the end of 1994. It is expected to continue to
decrease as additional  operating leases mature and the related assets are sold.
The reductions (in both 1993 and in 1994) of the asset base have  contributed to
the decrease in depreciation in 1994.

Interest  expense has  declined  as the  balances  of  long-term  debt have been
reduced by scheduled debt payments.

Equipment  management fees are related to the  Partnership's  gross lease rents.
Such fees  decreased  from $195,000 in 1993 to $146,000 in 1994.  The decline is
related to the decrease in lease rents noted above.  Partnership management fees
are  related to the  amounts of  distributions  of "Cash  from  Operations",  as
defined in the Limited  Partnership  Agreement,  to the Limited Partners.  These
fees decreased from $233,000 in 1993 to $167,000 in 1994 as a greater portion of
the cash  distributed  to the Limited  Partners was from the proceeds from asset
sales rather than from operations.


                                      -7-
<PAGE>

In 1994, the assets of the Partnership  represent a smaller portion of the total
assets of all of the affiliated  partnerships  managed by the General  Partners.
Its  partners  also  represent  a smaller  portion  of the total  number of such
partners  in all of  the  partnerships  administered  by the  General  Partners.
Administrative  costs  incurred  by  the  General  Partners  on  behalf  of  the
affiliated  partnerships  are  subject  to  certain  economies  of scale and the
Partnership was consequently allocated a smaller portion of those costs in 1994.
Additionally,   certain  portions  of  the  lease  administration  process  were
automated.  This resulted in the decrease in the amounts of administrative costs
reimbursed to the General Partners.


Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Financial  Statements and Notes to Financial  Statements  attached hereto at
pages 9 through 23.


                                      -8-
<PAGE>

                         REPORT OF INDEPENDENT AUDITORS






The Partners
ATEL Cash Distribution Fund II


We have audited the accompanying  balance sheets of ATEL Cash  Distribution Fund
II (a California limited  partnership) as of December 31, 1995 and 1994, and the
related  statements of income,  changes in partners'  capital and cash flows for
each of the three years in the period ended December 31, 1995.  These  financial
statements  are  the  responsibility  of  the  Partnership's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of ATEL Cash Distribution Fund II
(a California limited partnership) at December 31, 1995 and 1994 and the results
of its  operations  and its cash flows for each of the three years in the period
ended  December 31, 1995,  in  conformity  with  generally  accepted  accounting
principles.



                                                           ERNST & YOUNG LLP
San Francisco, California
February 2, 1996


                                      -9-
<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                                 BALANCE SHEETS

                           DECEMBER 31, 1995 AND 1994


                                     ASSETS

                                                         1995           1994
                                                         ----           ----

Cash and cash equivalents                             $874,714       $924,041

Accounts receivable, net of allowance
   for doubtful accounts of $15,552 in
   1995 and 1994                                        69,558        675,980

Investment in equipment and leases                   7,459,980     11,523,077
                                                --------------- --------------
Total assets                                        $8,404,252    $13,123,098
                                                =============== ==============


                        LIABILITIES AND PARTNERS' CAPITAL


Non-recourse debt                                   $2,965,946     $4,255,444

Accrued interest                                        53,047         75,141

Accounts payable and accrued liabilities:
     General Partners                                   61,192         50,505
     Trade and other                                    79,398         55,219

Customer deposits                                       77,409         77,409

Unearned operating lease income                         36,385         57,644
                                                --------------- --------------
Total liabilities                                    3,273,377      4,571,362

Partners' capital:
     General Partners                                   73,539         60,467
     Limited Partners                                5,057,336      8,491,269
                                                --------------- --------------
Total partners' capital                              5,130,875      8,551,736
                                                --------------- --------------
Total liabilities and partners' capital             $8,404,252    $13,123,098
                                                =============== ==============

                             See accompanying notes.


                                      -10-
<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                              STATEMENTS OF INCOME

                  YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993


<TABLE>
<CAPTION>
                                               1995            1994           1993
                                               ----            ----           ----
<S>                                         <C>            <C>             <C>
Revenues:
Leasing activities:
     Operating                              $2,351,976     $4,912,864      $6,336,870
     Direct financing                          436,955        470,109         448,959
     Leveraged                                  15,328         12,180           9,679
     Gain (loss) on sale of lease assets       453,960         (3,239)        184,599

Interest income                                 32,340         38,720          89,830
Gain on sale of marketable securities          124,878         19,292               -
Proceeds from bankruptcy settlements           228,033              -               -
Other                                            2,324        174,573          13,244
                                        --------------- --------------- --------------
                                             3,645,794      5,624,499       7,083,181
                                        --------------- --------------- --------------

Expenses:
Depreciation and amortization                1,451,193      2,963,445       4,285,373
Interest expense                               365,099        509,267         860,663
Equipment and partnership management
     fees to General Partner                   222,936        313,115         427,874
Administrative cost reimbursements
     to General Partner                        157,444        238,185         313,421
Provision for losses                            25,972         11,616               -
Professional fees                               44,864         37,647          47,110
Other                                           71,101         66,324          49,725
                                        --------------- --------------- --------------
                                             2,338,609      4,139,599       5,984,166
                                        --------------- --------------- --------------
Net Income                                  $1,307,185      $1,484,900     $1,099,015
                                        =============== =============== ==============

Net income:
     General Partners                          $13,072         $14,849        $10,990
     Limited Partners                        1,294,113       1,470,051      1,088,025
                                        --------------- --------------- --------------
                                            $1,307,185      $1,484,900     $1,099,015
                                        =============== =============== ==============

Net income per Limited Partnership unit         $18.49          $21.00         $15.54

Weighted average number of units
     outstanding                                69,979          69,990         70,001
</TABLE>

                             See accompanying notes.


                                      -11-
<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                   STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

                  YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993


<TABLE>

<CAPTION>
                                                                      Limited Partners           General
                                                                 Units           Amount         Partners         Total

<S>                                                                  <C>         <C>                <C>        <C>
Balance, January 1, 1993                                             70,001     $17,543,068         $34,628    $17,577,696

Distributions ($81.80 per unit)                                                  (5,726,239)                    (5,726,239)
Distributions reinvested                                                            211,172                        211,172
Net income                                                                        1,088,025          10,990      1,099,015
                                                            ---------------- --------------- --------------- --------------

Balance, December 31, 1993                                           70,001      13,116,026          45,618     13,161,644

Distributions ($87.05 per unit)                                                  (6,092,811)                    (6,092,811)
Repurchase of units                                                     (22)         (1,997)                        (1,997)
Net income                                                                        1,470,051          14,849      1,484,900
                                                            ---------------- --------------- --------------- --------------

Balance, December 31, 1994                                           69,979       8,491,269          60,467      8,551,736

Distributions ($67.56 per unit)                                                  (4,728,046)                    (4,728,046)
Net income                                                                        1,294,113          13,072      1,307,185
                                                            ---------------- --------------- --------------- --------------

Balance, December 31, 1995                                           69,979      $5,057,336         $73,539     $5,130,875
                                                            ================ =============== =============== ==============
</TABLE>







                             See accompanying notes.

                                      -12-
<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                            STATEMENTS OF CASH FLOWS

                  YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993


<TABLE>
<CAPTION>
                                                                                    1995          1994            1993
                                                                                    ----          ----            ----
<S>                                                                              <C>             <C>           <C>
Operating activities:
Net income                                                                       $1,307,185      $1,484,900     $1,099,015
   Adjustments  to  reconcile  net  income  to net cash  provided  by  
      operating activities:
      Depreciation and amortization expense                                       1,451,193       2,963,445      4,285,373
      (Gain) loss on sale of lease assets                                          (453,960)          3,239       (184,599)
      Leveraged lease income                                                        (15,328)        (12,180)        (9,679)
      Gain on sale of marketable securities                                        (124,878)        (19,292)             -
      Provision for losses                                                           25,972          11,616              -
      Changes in operating assets and liabilities:
         Accounts receivable                                                        606,422        (396,017)        76,161
         Notes receivable                                                                 -           2,861          6,031
         Accounts payable, general partner                                          (40,528)        (60,300)        12,563
         Accounts payable, other                                                     75,394         (10,997)       (27,516)
         Accrued interest                                                           (22,094)        (75,075)             -
         Customer deposit                                                                 -          77,409       (203,000)
         Unearned operating lease income                                            (21,259)        (67,004)      (100,552)
                                                                             --------------- --------------- --------------
Net cash provided by operating activities                                         2,788,119       3,902,605      4,953,797
                                                                             --------------- --------------- --------------

Investing activities:
Proceeds from sale of equipment on operating leases                               2,179,490       2,955,209      2,640,861
Purchase of equipment on operating leases                                                 -      (1,368,301)      (211,747)
Reductions of net investment in direct financing leases                             875,730       1,311,673        736,040
Investment in equipment on direct financing leases                                        -        (946,685)             -
Proceeds from sales of marketable securities                                        124,878          19,292              -
Payments of initial direct costs                                                          -          (7,605)             -
Proceeds from sale of assets on direct financing leases                                   -           4,340          2,475
Investment in equipment on leveraged leases                                               -               -        (37,448)
                                                                             --------------- --------------- --------------
Net cash provided by investing activities                                         3,180,098       1,967,923      3,130,181
                                                                             --------------- --------------- --------------

Financing activities:
Distributions to limited partners, net of reinvestments                          (4,728,046)     (6,092,811)    (5,515,067)
Repayments of non-recourse debt                                                  (1,289,498)     (2,552,027)    (3,610,005)
Repurchase of units                                                                       -          (1,997)             -
Proceeds from non-recourse debt                                                           -               -      1,118,668
                                                                             --------------- --------------- --------------
Net cash used in financing activities                                            (6,017,544)     (8,646,835)    (8,006,404)
                                                                             --------------- --------------- --------------
Net (decrease) increase in cash and cash equivalents                                (49,327)     (2,776,307)        77,574
Cash and cash equivalents at beginning of year                                      924,041       3,700,348      3,622,774
                                                                             --------------- --------------- --------------

Cash and cash equivalents at end of year                                           $874,714        $924,041     $3,700,348
                                                                             =============== =============== ==============
</TABLE>


                                      -13-
<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                      STATEMENTS OF CASH FLOWS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

<TABLE>
<CAPTION>

                                                                                    1995          1994            1993
                                                                                    ----          ----            ----
<S>                                                                              <C>             <C>           <C>
Supplemental disclosures of cash flow information:

Cash paid during the year for interest                                             $387,193        $509,267       $860,663
                                                                             =============== =============== ==============

Supplemental schedule of non-cash transactions:

Operating lease assets reclassified to assets held for sale or lease             $1,147,373
Less accumulated depreciation                                                      (947,899)
                                                                             ===============
                                                                                   $199,474
                                                                             ===============

Operating lease assets reclassified to direct financing lease assets               $166,609                     $1,806,923
Less accumulated depreciation                                                      (127,649)                    (1,294,744)
                                                                             ===============                 ==============
                                                                                    $38,960                       $512,179
                                                                             ===============                 ==============

Notes receivable received on asset sales                                                                            $8,892
                                                                                                             ==============
</TABLE>



                             See accompanying notes.



                                      -14-
<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 1995


1.  Organization and partnership matters:

ATEL  Cash  Distribution  Fund  II,  a  California   limited   partnership  (the
Partnership),  was formed under the laws of the State of California on September
30, 1987, for the purpose of acquiring  equipment to engage in equipment leasing
and sales  activities.  Contributions  in the amount of $600 were received as of
September 30, 1987, $100 of which represented the General  Partners'  continuing
interest,  and $500 of which  represented the Initial Limited  Partner's capital
investment.

Upon the sale of the  minimum  amount of Units of Limited  Partnership  interest
(Units) of $1,200,000 and the receipt of the proceeds thereof on March 23, 1988,
the Partnership commenced operations.

The Partnership  incurred costs of $5,076,426 in connection  with  organization,
registration, and issuance of the Units. The General Partners are ATEL Financial
Corporation  (ATEL),  a  California  corporation  and two  individuals,  who are
principals of ATEL Capital Group, the parent of Financial Corporation.

On January 3, 1990, the Partnership's  offering of Limited Partnership units was
completed. Total contributed capital from the offering was $35,000,000.

The Partnership's business consists of leasing various types of equipment. As of
December 31, 1995,  the original  terms of the leases  ranged from one to twelve
years.

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


2.  Summary of significant accounting policies:

Equipment on operating leases:

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

Revenues  from  operating  leases  are  recognized  evenly  over the life of the
related leases.

Direct financing leases:

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



                                      -15-
<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 1995


2.  Summary of significant accounting policies (continued):

Investment in leveraged leases:

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

Statements of cash flows:

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

Income taxes:

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

The tax basis of the  Partnership's  net assets and liabilities  varies from the
amounts presented in these financial statements.
<TABLE>
<CAPTION>
                                                                 1995           1994
                                                                 ----           ----
<S>                                                          <C>            <C>
Financial statement basis of net assets and liabilities      $5,130,875     $8,551,736
Tax basis of net assets and liabilities                       4,751,106      6,377,316
                                                         --------------- --------------
Difference                                                     $379,769     $2,174,420
                                                         =============== ==============
</TABLE>

The following  reconciles the net income reported in these financial  statements
to the net income reported on the Partnership's federal tax return (unaudited):
                                                 1995           1994
                                                 ----           ----
Net income per financial statements          $1,307,185     $1,484,900
Adjustment to depreciation expense             (158,820)        49,417
Adjustments to revenues                       1,926,962      2,821,248
Adjustments to other expenses                    26,508        (15,006)
                                         --------------- --------------

Net income per federal tax return            $3,101,835     $4,340,559
                                         =============== ==============

Credit Risk:

Financial   instruments   which   potentially   subject   the   Partnership   to
concentrations of credit risk include cash and cash equivalents. The Partnership
places its cash deposits and temporary cash investments with creditworthy,  high
quality financial institutions. The concentration of such deposits and temporary
cash investments is not deemed to create a significant risk to the Partnership.



                                      -16-
<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 1995


2.  Summary of significant accounting policies (continued):

Use of estimates:

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Per unit data:

Net income and distributions per unit are based upon the weighted average number
of units  outstanding  during the period,  without  giving  effect to changes in
capital interests as a result of reinvestment of distributions.

New accounting pronouncement:

In March 1995, the Financial  Accounting Standards Board (FASB) issued Statement
No. 121,  "Accounting for the Impairment of Long-Lived  Assets and for Long-Live
Assets to be Disposed Of" (FAS 121). This statement  requires  impairment losses
to be recorded  on  long-lived  assets used in  operations  when  indicators  of
impairment are present and the undiscounted cash flows estimated to be generated
by those  assets  during the holding  period are less than the assets'  carrying
amount. The impairment loss is measured by comparing the fair value of the asset
to its carrying  amount.  FAS 121 also  addresses the  accounting for long-lived
assets that are expected to be disposed of. The  Partnership  adopted FAS 121 as
of January 1, 1995.  No  impairment  losses  were  required  to be recorded as a
result of adopting FAS 121.

Prior to 1995, a provision  for  impairment of value was recorded when a decline
in the value of the  property was  determined  to be other than  temporary.  The
impairment loss was measured as the difference  between the sum of the estimated
future undiscounted cash flows and the carrying amount of the asset.

Reclassification and 1993 restatement:

Certain  1994 and 1993  amounts  have been  reclassified  to conform to the 1995
presentation.  Also,  direct  financing leases and revenues from operating lease
activities  for 1993 were restated in 1994 from amounts  previously  reported in
the financial  statements  and footnotes to reflect an increase in the amount of
$233,000.  The restatement  corrected certain errors in recognizing lease income
and its effects on the Partnership's investments in leases.






                                      -17-
<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 1995


3. Investment in leases:

The Partnership's investment in leases consists of the following:
<TABLE>
<CAPTION>
                                                                              Depreciation
                                                                               Expense or       Reclass-
                                                                              Amortization    ifications &
                                                 1994          Additions       of Leases      Dispositions       1995
                                                 ----          ---------       ---------      ------------       ----
<S>                                            <C>                 <C>          <C>             <C>             <C>
Net investment in operating leases              $7,691,388                      ($1,449,331)    ($1,963,963)    $4,278,094
Net investment in direct financing leases        3,777,324                         (875,730)         38,960      2,940,554
Net investment in leveraged leases                  59,307                           15,328               -         74,635
Equipment held for lease                                 -                                -         199,474        199,474
Reserves for losses                                (11,616)        ($25,972)              -               -        (37,588)
Initial direct costs                                 6,674                -          (1,863)              -          4,811
                                             -------------- ---------------- --------------- --------------- --------------
                                               $11,523,077         ($25,972)    ($2,311,596)    ($1,725,529)    $7,459,980
                                             ============== ================ =============== =============== ==============
</TABLE>

Operating leases:

Property on operating  lease  consists of the following as of December 31, 1994,
additions and dispositions during 1995 and as of December 31, 1995:

<TABLE>
<CAPTION>
                                                                Balance                         Reclass-        Balance
                                                             December 31,                     ifications &   December 31,
                                                                 1994          Additions      Dispositions       1995
                                                                 ----          ---------      ------------       ----
<S>                                                             <C>             <C>             <C>             <C>
Aircraft                                                         $3,164,533                                     $3,164,533
Mining                                                            6,435,092                     ($4,330,449)     2,104,643
Materials handling                                                3,398,792                      (1,480,458)     1,918,334
Manufacturing                                                       835,681                               -        835,681
Transportation                                                    2,474,788                      (1,777,066)       697,722
Data processing                                                     527,739                               -        527,739
Communications                                                      481,738                               -        481,738
Food processing                                                     344,799                               -        344,799
Motor vehicles                                                      176,962                         (81,685)        95,277
Furniture, fixtures and equipment                                   347,277                        (324,310)        22,967
Medical                                                              36,676                         (36,676)             -
                                                            ---------------- --------------- --------------- --------------
                                                                 18,224,077                      (8,030,644)    10,193,433
Less accumulated depreciation                                   (10,532,689)    ($1,449,331)      6,066,681     (5,915,339)
                                                            ================ =============== =============== ==============
                                                                 $7,691,388     ($1,449,331)    ($1,963,963)    $4,278,094
                                                            ================ =============== =============== ==============
</TABLE>




                                      -18-
<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 1995


3. Investment in leases (continued):

The  following  table  summarizes  activity in the  Partnership's  investment in
assets under operating leases and the related  accumulated  depreciation for the
years ended December 31, 1993, 1994 and 1995.

<TABLE>
<CAPTION>
                                                               Operating                       Operating
                                                             Lease Assets     Accumulated        Lease
                                                             Stated at Cost   Depreciation    Assets, Net
                                                            ---------------- --------------- ---------------
<S>                                                             <C>            <C>              <C>
Balance December 31, 1992                                       $35,607,457    ($16,311,347)    $19,296,110
Assets reclassified to assets held for lease                     (1,806,923)      1,294,744        (512,179)
Acquisitions and increases                                          211,747      (4,285,373)     (4,073,626)
Dispositions                                                     (7,532,933)      4,501,259      (3,031,674)
                                                            ---------------- --------------- ---------------
Balance December 31, 1993                                        26,479,348     (14,800,717)     11,678,631
Acquisitions and increases                                        1,368,301      (2,962,514)     (1,594,213)
Dispositions                                                     (9,623,572)      7,230,542      (2,393,030)
                                                            ---------------- --------------- ---------------
Balance December 31, 1994                                        18,224,077     (10,532,689)      7,691,388
Acquisitions and increases                                                -      (1,449,331)     (1,449,331)
Dispositions                                                     (8,030,644)      6,066,681      (1,963,963)
                                                            ---------------- --------------- ---------------
Balance December 31, 1995                                       $10,193,433     ($5,915,339)     $4,278,094
                                                            ================ =============== ===============
</TABLE>


Direct financing leases:

Equipment under direct financing  leases includes wine barrels,  a wine bottling
line,  various medical  furniture,  fixtures and equipment and color  separation
equipment. The following lists the components of the Partnership's investment in
direct financing leases as of December 31, 1995 and 1994:


<TABLE>
<CAPTION>
                                                                                  1995            1994
                                                                                  ----            ----
<S>                                                                              <C>             <C>
Total minimum lease payments receivable                                          $2,584,207      $3,776,897
Estimated residual values of leased equipment (unguaranteed)                        873,309         859,312
                                                                             --------------- ---------------
Investment in direct financing leases                                             3,457,516       4,636,209
Less unearned income                                                               (516,962)       (858,885)
                                                                             =============== ===============
Net investment in direct financing leases                                        $2,940,554      $3,777,324
                                                                             =============== ===============
</TABLE>


                                      -19-
<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 1995


3. Investment in leases (continued):

At December 31, 1995,  the aggregate  amounts of future  minimum lease  payments
from direct financing leases and operating leases are as follows:

Year ending                     Direct
December 31,   Operating       Financing           Total

       1996     $1,338,248       $1,233,361      $2,571,609
       1997        543,627        1,126,523       1,670,150
       1998        271,610          220,075         491,685
       1999        269,732            4,248         273,980
       2000        202,299                -         202,299
             -------------- ---------------- ---------------
                $2,625,516       $2,584,207      $5,209,723
             ============== ================ ===============

Leveraged leases:

The Partnership  participates in leveraged lease transactions in which the costs
of assets  leased  to  others is  financed  primarily  by loans  from  financial
institutions,  but the  ownership of the assets is retained by the  Partnership.
The lessees' rental  obligations are assigned to the financial  institutions and
the  leased  property  is pledged as  collateral  for the loans and are  without
recourse to the general credit of the  Partnership.  Leases have been structured
so that lease  rental  payments and debt  service  amounts are equal.  Equipment
under leveraged leases consists of coal mining and processing equipment. The net
investment in leveraged leases at December 31, 1995 and 1994 is as follows:

<TABLE>
<CAPTION>
                                                                                  1995            1994
                                                                                  ----            ----
<S>                                                                                <C>             <C>
Aggregate rentals receivable                                                       $458,082        $661,674
Aggregate principal and interest payable on non-recourse loans                     (458,082)       (661,674)
Estimated residual value of leased assets                                           148,750         148,750
Less unearned income                                                                (74,115)        (89,443)
                                                                             --------------- ---------------
Net investment in leveraged leases                                                  $74,635         $59,307
                                                                             =============== ===============
</TABLE>


4. Non-recourse debt:


At December 31, 1995 and 1994,  non-recourse  debt  consists of notes payable to
financial institutions of $2,965,946 and $4,255,444, respectively. The notes are
due in varying  monthly,  quarterly and  semi-annual  payments.  Interest on the
notes is at rates from 7.69% to 12.86%.  The notes are secured by assignments of
lease  payments and pledges of assets.  At December 31, 1995, the carrying value
of the pledged assets is  approximately  $3,060,070.  The notes mature from 1996
through 2000.





                                      -20-
<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 1995


4. Non-recourse debt (continued):

Future  minimum  principal  and  interest  payments of  non-recourse  debt as of
December 31, 1995 are as follows:

   Year ending
   December 31,   Principal       Interest          Total

         1996     $1,272,081         $261,180      $1,533,261
         1997      1,037,153          137,795       1,174,948
         1998        230,049           61,609         291,658
         1999        233,530           36,202         269,732
         2000        193,133            9,166         202,299
               -------------- ---------------- ---------------
                  $2,965,946         $505,952      $3,471,898
               ============== ================ ===============


5. Related party transactions:

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

The General  Partners  earned  partnership  management  fees equal to 5% of cash
distributed  from  operations and equipment  management fees equal to 2% of full
payout lease rentals and 5% of operating  lease rentals  pursuant to the Limited
Partnership Agreement.  The amounts earned in 1995, 1994 and 1993 were $222,936,
$313,115 and $427,874, respectively.

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

In 1995,  1994 and 1993, the Partnership  reimbursed ATEL Financial  Corporation
$157,444,  $238,185  and  $313,421,  respectively,  for  costs  incurred  in the
administration of Partnership business.

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




                                      -21-
<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 1995


 6. Partners' capital:

As of December 31, 1991,  70,000 Units were issued and  outstanding (in addition
to  the  Unit  issued  to the  Initial  Limited  Partner).  The  Partnership  is
authorized  to issue up to 70,000  Units (in  addition to the Unit issued to the
Initial Limited Partner).  As of December 31, 1995, 69,979 Units were issued and
outstanding.   Limited  Partners  could  elect  to  accumulate  their  share  of
distributions  for reinvestment  during the Partnership's  reinvestment  period.
Effective  April  1,  1993,  the  General   Partners   terminated  this  capital
accumulation period.  Reinvested  distributions do not result in the issuance of
additional  Units. Each limited partner's capital interest in the Partnership is
based upon his original invested capital plus any reinvested distributions.

The  Partnership's  net  profits and net losses are to be  allocated  99% to the
Limited Partners and 1% to the General Partners.

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

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

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

   Third, the General Partners will receive as a Subordinated  Incentive Fee, as
follows:

                       A) 10% of remaining Cash from Operations

                       B) 15% of remaining Cash from Sales and Refinancing

   Fourth, the remainder to the Limited Partners.


7.  Concentration of credit risk and major customers:

The Partnership  leases  equipment to lessees in diversified  industries.  As of
December  31,  1995,  22% (14% in 1994) of total  equipment  cost was  leased to
lessees in the health care industry. Leases are subject to the general partners'
credit committee review. The leases provide for the return of the equipment upon
default.

During 1995, rentals from one customer in the health care industry comprised 12%
of the Partnership's revenues from leases



                                      -22-
<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 1995


8.  Fair value of financial instruments:

During the year ended December 31, 1995, the  Partnership  adopted  Statement of
Financial  Accounting  Standards  No.  107,  "Disclosures  about  Fair  Value of
Financial Instruments," which requires disclosure of the fair value of financial
instruments  for which it is practicable  to estimate fair value.  The following
methods and  assumptions  were used to estimate  the fair value of each class of
financial instrument for which it is practicable to estimate that value.

Cash and cash equivalents:

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

Accounts payable, accrued interest and customer deposits:

The carrying amounts of accounts payable, accrued interest and customer deposits
approximate fair value because of the short maturity of these instruments.

Non-recourse debt:

The  fair  value  of the  Partnership's  non-recourse  debt is  estimated  using
discounted cash flow analyses,  based on the Partnership's  current  incremental
borrowing rates for similar types of borrowing arrangements.  The estimated fair
value of the Partnership's non-recourse debt at December 31, 1995 is $3,063,590.






                                      -23-
<PAGE>

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

Inapplicable.


                                    PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS

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

All  of the  outstanding  capital  stock  of  ATEL  Financial  Corporation  (the
corporate  General  Partner) is held by ATEL Capital  Group  ("ACG"),  a holding
company formed to control the General Partner and affiliated  companies pursuant
to a corporate  restructuring  completed in July 1994. The  outstanding  capital
stock of ATEL Capital Group is owned 75% by A. J. Batt and 25% by Dean Cash (the
individual General Partners),  and was obtained in the restructuring in exchange
for their capital interests in ATEL Financial Corporation.

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

The officers and directors of ATEL Capital Group, ATEL Financial Corporation and
their affiliates are as follows:

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

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

F. Randall Bigony . . . . . .Senior Vice President and Chief Financial Officer
                             of ACG, AFC, ALC, AIS and AEC

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

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

William J. Bullock . . . . . Director of Asset Management of AEC

Jeffrey A. Schwager . . . . .Vice President - Syndication of ALC

Russell H. Wilder . . . . . .Vice President - Credit of AEC

J. Edwin Holliday . . . . . .Senior Vice President - National Sales Manager of
                             ASC

John P. Scarcella . . . . . .Vice President of ASC


A. J. Batt, age 60, founded ATEL in 1977 and has been its president and chairman
of the  board of  directors  since  its  inception.  From  1973 to 1977,  he was
employed by GATX  Leasing  Corporation  as  manager-data  processing  and equity
placement for the lease underwriting department, which was involved in equipment
financing  for  major  corporations.  From  1967 to 1973  Mr.  Batt was a senior
technical representative for General Electric Corporation, involved in sales and
support  services for computer  time-sharing  applications  for corporations and
financial  institutions.  Prior to that time, he was employed by North  American
Aviation as an  engineer  involved in the Apollo  project.  Mr. Batt  received a
B.Sc.  degree with honors in  mathematics  and physics  from the  University  of
British Columbia in 1961.


                                      -24-
<PAGE>

Dean L. Cash,  age 46, joined ATEL as director of marketing in 1980 and has been
a vice president since 1981,  executive vice president since 1983 and a director
since  1984.   Prior  to  joining  ATEL,   Mr.  Cash  was  a  senior   marketing
representative for Martin Marietta Corporation, data systems division, from 1979
to 1980.  From 1977 to 1979,  he was employed by General  Electric  Corporation,
where he was an applications  specialist in the medical  systems  division and a
marketing  representative in the information  services division.  Mr. Cash was a
systems  engineer  with  Electronic  Data  Systems  from  1975 to 1977,  and was
involved in maintaining and developing software for commercial applications. Mr.
Cash received a B.S.  degree in psychology and mathematics in 1972 and an M.B.A.
degree with a  concentration  in finance in 1975 from Florida State  University.
Mr. Cash is an arbitrator with the American Arbitration Association.

F.  Randall  Bigony,  age 38,  joined  ATEL in  1992  to  review  administrative
operations  within  ATEL  Financial  Corporation  and to develop  and  implement
functional  plans to  support  company  growth.  He  currently  oversees  ATEL's
accounting, MIS and treasury functions. From 1987 until joining ATEL, Mr. Bigony
was  president  of F.  Randall  Bigony & Co., a  consulting  firm that  provided
financial and strategic  planning  services to emerging growth  companies.  From
1983 to 1987,  he was a manager  with the  accounting  firm of Ernst &  Whinney,
serving  clients in its management  consulting  practice.  Mr. Bigony received a
B.A.  degree in business  from the  University  of  Massachusetts  and an M.B.A.
degree in finance from the University of California,  Berkeley. He is a founding
board member and acting  treasurer  of the I Have a Dream  Foundation - Bay Area
Chapter.

Donald E. Carpenter, age 47, joined ATEL in 1986 as controller. Prior to joining
ATEL, Mr. Carpenter was an audit supervisor with Laventhol & Horwath,  certified
public accountants in San Francisco, California, from 1983 to 1986. From 1979 to
1983,  Mr.  Carpenter  was an  audit  senior  with  Deloitte,  Haskins  & Sells,
certified public accountants,  in San Jose,  California.  From 1971 to 1975, Mr.
Carpenter was a Supply Corp officer in the U. S. Navy. Mr. Carpenter  received a
B.S. degree in mathematics  (magna cum laude) from California State  University,
Fresno in 1971 and completed a second major in accounting in 1978. Mr. Carpenter
has been a California certified public accountant since 1981.

Vasco H. Morais, age 37, joined ATEL in 1989 as general counsel to provide legal
support in the  drafting  and  reviewing  of lease  documentation,  advising  on
general corporate law matters, and assisting on securities law issues. From 1986
to 1989,  Mr.  Morais was  employed  by the  BankAmeriLease  Companies,  Bank of
America's  equipment leasing  subsidiaries,  providing in-house legal support on
the  documentation  of  tax-oriented  and non-tax  oriented direct and leveraged
lease transactions, vendor leasing programs and general corporate matters. Prior
to the BankAmeriLease  Companies,  Mr. Morais was with the Consolidated  Capital
Companies in the Corporate and Securities Legal Department  involved in drafting
and reviewing  contracts,  advising on corporate law matters and  securities law
issues.  Mr.  Morais  received  a B.A.  degree  in 1982 from the  University  of
California in Berkeley and a J.D. degree in 1986 from Golden Gate University Law
School.  Mr.  Morais  has been an active  member of the State Bar of  California
since 1986.

William J.  Bullock,  age 32,  joined  ATEL in 1991,  as the  director  of asset
management. He assumed responsibility for the disposition of off-lease equipment
and  residual  valuation  analysis on new lease  transactions.  Prior to joining
ATEL,  Mr.  Bullock  was a senior  member of the  equipment  group at  McDonnell
Douglas  Finance  Corporation("MDFC")  responsible  for  managing its $4 billion
portfolio of leases.  Mr. Bullock was involved in negotiating sales and renewals
as well as preparing and  inspecting  equipment.  Prior to joining MDFC in 1989,
Mr. Bullock was the Senior  Negotiator at Equitable  Leasing (a subsidiary of GE
Capital Equipment Corp.) in San Diego. At Equitable, he handled the end-of-lease
negotiations  and equipment  dispositions of a portfolio  comprised of equipment
leased primarily to Fortune 200 companies.  Mr. Bullock has been a member of the
Equipment Lessors  Association  ("ELA") since 1987 and has authored ELA industry
articles.  He  received a B.S.  degree in  Finance in 1987 from San Diego  State
University and is pursuing his M.B.A.

Jeffrey A. Schwager, age 35, joined ATEL in 1991 as vice president - syndication
and is responsible for acquiring  transactions  from  intermediaries  as well as
debt and equity  placement.  Prior to joining ATEL, Mr. Schwager was a member of
General Electric Capital Corporation's  Institutional Financing Group. There, he
was  responsible  for   originating   equipment  lease  and  corporate   finance
opportunities,  as well as soliciting  equipment  portfolios in conjunction with
marketing a proprietary capital enhancement product. From 1985 through 1990, Mr.
Schwager held several positions with Bank Ireland/First Financial, most recently
Vice  President  Marketing,   where  he  was  responsible  for  originating  and
negotiating  tax-oriented  leveraged lease financings for Fortune 500 companies.
From 1983 to 1985 Mr.  Schwager  was an  Associate  Consultant  with The Bigelow
Company,  a middle market  investment  banking and management  consulting  firm,
developing and  implementing  strategic plans for a number of clients.  Prior to
The Bigelow Company,  he worked for Petro-Lewis  Corporation as a joint-interest
accountant.  Mr.  Schwager  received  his B.S. in Business  Administration  from
Babson College in 1982, majoring in Finance and Entrepreneurial Studies.


                                      -25-
<PAGE>

Russell  H.  Wilder,  age 41,  joined  ATEL in  1992 as Vice  President  of ATEL
Business Credit, a wholly-owned  subsidiary of ACG. Immediately prior to joining
ATEL,  Mr.  Wilder was a personal  property  broker  specializing  in  equipment
leasing  and  financing  and an  outside  contractor  in the areas of credit and
collections.  From 1985 to 1990 he was Vice President and Manager of Leasing for
Fireside Thrift Co., a Teledyne subsidiary,  and was responsible for all aspects
of setting up and  managing  the  department,  which  operated as a small ticket
lease  funding  source.  From  1983 to  1985 he was  with  Wells  Fargo  Leasing
Corporation  as  Assistant  Vice  President  in the credit  department  where he
oversaw all credit analysis on  transactions in excess of $2 million.  From 1978
to 1983 he was District Credit Manager with  Westinghouse  Credit  Corporation's
Industrial Group and was responsible for all non-marketing operations of various
district offices. Mr. Wilder holds a B.S. with Honors in Agricultural  Economics
and Business  Management from the University of California at Davis. He has been
awarded the Certified Lease Professional  designation by the Western Association
of Equipment Lessors.

J.  Edwin  Holliday,  age 51,  joined  ATEL  Securities  Corporation  in 1988 as
Regional Vice President for the Southwestern region and has been its Senior Vice
President and National  Sales  Manager since April 1994.  From August 1993 until
April 1994,  Mr.  Holliday  was a Managing  Director of HomeMac  Corporation,  a
mortgage bank that also markets a mortgage-related trust. Prior to joining ATEL,
Mr.  Holliday  was  a  Regional  Vice  President  for  several  firms  marketing
securities, including Icon Group from 1986 to 1988, Stonehenge Capital from 1982
to 1986 and Quantum  Resources from 1980 to 1982. Mr. Holliday was Sales Manager
for a retail  division of Beech Aircraft in Denver,  Colorado from 1975 to 1980,
and sales  engineer  for Trane  Company in Canton,  Ohio from 1968 to 1975.  Mr.
Holliday  received a B.S.  degree in Mechanical  Engineering  from West Virginia
Institute  of  Technology  in 1968,  and served a  Chairman  of the Board of the
Orange County, California Chapter of the International Association for Financial
Planning in 1993 and 1994.

John P. Scarcella,  age 34, joined ATEL Securities as vice president in 1992. He
is involved in the marketing of securities offered by ASC. Prior to joining ASC,
from 1987 to 1991,  he was  employed  by Lansing  Pacific  Fund,  a real  estate
investment  trust in San Mateo,  California  and acted as  director  of investor
relations.   From  1984  to  1987,   Mr.   Scarcella   acted  as  broker  dealer
representative  for Lansing  Capital  Corporation,  where he was involved in the
marketing of direct  participation  programs and REITs. Mr. Scarcella received a
B.S.C.  degree with emphasis in investment finance in 1983 and an M.B.A.  degree
with a concentration in marketing in 1991 from Santa Clara University.


Item 11.  EXECUTIVE COMPENSATION

The  registrant  is a limited  partnership  and,  therefore,  has no officers or
directors.

Set forth hereinafter is a description of the nature of remuneration paid and to
be paid to the  general  partners  and  their  affiliates.  The  amount  of such
remuneration  paid  through  December  31,  1995 is set  forth in Item 8 of this
report under the caption "Financial Statements and Supplementary Data - Notes to
the Financial  Statements - Related party transactions," at Note 5 thereof which
information is hereby incorporated by reference.

Selling Commissions

Through January 1990, the Partnership paid selling  commissions in the amount of
$3,325,000 to ATEL Securities Corporation, a wholly owned subsidiary of ATEL. No
further commissions are to be paid. Of this amount,  $3,094,015 was reallowed to
other broker/dealers.

Acquisition Fees

Acquisition  fees were paid to the General  Partners  for  services  rendered in
finding,  reviewing and evaluating  equipment to be purchased by the Partnership
and rejecting equipment not to be purchased by the Partnership. Acquisition fees
paid to the General Partners or their  affiliates were  $1,662,500,  the maximum
allowable amount.

Equipment Management Fees

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


                                      -26-
<PAGE>

Partnership Management Fees

As compensation  for its services  rendered in connection with the management of
the  Partnership,  including but not limited to employment  and  supervision  of
supervisory  managing  agents,  insurance  brokers,   equipment  lease  brokers,
accountants and other professional advisors, and for supervising the preparation
of reports and  maintenance of financial and operating data of the  Partnership,
Securities and Exchange Commission and Internal Revenue Service filings, returns
and reports,  the General  Partners shall be entitled to receive the partnership
management  fee which shall be payable  for each fiscal  quarter and shall be an
amount equal to 5% of distributions  of cash from operations.  See Note 5 to the
financial statements included at item 8 of this report for amounts paid.

Equipment Resale Fees

As compensation for services  rendered in connection with the sale of equipment,
the General  Partners shall be entitled to receive an amount equal to the lesser
of (i) 3% of the sales  price of the  equipment,  or (ii)  one-half  the  normal
competitive  equipment sales commission charged by unaffiliated parties for such
services.  Such fee is payable only after the Limited  Partners  have received a
return of their adjusted invested capital (as defined in the Limited Partnership
Agreement) plus 10% of their adjusted invested capital per annum calculated on a
cumulative basis,  compounded  daily,  commencing the last day of the quarter in
which the limited  partner was admitted to the  Partnership.  To date, none have
been accrued or paid.

Subordinated Incentive Fees

As compensation for the services rendered in evaluating and selecting  equipment
for  the  Partnership,  making  decisions  as to the  nature  and  terms  of the
acquisition,   leasing,   releasing  and  disposition  of  such  equipment,  and
selecting,  retaining and supervising consultants,  lessees, engineers, lenders,
borrowers  and  others,  the  General  Partners  shall be  entitled to receive a
subordinated  incentive fee equal to a percentage of all  distributions  of cash
from  operations  and cash from  sales or  refinancing  payable  quarterly,  but
commencing  immediately  after the Limited  Partners have received the return on
their adjusted capital described under "Equipment Resale Fees" above. The amount
of the  subordinated  incentive fee shall be 10% of  distributions  of cash from
operations and 15% of distributions of cash from sales or refinancing.  To date,
none have been accrued or paid.

General Partners' Interest in Operating Proceeds

Net income, net loss and investment tax credits are allocated 99% to the Limited
Partners and 1% to the General  Partners.  See the statements of income included
in item 8 of this  report for the amounts  allocated  to the General and Limited
Partners in 1993, 1994 and 1995.


Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
            MANAGEMENT

Security Ownership of Certain Beneficial Owners

At  December  31,  1995  no  investor  is  known  to  the  Partnership  to  hold
beneficially more than 5% of the issued and outstanding Units.

Security Ownership of Management

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

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

<S>                                           <C>                          <C>                                <C>
Limited Partnership Units                            Dean L. Cash            Individual Retirement            0.0057%
                                              235 Pine Street, 6th Floor   Account - 4 Units ($2,000)
                                                San Francisco, CA 94104

Limited Partnership Units                           Dean L. Cash             Initial Limited Partner Unit     0.0014%
                                              235 Pine Street, 6th Floor     1 Unit ($500)
                                                San Francisco, CA 94104            (owned by spouse)
</TABLE>


                                      -27-
<PAGE>

Changes in Control

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

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


Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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

The Partnership owns a 39% undivided  interest in a lease transaction  involving
restaurant furniture, fixtures and equipment on lease to the Galardi Group, Inc.
The  Partnership's  interest  was  purchased  on the  same  terms as that of the
affiliated partnerships,  ATEL Cash Distribution Fund and ATEL Cash Distribution
Fund IV which own 19% and 42%, respectively.  The term of the lease is 49 months
and expires August 31, 1998. The  Partnership's  monthly  rentals from the lease
are $13,253.

The Partnership  also owns a 30% undivided  interest in the Boeing 727 executive
aircraft on lease to DJ Aerospace (Bermuda) Ltd. The Partnership's  interest was
purchased  on the same terms as that of the  affiliated  partnership,  ATEL Cash
Distribution  Fund IV which owns the remaining  70%. The term of the lease is 36
months and expires June 30, 1997.  The  Partnership's  monthly  rentals from the
lease are $20,436.


                                     PART IV

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

                   (a)  Financial Statements and Schedules

                          1. Financial Statements

                             Included in Part II of this report:

                             Report of Independent Auditors

                             Balance Sheets at December 31, 1995 and 1994

                             Statements of Income for the years ended December
                             31, 1995, 1994 and 1993

                             Statements of Changes in Partners' Capital for the
                             years ended December 31, 1995, 1994 and 1993

                             Statements of Cash Flows for the years ended
                             December 31, 1995, 1994 and 1993

                             Notes to Financial Statements

                          2. Financial Statement Schedules

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

                   (b)  Reports on Form 8-K for the fourth quarter of 1995

                             None

                   (c)  Exhibits

                             (3)   and   (4)   Limited   Partnership   Agreement
                             incorporated  by  reference to Exhibits (3) and (4)
                             to the Partnership's Annual Report on Form 10-K for
                             the year ended  December  31,  1988 filed March 31,
                             1989 (File No. 33-17663)



                                      -28-
<PAGE>

                                   SIGNATURES

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



                                 Date: 3/27/1996

                         ATEL Cash Distribution Fund II,
                        a California Limited Partnership
                                  (Registrant)


                 By:  ATEL Financial Corporation,
                      General Partner of Registrant



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



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



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



                                      -29-
<PAGE>

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


SIGNATURE                            CAPACITIES                        DATE




/s/ A. J. Batt               General Partner of                      3/27/1996
      A. J. Batt             registrant; president,
                             chairman and chief
                             executive officer of ATEL
                             Financial Corporation

/s/ Dean Cash                General Partner of                      3/27/1996
      Dean Cash              registrant; executive vice
                             president and director of
                             ATEL Financial
                             Corporation

/s/ F. Randall Bigony        Principal financial officer of          3/27/1996
  F. Randall Bigony          registrant; principal
                             financial officer of ATEL
                             Financial Corporation


/s/Donald E. Carpenter       Principal accounting officer            3/27/1996
 Donald E. Carpenter         of registrant; principal
                             accounting officer of ATEL
                             Financial Corporation


                                      -30-