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

              |X|  Annual report pursuant to section 13 or 15(d) of the
                   Securities Exchange Act of 1934 (no fee required)

                   For the Year Ended December 31, 1998

                                                  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 Partnershi
 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 |_| 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|

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

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, 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.

As of December 31, 1998, the  Partnership  had disposed of all of its assets and
had ceased operations.

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

Narrative Description of Business

The  Partnership  acquired  various types of equipment and leased 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's  objective  was to lease a  minimum  of 75% of the  equipment
acquired  with the net  proceeds  of the  offering  to lessees  which (i) had an
aggregate credit rating by Moody's Investor  Service,  Inc. of Baa or better, or
the credit equivalent as determined by the General Partners,  with the aggregate
rating weighted to account for the original equipment cost for each item leased;
or  (ii)  were   established   hospitals  with  histories  of  profitability  or
municipalities.  The balance of the original  equipment  portfolio could include
equipment leased to lessees which,  although deemed  creditworthy by the General
Partners,  would  not  satisfy  the  general  credit  rating  criteria  for  the
portfolio.  As of December 31, 1998,  all of the  Partnership's  assets had been
sold.

Two lessees, in the health care and wine industries,  accounted for 31% and 27%,
respectively, of the Partnership's lease revenues during 1998. One lessee in the
health care  industry  accounted  for 26% of the  Partnership's  lease  revenues
during 1997.

The business of the Partnership is not seasonal.

The Partnership has no full time employees.



<PAGE>

Item 2.  PROPERTIES

The  Partnership  does not own or lease any real  property,  plant or materially
important physical properties as of December 31, 1998.


Item 3.  LEGAL PROCEEDINGS

Inapplicable.


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 were 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 was ever developed.

Holders

As of December 31, 1998, a total of 2,964 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  had  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 1997
and in  January  1998  were  $3.75 per Unit (a total of $15.00  per  Unit).  All
distributions were from cash flows from operations and sales proceeds in 1997.

The rates for  distributions to Limited Partners in April, July and October 1998
were $7.50 per Unit and in December 1998 were $45.00 per Unit (a total of $67.50
per Unit).  All  distributions  were from cash flows from  operations  and sales
proceeds in 1998.

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

<CAPTION>
                                                  1998            1997            1996           1995             1994
                                                  ----            ----            ----           ----             ----
<S>                                                 <C>              <C>             <C>           <C>              <C>    
Distributions of net income                         $ 28.39          $ 7.26          $ 8.98        $ 18.49          $ 21.00
Return of investment                                  41.77           11.19           20.71          49.07            66.05
                                             --------------- --------------- --------------- --------------  ---------------
Distributions per unit                                70.16           18.45           29.69          67.56            87.05
Differences due to timing of
   distributions and due to distribution
   reinvestments                                      (2.66)          (3.45)          (3.69)        (14.76)           (2.05)
                                             --------------- --------------- --------------- --------------  ---------------
Nominal distribution rates from above               $ 67.50         $ 15.00         $ 26.00        $ 52.80          $ 85.00
                                             =============== =============== =============== ==============  ===============
</TABLE>



<PAGE>

Item 6.  SELECTED FINANCIAL DATA

The following table presents selected  financial data of the Partnership for the
years ended December 31, 1998,  1997,  1996,  1995 and 1994. This financial data
should be read in  conjunction  with the financial  statements and related notes
included under Item 8 of this report.
<TABLE>

<CAPTION>
                                                  1998            1997            1996           1995             1994
                                                  ----            ----            ----           ----             ----
<S>                                             <C>             <C>             <C>             <C>             <C>        
Gross Revenues                                  $ 2,527,269     $ 1,313,735     $ 2,163,088     $3,645,794      $ 5,624,499

Net Income                                      $ 2,006,605       $ 513,216       $ 634,555     $1,307,185      $ 1,484,900

Weighted average Units outstanding                   69,979          69,979          69,979         69,979           69,990

Net income per Unit, based on
   weighted average Units outstanding               $ 28.39          $ 7.26          $ 8.98        $ 18.49          $ 21.00

Distributions per Unit, based on
   weighted average Units outstanding               $ 70.16         $ 18.45         $ 29.69        $ 67.56          $ 87.05

Total Assets                                            $ -     $ 3,668,297     $ 5,584,504     $8,404,252     $ 13,123,098

Non-recourse Debt                                       $ -       $ 656,712     $ 1,693,865     $2,965,946      $ 4,255,444

Total Partners' Capital                                 $ -     $ 2,910,078     $ 3,687,982     $5,130,875      $ 8,551,736
</TABLE>

In 1995, cash flows and distributions to Limited Partners were not sufficient to
allow the Partnership to reinvest in additional equipment.


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


Capital Resources and Liquidity

During  the year,  the  Partnership's  primary  sources of  liquidity  were cash
balances and cash flows from leasing operations and sales of lease assets.

As of December 31, 1998, the  Partnership  had disposed of all of its assets and
had ceased operations.

The  Partnership  commenced  regular  distributions,  based on cash  flows  from
operations,  beginning  with the second quarter of 1988.  Distributions  of cash
from 1998  operations and sales proceeds were made in April,  July,  October and
December  1998.  See Items 5 and 6 of this  report  for  additional  information
regarding the distributions.


Cash Flows:

Cash flows from operations  decreased from $635,243 in 1997 to $459,213 in 1998.
This decrease,  was due to a $385,008  decrease in lease revenues,  offset by an
increase  in other  income of $188,903  in 1998.  Most of the  increase in other
income  was the  result  of the  recovery  of excess  reserves  for  losses  and
impairments  that  were  not  required  in  conjunction  with  the  sales of the
remaining lease assets.  In 1997, the Partnership  received  $116,481 as partial
settlement of its claim in the bankruptcy of Rocky Mountain Helicopters, Inc. No
similar amounts were received in 1998.
<PAGE>

In 1998 and 1997, investing sources of cash consisted of the proceeds from sales
of lease assets and from rents on direct financing  leases.  Proceeds from sales
of lease assets increased by $3,306,240 compared to 1997. This was primarily due
to sales of all of the Partnership's remaining lease assets during the third and
fourth quarters of 1998.

There were no sources of cash from financing sources in either 1998 or 1997.


Results of Operations

Operations resulted in net income of $2,006,605 in 1998 and $513,216 in 1997.

Operations of the Partnership  were concluded on December 31, 1998 with the sale
of the  remaining  lease assets to an unrelated  third party and the transfer of
the remaining cash balances ($19,645) and liabilities ($12,855) to a liquidating
trust. If funds remain in the liquidating trust after paying all of the expenses
related to closing the  operations of the fund,  the  remaining  amounts will be
paid to the  holders  of  interests  in the trust.  The  Limited  Partners  hold
interests in the trust  proportionate to their interests in the Partnership.  If
expenses of the liquidating trust exceed the net assets transferred to it by the
Partnership, the excess amounts will be funded by the General Partners.

Revenues from operating leases decreased compared to 1997 due lease terminations
and  sales.  As a result of the final  sales of lease  assets in 1998,  gains on
sales of assets increased compared to 1997.

Depreciation  expense  decreased  as a result of the sales of  operating  leases
noted above.


Impact of the Year 2000

As of December 31, 1998, the  Partnership  had disposed of all of its assets and
had ceased operations.  The year 2000 issue will therefore have no impact on the
Partnership.


Item 7a.  QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

As of December 31, 1998, the  Partnership  had disposed of all of its assets and
had ceased  operations.  The  Partnership  therefore  has no  exposure to market
risks.


Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See the  Report  of  Independent  Auditors,  Financial  Statements  and Notes to
Financial Statements attached hereto at pages 6 through 14.

<PAGE>

                         REPORT OF INDEPENDENT AUDITORS






The Partners
ATEL Cash Distribution Fund II


We have  audited the  accompanying  statements  of income,  changes in partners'
capital and cash flows of ATEL Cash Distribution  Fund II (a California  limited
partnership)  for the years ended  December 31, 1998 and 1997.  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 results of operations,  changes in partners' capital,
and  cash  flows  of  ATEL  Cash  Distribution  Fund  II (a  California  limited
partnership)  for the years ended December 31, 1998 and 1997, in conformity with
generally accepted accounting principles.



                                                           ERNST & YOUNG LLP
San Francisco, California
January 25, 1999

<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                              STATEMENTS OF INCOME

                     YEARS ENDED DECEMBER 31, 1998 AND 1997


<TABLE>
<CAPTION>
                                                                1998             1997
                                                                ----             ----
Revenues:
Leasing activities:
<S>                                                             <C>              <C>      
     Operating                                                  $ 426,269        $ 862,129
     Direct financing                                             198,724          154,229
     Leveraged                                                     30,550           24,283
     Gain on sale of lease assets                               1,647,529          124,594

Proceeds from bankruptcy settlement                                     -          116,481
Interest income                                                    31,507           28,232
Other                                                             192,690            3,787
                                                            --------------  ---------------
                                                                2,527,269        1,313,735
                                                            --------------  ---------------

Expenses:
Depreciation and amortization                                     191,489          364,425
Administrative cost reimbursements to General Partner             123,597          127,992
Equipment and partnership management fees to General Partner       87,906           84,156
Other                                                              49,779           54,154
Interest expense                                                   41,969          115,320
Professional fees                                                  20,930           24,303
Provision for losses and impairments                                4,994           13,097
Provision for doubtful accounts                                         -           17,072
                                                            --------------  ---------------
                                                                  520,664          800,519
                                                            --------------  ---------------
Net income                                                     $2,006,605        $ 513,216
                                                            ==============  ===============

Net income:
     General Partners                                             $20,066           $5,132
     Limited Partners                                           1,986,539          508,084
                                                            --------------  ---------------
                                                               $2,006,605        $ 513,216
                                                            ==============  ===============

Net income per Limited Partnership unit                            $28.39            $7.26

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

                             See accompanying notes.


<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                   STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

                     YEARS ENDED DECEMBER 31, 1998 AND 1997



<TABLE>
<CAPTION>
                                                           Limited Partners    General
                                                Units           Amount        Partners          Total

<S>              <C>                                <C>        <C>               <C>           <C>        
Balance, January 1, 1997                            69,979     $ 3,608,097       $ 79,885      $ 3,687,982

Distributions ($18.45 per unit)                                 (1,291,120)             -       (1,291,120)
Net income                                                         508,084          5,132          513,216
                                            --------------- --------------- --------------  ---------------
Balance, December 31, 1997                          69,979       2,825,061         85,017        2,910,078

Distributions ($70.16 per unit)                                 (4,909,893)             -       (4,909,893)
Net income                                                       1,986,539         20,066        2,006,605
Cash transferred to liquidating trust                              (19,449)          (196)         (19,645)
Liabilities transferred to liquidating trust                        12,726            129           12,855
Special allocation of income (loss)                                105,016       (105,016)               -
                                            --------------- --------------- --------------  --------------=
Balance, December 31, 1998                          69,979             $ 0            $ 0              $ 0
                                            =============== =============== ==============  ===============
</TABLE>
                             See accompanying notes.

<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                            STATEMENTS OF CASH FLOWS

                     YEARS ENDED DECEMBER 31, 1998 AND 1997


<TABLE>
<CAPTION>
                                                                   1998             1997
                                                                   ----             ----
Operating activities:
<S>                                                               <C>               <C>      
Net income                                                        $2,006,605        $ 513,216
   Adjustments to reconcile net income to net cash provided by
      operating activities:
      Depreciation and amortization expense                          191,489          364,425
      Gain on sale of lease assets                                (1,647,529)        (124,594)
      Leveraged lease income                                         (30,550)         (24,283)
      Provision for doubtful accounts                                      -           17,072
      Provision for losses and impairments                             4,994           13,097
      Changes in operating assets and liabilities:
         Accounts receivable                                          35,711          (22,540)
         Accounts payable, general partner                           (10,892)         (10,390)
         Accounts payable, other                                     (74,286)           7,502
         Accrued interest                                             (6,617)         (22,475)
         Customer deposits                                                 -          (69,000)
         Unearned operating lease income                              (9,712)          (6,787)
                                                               --------------  ---------------
Net cash provided by operating activities                            459,213          635,243
                                                               --------------  ---------------

Investing activities:
Proceeds from sales of lease assets                                4,085,168          778,928
Reductions of net investment in direct financing leases              136,857          816,922
                                                               --------------  ---------------
Net cash provided by investing activities                          4,222,025        1,595,850
                                                               --------------  ---------------

Financing activities:
Distributions to limited partners                                 (4,909,893)      (1,291,120)
Repayments of non-recourse debt                                     (656,712)      (1,037,153)
Transfer to liquidating trust, net                                    (6,790)               -
                                                               --------------  ---------------
Net cash used in financing activities                             (5,573,395)      (2,328,273)
                                                               --------------  ---------------
Net decrease in cash and cash equivalents                           (892,157)         (97,180)
Cash and cash equivalents at beginning of year                       892,157          989,337
                                                               --------------  ---------------

Cash and cash equivalents at end of year                                 $ 0        $ 892,157
                                                               ==============  ===============

Supplemental disclosures of cash flow information:

Cash paid during the year for interest                              $ 48,586        $ 137,795
                                                               ==============  ===============
</TABLE>


                             See accompanying notes.

<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 1998


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

The Partnership's  business consisted of leasing various types of equipment.  As
of December 31, 1998, the  Partnership had sold all of its assets and had ceased
operations.

Pursuant to the Limited  Partnership  Agreement,  the General Partners  received
compensation  and   reimbursement   for  services  rendered  on  behalf  of  the
Partnership (Note 4).


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.

<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 1998


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

Income taxes:

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

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

                                                  1998             1997
                                                  ----             ----
Net income per financial statements              $2,006,605         $513,216
Adjustment to depreciation expense                  136,558           (5,161)
Adjustments to revenues                           2,993,912          832,269
Adjustments to other expenses                        31,507          (13,421)
Provision for doubtful accounts                           -           17,072
Provision for losses and impairments                  4,994           13,097
                                              -------------- ---------------=
Net income per federal tax return                $5,173,576       $1,357,072
                                              ==============  ===============

<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 1998


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.


3. Investments in equipment and leases:

The Partnership's investments in equipment and leases consist of the following:
<TABLE>
<CAPTION>

                                                                               Depreciation
                                                                               Expense or      Reclass-
                                              December 31,                    Amortization   ifications &      December 31,
                                                  1997         Additions       of Leases      Dispositions        1998
                                                  ----         ---------       ---------     --------------       ----
<S>                                             <C>                              <C>           <C>                      <C>
Net investment in operating leases              $ 1,749,575                      $ (191,489)   ($1,558,086)             $ 0
Net investment in direct financing leases           944,264                        (136,857)      (807,407)               -
Net investment in leveraged leases                  118,208                          30,550       (148,758)               -
Equipment held for lease                                388                               -           (388)               -
Reserves for losses                                 (72,006)       $ (4,994)              -         77,000                -
                                             --------------- --------------- --------------- --------------  ---------------
                                                $ 2,740,429        $ (4,994)     $ (297,796)   $(2,437,639)             $ 0
                                             =============== =============== =============== ==============  ===============
</TABLE>

Reserves for losses and impairments:

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

      Balance 12/31/96                                           $ 59,809
      Provision                                                    13,097
      Charge-offs                                                    (900)
                                                           ---------------
      Balance 12/31/97                                             72,006
      Provision                                                     4,994
      Charge-offs                                                 (13,221)
      Excess reserves included in other income                    (63,779)
                                                           ---------------
      Balance 12/31/98                                                $ -
                                                           ===============

<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 1998


4. 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 1998 and 1997 were  $87,906 and
$84,156, 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 1998 and  1997,  the  Partnership  reimbursed  ATEL  $123,597  and  $127,992,
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.


 5. Partners' capital:

The  Partnership  was authorized to issue up to 70,000 Units (in addition to the
Unit issued to the Initial  Limited  Partner).  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, were 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.
<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 1998


 5. Partners' capital (continued):

   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.

Operations of the Partnership  were concluded on December 31, 1998 with the sale
of the  remaining  lease assets to an unrelated  third party and the transfer of
the remaining cash balances ($19,645) and liabilities ($12,855) to a liquidating
trust. If funds remain in the liquidating trust after paying all of the expenses
related to closing the operations of the Partnership, the remaining amounts will
be paid to the holders of  interests  in the trust.  The Limited  Partners  hold
interests in the trust  proportionate to their interests in the Partnership.  If
expenses of the liquidating trust exceed the net assets transferred to it by the
Partnership, the excess amounts will be funded by the General Partners.

Upon  termination  of operations  on December 31, 1998, a special  allocation of
income  was made to the  Limited  Partners  under the  terms of the  Partnership
Agreement in an amount sufficient to bring their capital accounts to zero.


6. Concentration of credit risk and major customers:

Two lessees, in the health care and wine industries,  accounted for 31% and 27%,
respectively, of the Partnership's lease revenues during 1998. One lessee in the
health care  industry  accounted  for 26% of the  Partnership's  lease  revenues
during 1997.





<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

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

Carl W. Magnuson             Vice President - Syndication of ALC

Barbara F. Medwadowski       Vice President - Syndication of ALC

James A. Kamradt             Director of Pricing and Syndication of ALC

Thomas D. Sbordone           Senior Vice President - Marketing of ALC

Russell H. Wilder            Vice President - Credit of AEC

John P. Scarcella            Vice President of ASC


<PAGE>

A. J. Batt, age 62, founded ATEL in 1977 and has been its president and chairman
of the  board of  directors  since  its  inception.  From  1973 to 1977,  he was
employed by GATX  Leasing  Corporation  as  manager-data  processing  and equity
placement for the lease underwriting department, which was involved in equipment
financing  for  major  corporations.  From  1967 to 1973  Mr.  Batt was a senior
technical representative for General Electric Corporation, involved in sales and
support  services for computer  time-sharing  applications  for corporations and
financial  institutions.  Prior to that time, he was employed by North  American
Aviation as an  engineer  involved in the Apollo  project.  Mr. Batt  received a
B.Sc.  degree with honors in  mathematics  and physics  from the  University  of
British Columbia in 1961.

Dean L. Cash,  age 48, 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.

Donald E. Carpenter, age 50, 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 40, joined ATEL in 1989 as general counsel to provide legal
support in the  drafting  and  reviewing  of lease  documentation,  advising  on
general corporate law matters, and assisting on securities law issues. From 1986
to 1989,  Mr.  Morais was  employed  by the  BankAmeriLease  Companies,  Bank of
America's  equipment leasing  subsidiaries,  providing in-house legal support on
the  documentation  of  tax-oriented  and non-tax  oriented direct and leveraged
lease transactions, vendor leasing programs and general corporate matters. Prior
to the BankAmeriLease  Companies,  Mr. Morais was with the Consolidated  Capital
Companies in the Corporate and Securities Legal Department  involved in drafting
and reviewing  contracts,  advising on corporate law matters and  securities law
issues.  Mr.  Morais  received  a B.A.  degree  in 1982 from the  University  of
California in Berkeley,  a J.D.  degree in 1986 from Golden Gate  University Law
School and an MBA (Finance) in 1997 from Golden Gate University.  Mr. Morais has
been an active member of the State Bar of California since 1986.

William J.  Bullock,  age 34,  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.


<PAGE>

Carl  W.  Magnuson,  age  55,  joined  ATEL in  1994  and is  Vice  President  -
Syndication for ALC. Mr. Magnuson is responsible for acquiring third party lease
transactions  and debt placement.  Prior to joining ATEL he was a Regional Group
Manager and Portfolio  Sales Manager for Bell  Atlantic  Systems  Leasing for 10
years.  From 1983 to 1984 he was Vice President and Chief  Financial  Officer of
the Handi-Kup  Company,  a plastics  manufacturer,  and from 1981 to 1982 he was
Controller for the Cyclotron  Corporation,  engaged in nuclear medicine research
and  development.  From 1978 to 1981 he was Executive  Vice President of Shannon
Financial Corporation, a middle market leasing corporation. From 1975 to 1978 he
was a Deputy Program Manager for the Watkins Johnson Company.  From 1968 to 1973
Mr.  Magnuson was an engineering  duty officer in the U. S. Navy.  Mr.  Magnuson
received a B.S. in Engineering  Science and an M.S. in Applied  Mathematics from
the Rensselaer Polytechnic Institute, an MS in Industrial Engineering/Operations
Research  from  Stanford  University,  and an  M.B.A.  from  the  University  of
California at Berkeley.

Barbara F.  Medwadowski,  age 59,  joined  ATEL in 1997 and is vice  president -
syndication  for ALC. Ms.  Medwadoski is responsible  for acquiring  third party
lease  transactions.  Prior to joining ATEL, she was a syndications  manager for
Mellon US Leasing  (successor to USL Capital and U.S.  Leasing  Corporation) for
nine  years.  From 1985 to 1987,  she was a vice  president  with Great  Western
Leasing where she acquired lease and loan transactions from intermediaries. From
1982 through 1984, she was a portfolio  manager with U.S.  Leasing  Corporation.
Ms. Medwadowski  received an M.B.A.  degree from the University of California at
Berkeley in 1982. From 1964 through 1979, she was a senior  researcher in lipids
and  lipoproteins  at the  University of California  at Berkeley.  In 1964,  she
earned  an  M.S.  degree  in  nutrition  and  in  1961 a B.S.  degree  in  child
development, each from the University of California at Berkeley

James A. Kamradt,  age 37,  Director of Pricing and  Syndication for ALC, joined
ATEL in 1997. Mr. Kamradt is involved in the pricing of lease  transactions  and
the placement of debt to leverage certain  transactions.  From 1985 to 1997, Mr.
Kamradt managed his own private consulting business,  providing underwriting and
operational services for numerous leasing companies.  Prior to that, Mr. Kamradt
was the National Operations Officer for the computer leasing division of Phoenix
American;  and Regional Credit Manager for Dana Commercial  Credit  Corporation.
Mr.  Kamradt  received  his  B.S.  from  Michigan   Technological   University's
Engineering  School of Business,  and his M.B.A. from Haas School of Business of
the University of California, Berkeley.

Thomas D.  Sbordone,  age 40, is Senior Vice  President - Marketing  for ALC. He
joined ATEL in 1993, as a regional  vice  president in the  northeastern  United
States.  Mr.  Sbordone is currently  responsible  for new  business  development
within the eastern  U.S.,  including  management  of filed sales  personnel  and
directly interfacing with ATEL's existing and prospective clients to achieve the
company's lease investment  objectives.  Prior to joining ATEL, Mr. Sbordone was
employed, from 1985, by American Finance Group, a Boston-based equipment lessor.
While there, Mr. Sbordone's various responsibilities  involved lease origination
of vendor finance  relationships.  Mr. Sbordone  earned a B.S., with honors,  in
finance and marketing from  Northeastern  University,  and has attended  Bentley
College Graduate School of Business.

Russell  H.  Wilder,  age 44,  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.


<PAGE>

John P. Scarcella,  age 37, 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 to the
General Partners and their affiliates.  The amount of such remuneration paid for
the years ended December 31, 1998 and 1997 is set forth in Item 8 of this report
under the caption  "Financial  Statements and Supplementary  Data - Notes to the
Financial  Statements - Related  party  transactions,"  at Note 4 thereof  which
information is hereby incorporated by reference.

Selling Commissions

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  were
entitled to receive  management  fees which were payable for each fiscal quarter
and  were  in an  amount  equal  to (i)  5% of the  gross  lease  revenues  from
"operating" leases and (ii) 2% of gross lease revenues from "full payout" leases
which  contain  net lease  provisions.  See Note 4 to the  financial  statements
included at Item 8 of this report for amounts paid.

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  were  entitled to receive the  partnership
management  fee which were  payable for each  fiscal  quarter and were an amount
equal  to 5% of  distributions  of  cash  from  operations.  See  Note  4 to the
financial statements included at Item 8 of this report for amounts paid.



<PAGE>

Equipment Resale Fees

As compensation for services  rendered in connection with the sale of equipment,
the General  Partners  were entitled to receive an amount equal to the lesser of
(i) 3% of the  sales  price  of the  equipment,  or  (ii)  one-half  the  normal
competitive  equipment sales commission charged by unaffiliated parties for such
services. Such fee was payable only after the Limited Partners 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. From the inception of
the Partnership through December 31, 1998, no equipment resale fees were accrued
or paid to the General Partner.

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  were  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  was  10% of  distributions  of  cash  from
operations and 15% of distributions of cash from sales or refinancing.  From the
inception  of  the  Partnership  through  December  31,  1998,  no  subordinated
incentive fees were accrued or paid to the General Partner.

General Partners' Interest in Operating Proceeds

Net income,  net loss and  investment  tax  credits  were  allocated  99% to the
Limited  Partners and 1% to the General  Partners.  See the statements of income
included in Item 8 of this report for the amounts  allocated  to the General and
Limited Partners in 1998 and 1997.


Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
            MANAGEMENT

Security Ownership of Certain Beneficial Owners

At  December  31,  1998  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 
                                                San Francisco, CA 94104     ($2,000)

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>


<PAGE>

Changes in Control

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

The General Partners could at any time call a meeting of the Limited Partners or
a vote of the limited partners  without a meeting,  on matters on which they are
entitled  to vote,  and could 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 4 thereof,  and Item 11 of this report  under the caption
"Executive Compensation," are hereby incorporated herein by reference.

The Partnership also owned a 30% undivided  interest in the Boeing 727 executive
aircraft on lease to DJ Aerospace (Bermuda) Ltd. The Partnership's  interest was
purchased  from an unrelated  party on the same terms as that of the  affiliated
partnership,  ATEL Cash  Distribution Fund IV which owned the remaining 70%. The
aircraft was sold on January 2, 1997 to the lessee.




<PAGE>

                                     PART IV

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

                    (a) Financial Statements and Schedules

                         1.  Financial Statements

                             Included in Part II of this report:

                             Report of Independent Auditors

                             Statements of Income for the years ended December 
                             31, 1998 and 1997

                             Statements of Changes in Partners' Capital for the 
                             years ended December 31, 1998 and 1997

                             Statements of Cash Flows for the years ended 
                             December 31, 1998 and 1997

                             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 1998

                             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)


<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:     3/26/1999

                         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)





<PAGE>

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


          SIGNATURE                  CAPACITIES                        DATE



/s/  A. J. Batt              General Partner of registrant;            3/26/1999
---------------------------- president, chairman andchief executive 
      A. J. Batt             officer of ATEL Financial Corporation




 /s/ Dean Cash               General Partner of registrant; executive  3/26/1999
---------------------------- vice president and director of ATEL 
      Dean Cash              Financial Corporation




/s/ Donald E. Carpenter      Principal financial officer of            3/26/1999
---------------------------- registrant; principal financial officer
  Donald E. Carpenter        of ATEL Financial Corporation
                             Principal accounting officer of 
                             registrant; principalaccounting officer 
                             of ATEL Financial Corporation