Form 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

             |X| Quarterly Report Pursuant to Section 13 or 15(d) of
                      the Securities Exchange Act of 1934.
                For the quarterly period ended September 30, 1996

            |_| Transition Report Pursuant to Section 13 or 15(d) of
                      the Securities Exchange Act of 1934.
                For the transition period from _______ to _______

                        Commission File Number 000-17631

                  ATEL Cash Distribution Fund II, a California
                       Limited Partnership (Exact name of
                     registrant as specified in its charter)

       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

Former name, former address and former fiscal year, if changed since last report

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 |_|

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None


                                  Page 1 OF 12

<PAGE>

                          Part I FINANCIAL INFORMATION

            Item 1.             Financial Statements.



                                     Page 2
<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                                 BALANCE SHEETS

                    SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
                                   (Unaudited)

                                     ASSETS

                                                   1996              1995
                                                   ----              ----
Cash and cash equivalents                            $740,014          $874,714

Accounts receivable, net of allowance for 
   doubtful accounts of $15,552 in 1996 
   and 1995                                            43,209            69,558

Investment in equipment and leases                  5,446,372         7,459,980
                                              ----------------  ----------------
                                                   $6,229,595        $8,404,252
                                              ================  ================

                        LIABILITIES AND PARTNERS' CAPITAL

Non-recourse debt                                  $2,009,137        $2,965,946
Accrued interest                                       35,270            53,047
Accounts payable:
     General Partners                                  45,940            61,192
     Other                                             98,567            79,398
Deposits due to lessees                                77,409            77,409
Unearned lease income                                  12,567            36,385
                                              ----------------  ----------------
Total liabilities                                   2,278,890         3,273,377

Partners' capital:
     General Partners                                  77,776            73,539
     Limited Partners                               3,872,929         5,057,336
                                              ----------------  ----------------
Total partners' capital                             3,950,705         5,130,875
                                              ----------------  ----------------
                                                   $6,229,595        $8,404,252
                                              ================  ================

                             See accompanying notes.

                                     Page 3
<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                                INCOME STATEMENTS

                       NINE AND THREE MONTH PERIODS ENDED
                           SEPTEMBER 30, 1996 AND 1995

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                 Nine Months Ended                    Three Months Ended
                                                    September 30,                        September 30,
Revenues:                                       1996              1995              1996              1995
                                                ----              ----              ----              ----
<S>                                           <C>                <C>                 <C>               <C>     
Lease income:
     Operating                                $1,144,100         $1,856,003          $338,012          $547,341
     Direct financing                            250,018            339,916            71,411           103,711
     Leveraged                                    12,860             11,496             3,215             3,832
     Gain (loss) on disposition of assets         51,757            396,058           (11,893)           20,601
Interest income                                   10,869             27,858             4,724             9,678
Gain on sale of marketable securities                  -            124,879                 -                 -
Other                                            177,151            228,600            79,323           155,452
                                          ---------------   ----------------  ----------------  ----------------
                                               1,646,755          2,984,810           484,792           840,615
                                          ---------------   ----------------  ----------------  ----------------
Expenses:
Depreciation                                     712,396          1,159,568           184,516           310,969
Interest expense                                 190,085            286,058            55,118            88,398
Management fees                                  119,981            171,722            45,941            49,121
Administrative cost reimbursements               101,298            107,480            40,396            34,352
Taxes                                             32,048             25,841                 -                63
Other expense                                     31,345             35,342            12,376            11,483
Professional fees                                 19,682             42,853             6,471             3,622
Provision for losses                              16,192             19,371             4,846             8,406
                                          ---------------   ----------------  ----------------  ----------------
                                               1,223,027          1,848,235           349,664           506,414
                                          ---------------   ----------------  ----------------  ----------------

Net income                                      $423,728         $1,136,575          $135,128          $334,201
                                          ===============   ================  ================  ================
Net income:
     General Partners                             $4,237            $11,366            $1,351            $3,342
     Limited Partners                            419,491          1,125,209           133,777           330,859
                                          ---------------   ----------------  ----------------  ----------------
                                                $423,728         $1,136,575          $135,128          $334,201
                                          ===============   ================  ================  ================
Net income per Limited Partnership unit            $5.99             $16.08             $1.91             $4.73
                                          ===============   ================  ================  ================
Weighted average number of units
   outstanding                                    69,979             69,979            69,979            69,979
                                          ===============   ================  ================  ================
</TABLE>

                   STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
                      NINE MONTHS ENDED SEPTEMBER 30, 1996

<TABLE>
<CAPTION>
                                                   Limited Partners               General
                                               Units             Amount           Partners            Total
                                               -----             ------           --------            -----
<S>              <C> <C>                          <C>            <C>                  <C>            <C>       
Balance December 31, 1995                         69,979         $5,057,336           $73,539        $5,130,875
Net income                                                          419,491             4,237           423,728
Distributions to limited partners                                (1,603,898)                         (1,603,898)
                                          ---------------   ----------------  ----------------  ----------------
Balance September 30, 1996                        69,979         $3,872,929           $77,776        $3,950,705
                                          ===============   ================  ================  ================
</TABLE>
                             See accompanying notes.


                                     Page 4

<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                            STATEMENTS OF CASH FLOWS

                       NINE AND THREE MONTH PERIODS ENDED
                           SEPTEMBER 30, 1996 AND 1995

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                   Nine Months Ended                  Three Months Ended
                                                     September 30,                       September 30,
                                                1996              1995              1996              1995
                                                ----              ----              ----              ----
Operating activities:
<S>                                            <C>               <C>                 <C>               <C>     
Net income                                      $423,728         $1,136,575          $135,128          $334,201
Adjustments to reconcile net income to net
   cash provided by operations:
     Depreciation                                712,396          1,159,568           184,516           310,969
     Revenues from leveraged leases              (12,860)           (11,496)           (3,215)           (3,832)
     (Gain) loss on dispositions of assets       (51,757)          (396,058)           11,893           (20,601)
     Gain on sale of marketable securities             -           (124,879)                -                 -
     Provision for losses                         16,192             19,371             4,846             8,406
Changes in operating assets and liabilities:
   Accounts receivable                            26,349            675,980             1,675           104,933
   Accounts payable, General Partner             (15,252)            (1,385)           12,120           (14,137)
   Accounts payable, other                        19,169             13,597            (1,632)           (9,816)
   Accrued interest                              (17,777)           (15,944)           (6,030)           (4,457)
   Customer deposit                                    -                  -                 -                 -
   Unearned operating lease income               (23,818)           (15,352)          (11,028)          (20,117)
                                          ---------------   ----------------  ----------------  ----------------
Net cash provided by operations                1,076,370          2,439,977           328,273           685,549
                                          ---------------   ----------------  ----------------  ----------------

Investing activities:
Proceeds from sales of equipment                 679,310          1,901,361           248,151            38,546
Proceeds from sales of marketable securities           -            124,879                 -                 -
Reductions of net investment in direct
   financing leases                              670,327            657,928           220,499           212,824
                                          ---------------   ----------------  ----------------  ----------------
Net cash provided by investing activities      1,349,637          2,684,168           468,650           251,370
                                          ---------------   ----------------  ----------------  ----------------
</TABLE>







                                     Page 5
<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                            STATEMENTS OF CASH FLOWS

                       NINE AND THREE MONTH PERIODS ENDED
                           SEPTEMBER 30, 1996 AND 1995

                                   (Unaudited)
                                   (Continued)

<TABLE>
<CAPTION>
                                                   Nine Months Ended                  Three Months Ended
                                                     September 30,                       September 30,
                                                1996              1995              1996              1995
                                                ----              ----              ----              ----
<S>                                           <C>                <C>                 <C>             <C>        
Financing activities:
Repayment of non-recourse debt                  (956,809)         (975,937)          (307,442)         (306,255)
Distributions to limited partners             (1,603,898)       (3,818,804)          (472,804)         (909,238)
                                          ---------------   ----------------  ----------------  ----------------

Net cash used in financing activities         (2,560,707)        (4,794,741)         (780,246)       (1,215,493)
                                          ---------------   ----------------  ----------------  ----------------

Net increase (decrease) in cash and cash
   equivalents                                  (134,700)           329,404            16,677          (278,574)
Cash and cash equivalents at beginning of
   period                                        874,714            924,041           723,337         1,532,019
                                          ---------------   ----------------  ----------------  ----------------
Cash and cash equivalents at end of
   period                                       $740,014         $1,253,445          $740,014        $1,253,445
                                          ===============   ================  ================  ================


Supplemental disclosures of cash flow 
   information:

Cash paid for interest                          $190,085           $286,058           $55,118           $88,398
                                          ===============   ================  ================  ================

Supplemental schedule of non-cash 
   transactions:

Operating lease assets reclassified to 
   direct financing lease assets                                   $166,612                            $166,612
Less accumulated depreciation                                      (127,649)                           (127,649)
                                                            ----------------                    ----------------
                                                                    $38,963                             $38,963
                                                            ================                    ================

Operating lease assets reclassified to 
   equipment held for lease                     $146,252           $324,310          $146,252          $324,310
Less accumulated depreciation                   (118,612)          (259,448)         (118,612)         (259,448)
                                          ---------------   ----------------  ----------------  ----------------
                                                 $27,640            $64,862           $27,640           $64,862
                                          ===============   ================  ================  ================
</TABLE>




                             See accompanying notes.


                                     Page 6
<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                          NOTES TO FINANCIAL STATEMENTS

                               SEPTEMBER 30, 1996
                                   (Unaudited)


1.  Interim financial statements:

The unaudited interim financial statements reflect all adjustments which are, in
the opinion of the general partners,  necessary to a fair statement of financial
position and results of operations for the interim periods  presented.  All such
adjustments are of a normal recurring nature.  These unaudited interim financial
statements  should be read in  conjunction  with the most recent  report on Form
10K.


2. Investment in leases:

The Partnership's investment in leases consists of the following:

<TABLE>
<CAPTION>
                                                                              Depreciation
                                                                              Expense or         Reclass-
                                         December 31,                        Amortization      ifications &      September 30,
                                              1995          Additions          of Leases       Dispositions          1996
                                              ----          ---------          ---------      --------------         ----
<S>                                           <C>               <C>             <C>                 <C>              <C>       
Net investment in operating leases            $4,278,094                           (640,319)        ($559,940)       $3,077,835
Net investment in direct
   financing leases                            2,940,554                           (670,327)         (276,456)        1,993,771
Net investment in leveraged
   leases                                         74,635                             12,860                 -            87,495
Assets held for sale or lease                    199,474                            (70,680)          208,843           337,637
Initial direct costs                               4,811                             (1,397)                -             3,414
Reserve for losses                               (37,588)       ($16,192)                 -                 -           (53,780)
                                         ---------------- ---------------   ----------------  ----------------  ----------------

                                              $7,459,980        ($16,192)       ($1,369,863)        ($627,553)       $5,446,372
                                         ================ ===============   ================  ================  ================
</TABLE>

The following  schedule provides an analysis of the Partnership's  investment in
equipment on operating leases by major  classifications as of December 31, 1995,
dispositions  during  the  three  month  periods  ended  March  31,  June 30 and
September 30, 1996 and as of September 30, 1996:

<TABLE>
<CAPTION>
                                          December 31,               -------- Dispositions --------              September 30,
        Equipment type                        1995         1st Quarter        2nd Quarter       3rd Quarter          1996
        --------------                        ----         -----------        -----------       -----------          ----
<S>                                           <C>              <C>                <C>               <C>              <C>       
Aircraft                                      $3,164,533                                                             $3,164,533
Mining                                         2,104,643                                                              2,104,643
Manufacturing                                    835,681                                                                835,681
Materials handling                             1,918,334       ($187,555)         ($579,632)        ($509,889)          641,258
Communications                                   481,738               -                  -                 -           481,738
Data processing                                  527,739               -           (195,522)                -           332,217
Food processing                                  344,799               -            (13,728)                -           331,071
Transportation                                   697,722        (511,041)           (33,029)                -           153,652
Motor vehicles                                    95,277               -                  -           (34,061)           61,216
Furniture, fixtures and equipment                 22,967               -                  -                 -            22,967
                                         ---------------- ---------------   ----------------  ----------------  ----------------
                                              10,193,433        (698,596)          (821,911)         (543,950)        8,128,976
Less accumulated depreciation                 (5,915,339)        303,412            380,940           179,846        (5,051,141)
                                         ---------------- ---------------   ----------------  ----------------  ----------------
                                              $4,278,094       ($395,184)         ($440,971)        ($364,104)       $3,077,835
                                         ================ ===============   ================  ================  ================
</TABLE>


                                     Page 7

<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                          NOTES TO FINANCIAL STATEMENTS

                               SEPTEMBER 30, 1996
                                   (Unaudited)


2. Investment in leases (continued):

At September 30, 1996,  the aggregate  amounts of future  minimum lease payments
are as follows:

<TABLE>
<CAPTION>
                                            Direct
                                            Financing          Operating           Total
                                            ---------          ---------           -----
<S>                                          <C>                <C>               <C>       
  Three months ending December 31, 1996        $260,003           $304,081          $564,084
          Year ending December 31, 1997         967,483            578,044         1,545,527
                                   1998         115,204            272,090           387,294
                                   1999           4,248            269,732           273,980
                                   2000               -            202,299           202,299
                                         ---------------   ----------------  ----------------
                                             $1,346,938         $1,626,246        $2,973,184
                                         ===============   ================  ================
</TABLE>


3. Non-recourse debt:

Notes payable to financial  institutions are due in varying  monthly,  quarterly
and semi-annual installments of principal and interest. The notes are secured by
assignments  of lease  payments and pledges of the assets  which were  purchased
with the proceeds of the particular notes. Interest rates on the notes vary from
9.43% to 12.86%.

Future  minimum  principal  payments  of debt as of  September  30,  1996 are as
follows:

<TABLE>
<CAPTION>
                                            Principal          Interest            Total
                                            ---------          --------            -----
<S>                                          <C>                  <C>             <C>       
  Three months ending December 31,1996         $315,272            $53,319          $368,591
         Year ending December 31, 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
                                         ---------------   ----------------  ----------------
                                             $2,009,137           $298,091        $2,307,228
                                         ===============   ================  ================
</TABLE>


4. Commitments, management and report of fees:

The terms of the  Agreement  of Limited  Partnership  provide  that the  General
Partners and/or Affiliates are entitled to receive certain fees.

The  General  Partners  and/or  Affiliates  earned   partnership  and  equipment
management  fees of $171,722 in 1995 and  $119,181 in 1996,  as permitted in the
Agreement of Limited Partnership .


                                     Page 8
<PAGE>


                 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Capital Resources and Liquidity

Partnership cash which has been received, but which has not yet been invested in
leased  equipment or  distributed to partners,  is invested in  interest-bearing
accounts or high-quality/short-term commercial paper.

The  Partnership's  primary  source of  liquidity  is cash  received  from lease
rentals. The liquidity of the Partnership will vary in the future, increasing to
the extent cash flows from leases 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.

The Partnership currently has available adequate reserves to meet contingencies,
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.

As  of  September  30,  1996,  the   Partnership   had  borrowed   approximately
$21,700,000.  The remaining unpaid balance on those borrowings was approximately
$2,009,000.  The borrowings are  non-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 Agreement of Limited  Partnership  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.  At September 30, 1996,  there were no
such commitments.

The Partnership made distributions of cash from 1996 first quarter operations in
April 1996,  from second quarter  operations in July 1996 and from third quarter
operations in October 1996. The amounts of each of the distributions  were $6.50
per Unit. These distributions represent an annualized distribution rate of 5.2%.

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 or decrease  significantly,  the lease rates that the
Partnership can obtain on future leases will be expected to increase or decrease
in  parallel  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.

Cash flows, nine months, 1996 vs. 1995

Lease revenues,  the Partnership's primary source of cash, decreased by $800,437
compared to 1995.  Lease  revenues  have declined as leases have matured and the
underlying assets have been sold.

Cash flows provided by investing activities decreased by $1,334,531 primarily as
a result of decreased asset sales.

There were no financing  sources of cash in 1996.  Debt principal  payments have
decreased due to scheduled debt payments.


                                     Page 9
<PAGE>

Cash flows, three months, 1996 vs. 1995

For the third  quarter,  lease  rents  were the  primary  source of cash for the
Partnership. Lease rents decreased by $242,246 compared to 1995. As noted above,
the  decrease  is the result of assets  coming off lease and being  subsequently
sold.

Cash flows provided by investing activities increased by $217,280 due largely to
increased  asset sales.  This was the result of a increased  amount of equipment
coming off lease in the third  quarter of 1996  compared to 1995 and  subsequent
sales of that equipment.

There were no financing sources of cash in 1996 or 1995. Debt principal payments
decreased due to the causes noted above for the nine month period.

Results of Operations

The results of operations in future periods may vary significantly from those of
the first nine months of 1996 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
rates. The effect on net income is not determinable as it will depend to a large
degree on the amounts  received  from the sales of assets or from  re-leases  to
either the same or new lessees once the initial lease terms expire.

1996 vs. 1995

Operating  lease  revenues  decreased  by $711,903 for the nine month period and
$209,329 for the three month  period due to lease  terminations  and  subsequent
asset sales.  Direct financing lease revenues  decreased by $89,898 for the nine
month period and  decreased  by $32,300 for the three month  period  compared to
1995. The decreases  resulted from lease  terminations and asset sales. In 1995,
sales of assets  resulted in gains of $396,058  (nine months) and $20,601 (three
months).  In 1996,  sales of assets  resulted  in gains of $51,757  for the nine
month  period and losses of $11,893 for the three month  period.  Such gains and
losses  are  not  expected  to  be  comparable   from  one  period  to  another.
Depreciation  expense  declined by $447,172  (nine  months) and $126,453  (three
months) as a result of asset  sales  since  October 1,  1995.  Interest  expense
continues to decline in both the three and nine month periods in relation to the
declining  balances of debt.  There have been no new  borrowings  in the current
year.












                                    Page 10
<PAGE>

                           PART II. OTHER INFORMATION

Item 1.                        LEGAL PROCEEDINGS.

                                Inapplicable.

Item 2.                        CHANGES IN SECURITIES.

                                Inapplicable.

Item 3.                        DEFAULTS UPON SENIOR SECURITIES.

                                Inapplicable.

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

Item 5.                        OTHER INFORMATION.

                                Inapplicable.

Item 6.                        EXHIBITS AND REPORTS ON FORM 8-K.

                           (a) Documents filed as a part of this report

                             1  Financial Statements.

                                Included in Part I of this report:

                                Balance sheets, September 30, 1996 and December 
                                   31, 1995
                                Income  statements  for the nine and three month
                                   periods ended September 30, 1996 and 1995.
                                Statement of changes in  partners'  capital  for
                                   the nine months ended September 30, 1996.
                                Statements  of cash flows for the nine and three
                                   month  periods  ended  September 30, 1996 and
                                   1995.
                                Notes to the financial statements

                             2  Financial Statement Schedules.

                                All other  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)  Report on Form 8-K
                                None

                                    Page 11

<PAGE>

                                   SIGNATURES


Pursuant  to the  requirements  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:
      November 11, 1996
                         ATEL Cash Distribution Fund II,
                        a California Limited Partnership
                                  (Registrant)





                                     By:  /s/   A. J. BATT
                                         --------------------------------------
                                         A. J. Batt
                                         General Partner of registrant



                                     By:  /s/  DEAN L. CASH
                                         --------------------------------------
                                         Dean L. Cash
                                         General Partner of registrant



                                     By:   /s/ F. RANDALL BIGONY
                                         --------------------------------------
                                         F. RANDALL BIGONY
                                         Principal financial officer
                                         of registrant



                                     By:   /s/ DONALD E.  CARPENTER
                                         --------------------------------------
                                         Donald E.  Carpenter,
                                         Principal accounting
                                         officer of registrant


                                    Page 12