Form 10-QSB

                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                |X|    Quarterly Report Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934.
                       For the quarterly period ended June 30, 1998

                |_|    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 0-17631

        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

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>

                          Part I FINANCIAL INFORMATION

Item 1.   Financial Statements.


<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                                  BALANCE SHEET

                                  JUNE 30, 1998
                                   (Unaudited)


                                     ASSETS


<TABLE>
<CAPTION>

<S>                                                                         <C>

Cash and cash equivalents                                                     $766,718

Accounts receivables, net of allowance for doubtful accounts of $32,623         34,442

Investment in equipment and leases                                           2,370,652
                                                                       ----------------
                                                                            $3,171,812
                                                                       ================


                          LIABILITIES AND PARTNERS' CAPITAL


Non-recourse debt                                                             $533,981

Accrued interest                                                                 5,006

Accounts payable:
     General partners                                                            1,974
     Other                                                                      63,971

Unearned operating lease income                                                 84,031
                                                                       ----------------
Total liabilities                                                              688,963

Partners' capital:
     General partners                                                           88,928
     Limited partners                                                        2,393,921
                                                                       ----------------
Total partners' capital                                                      2,482,849
                                                                       ----------------
                                                                            $3,171,812
                                                                       ================
</TABLE>


                        See notes to financial statements


<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                                INCOME STATEMENTS

                        SIX AND THREE MONTH PERIODS ENDED
                             JUNE 30, 1998 AND 1997
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                              Six Months                        Three Months
                                                            Ended June 30,                     Ended June 30,
Revenues:                                               1998              1997             1998             1997
                                                        ----              ----             ----             ----
<S>                                                       <C>               <C>              <C>              <C>

Lease income:
     Operating                                            $283,221          $517,582         $141,338         $243,145
     Direct financing                                      124,000            87,003           60,208           40,381
     Leveraged leases                                       30,550            12,138                -            6,069
     Gain on sales of assets                               256,886           150,117            1,201           68,045
Other income                                                 1,732            63,752              345           62,933
Interest income                                             12,576            12,965            6,495            6,738
                                                   ---------------- ----------------- ---------------- ----------------
                                                           708,965           843,557          209,587          427,311
                                                   ---------------- ----------------- ---------------- ----------------
Expenses:
Depreciation and amortization                              140,293           217,793           71,064          104,619
Administrative cost reimbursements                          56,196            64,868           19,800           27,619
Equipment and partnership management
   fees                                                     37,754            49,915           10,896           23,947
Interest expense                                            32,450            71,318           15,504           31,942
Taxes                                                       18,806            20,641           18,806           20,641
Other                                                       18,340            26,071            5,319           18,676
Professional fees                                            9,045             8,450            9,045            6,959
Provision for losses                                         4,995             4,162                -                -
                                                   ---------------- ----------------- ---------------- ----------------
                                                           317,879           463,218          150,434          234,403
                                                   ---------------- ----------------- ---------------- ----------------
Net Income                                                $391,086          $380,339          $59,153         $192,908
                                                   ================ ================= ================ ================
Net income:
     General partners                                       $3,911            $2,886             $592           $1,483
     Limited partners                                      387,175           285,714           58,561          146,816
                                                   ---------------- ----------------- ---------------- ----------------
                                                          $391,086          $288,600          $59,153         $148,299
                                                   ================ ================= ================ ================

Net income per limited partnership unit                      $5.53             $4.08            $0.84            $2.10

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

                   STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

                         SIX MONTHS ENDED JUNE 30, 1998

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

<S>                                                         <C>           <C>                 <C>           <C>
Balance December 31, 1997                                   69,979        $2,825,061          $85,017       $2,910,078
Net income                                                                   387,175            3,911          391,086
Distributions                                                               (818,315)               -         (818,315)
                                                   ---------------- ----------------- ---------------- ----------------
Balance June 30, 1998                                       69,979        $2,393,921          $88,928       $2,482,849
                                                   ================ ================= ================ ================
</TABLE>

                        See notes to financial statements

<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                            STATEMENTS OF CASH FLOWS

                        SIX AND THREE MONTH PERIODS ENDED
                             JUNE 30, 1998 AND 1997

                                   (Unaudited)


<TABLE>
<CAPTION>
                                                              Six Months                        Three Months
                                                            Ended June 30,                     Ended June 30,
                                                        1998              1997             1998             1997
Operating activities:

<S>                                                       <C>               <C>              <C>              <C>


Net income                                                $391,086          $380,339          $59,153         $192,908
   Adjustment to reconcile net income to
     net cash provided by operations:
        Depreciation and amortization                      140,293           217,793           71,064          104,619
        Revenues from leveraged leases                     (30,550)          (12,138)               -           (6,069)
        Gain on sales of assets                           (256,886)         (150,117)          (1,201)         (68,045)
        Provision for losses                                 4,995             4,162                -                -
Changes in operating assets and liabilities:
   Decrease (increase) in accounts
   Accounts receivable                                       1,269           (63,077)          (3,692)         (46,737)
   Accounts payable, general partner                        (8,918)          (19,741)         (63,515)         (16,371)
   Accounts payable, other                                 (10,315)            5,297           33,492           (2,442)
   Accrued interest                                         (1,611)          (11,822)            (482)          (5,912)
   Customer deposits                                             -           (60,000)               -                -
   Unearned operating lease income                          74,319            (5,818)          66,025          (12,023)
                                                   ---------------- ----------------- ---------------- ----------------
Net cash from operations                                   303,682           284,878          160,844          139,928
                                                   ---------------- ----------------- ---------------- ----------------

Investing activities:
Proceeds from sales of assets                              435,440           563,964            4,199          100,553
Reductions of net investment in direct
   financing leases                                         76,485           422,809           29,072          213,279
                                                   ---------------- ----------------- ---------------- ----------------
Net cash provided by investing
   activities                                              511,925           986,773           33,271          313,832
                                                   ---------------- ----------------- ---------------- ----------------
</TABLE>
<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                            STATEMENTS OF CASH FLOWS

                        SIX AND THREE MONTH PERIODS ENDED
                             JUNE 30, 1998 AND 1997

                                   (Unaudited)
                                   (Continued)


<TABLE>
<CAPTION>
                                                              Six Months                        Three Months
                                                            Ended June 30,                     Ended June 30,
                                                        1998              1997             1998             1997
Financing activities:
<S>                                                       <C>               <C>               <C>             <C>
Repayment of non-recourse debt                            (122,731)         (585,274)         (51,447)        (296,354)
Distributions to limited partners                         (818,315)         (745,576)        (545,543)        (272,771)
                                                   ---------------- ----------------- ---------------- ----------------
Net cash used in financing activities                     (941,046)       (1,330,850)        (596,990)        (569,125)
                                                   ---------------- ----------------- ---------------- ----------------

Net (decrease) increase in cash and
   cash equivalents                                       (125,439)          (59,199)        (402,875)        (115,365)
Cash and cash equivalents at
   beginning of period                                     892,157           989,337        1,169,593        1,045,503
                                                   ---------------- ----------------- ---------------- ----------------
Cash and cash equivalents at end of
   period                                                 $766,718          $930,138         $766,718         $930,138
                                                   ================ ================= ================ ================

Supplemental disclosures of cash flow information:

Cash paid for interest during the period                   $32,450           $71,318          $15,504          $31,942
                                                   ================ ================= ================ ================

Operating lease assets reclassified to assets
   held or sale or lease                                                  $1,046,154                        $1,046,154
Less accumulated depreciation                                               (802,625)                         (802,625)
                                                                    -----------------                  ----------------
                                                                            $243,529                          $243,529
                                                                    =================                  ================
</TABLE>




                        See notes to financial statements


<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                          NOTES TO FINANCIAL STATEMENTS

                                  JUNE 30, 1997
                                   (Unaudited)


1. Summary of significant accounting policies:

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. 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.


3. Investment in leases:

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

<TABLE>
<CAPTION>
                                                                      Depreciation
                                                                       Expense or        Reclass-
                                December 31,                          Amortization     ifications &       June 30,
                                      1997            Additions        of Leases       Dispositions         1998
                                      ----            ---------        ---------      --------------        ----

<S>                                    <C>                 <C>             <C>              <C>             <C>

Net investment in operating
   leases                              $1,749,575                          ($140,293)        ($32,415)      $1,576,867
Net investment in direct
   financing leases                       944,264                            (76,485)        (269,098)         598,681
Net investment in leveraged
   leases                                 118,208                             30,550         (148,758)               -
Equipment held for sale                       388                                  -          271,717          272,105
Reserve for losses                        (72,006)         ($4,995)                -                -          (77,001)
                                ------------------ ---------------- ----------------- ---------------- ----------------
                                       $2,740,429          ($4,995)        ($186,228)       ($178,554)      $2,370,652
                                ================== ================ ================= ================ ================
</TABLE>






<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                          NOTES TO FINANCIAL STATEMENTS

                                  JUNE 30, 1997
                                   (Unaudited)


3. Investment in leases (continued):

Operating leases:

The following  schedule provides an analysis of the Partnership's  investment in
equipment on operating leases by major  classifications as of December 31, 1997,
additions and  dispositions  during the three month periods ended March 31, 1998
and June 30, 1998 and as of June 30, 1998:

<TABLE>
<CAPTION>
                                                                           Reclassifications &
                                                    December 31,               Dispositions               June 30,
   Equipment type                                       1997          1st Quarter       2nd Quarter         1998
   --------------                                       ----          -----------       -----------         ----
<S>                                                     <C>                <C>               <C>            <C>
Aircraft                                                $2,354,533                                          $2,354,533
Mining                                                   1,546,341         ($186,232)        ($21,866)       1,338,243
Communications                                             445,877                 -                -          445,877
Materials handling                                         432,139           (54,592)                          377,547
Other                                                      183,599                 -                -          183,599
                                                   ---------------- ----------------- ---------------- ----------------
                                                         4,962,489          (240,824)         (21,866)       4,699,799
Less accumulated depreciation                           (3,212,914)          142,180          (52,198)      (3,122,932)
                                                   ---------------- ----------------- ---------------- ----------------
                                                        $1,749,575          ($98,644)        ($74,064)      $1,576,867
                                                   ================ ================= ================ ================
</TABLE>

Equipment on operating leases was acquired in 1988, 1989, 1990, 1991 and 1994.

At June 30, 1998, the aggregate  amounts of future minimum lease payments are as
follows:

              Year ending      Direct
             December 31,     Financing        Operating           Total
                     1998         $148,339          $271,578         $419,917
                     1999          228,248           415,968          644,216
                     2000          224,000           239,499          463,499
                     2001          224,000            37,200          261,200
                     2002          224,000            18,600          242,600
                           ---------------- ----------------- ----------------
                                $1,048,587          $982,845       $2,031,432
                           ================ ================= ================

<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                          NOTES TO FINANCIAL STATEMENTS

                                  JUNE 30, 1997
                                   (Unaudited)


4. 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
7.69% to 12.86%.

Future minimum  principal and interest  payments of debt as of June 30, 1998 are
as follows:

               Year ending
              December 31,     Principal         Interest           Total

                      1998         $107,317           $27,548         $134,865
                      1999          233,531            36,202          269,733
                      2000          193,133             9,166          202,299
                            ---------------- ----------------- ----------------
                                   $533,981           $72,916         $606,897
                            ================ ================= ================


5. 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 for equipment
acquisition, management and resale and for management of the Partnership.

The General Partners and/or  Affiliates  earned the following fees,  commissions
and reimbursements, pursuant to the Limited Partnership Agreement as follows:

                                               1998             1997
                                               ----             ----

Reimbursement of administrative costs             $56,196          $64,868

Incentive and equipment management fees            37,754           49,915
                                          ---------------- ----------------
                                                  $93,950         $114,783
                                          ================ ================











<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.

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

As of June 30, 1998, the partnership had borrowed approximately $21,700,000. The
remaining  unpaid balance on those  borrowings was $533,981.  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
general partners expect that aggregate borrowings in the future will decrease as
a  percentage  of  equipment  cost.  In any  event,  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.

The Partnership  made  distributions  of cash from 1998 first and second quarter
operations  in  April  and  July  1998,  respectively.   The  amounts  of  these
distributions  were each  $7.50  per  Unit.  These  distributions  represent  an
annualized distribution rate of 6.0%.

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.

<PAGE>
Cash flows, six months, 1998 vs. 1997


In the first six months of 1998, the Partnership's  primary source of cash flows
from operations was lease rents,  particularly operating lease rents. Cash flows
from operations Increased by $18,804. The Partnership's operating lease revenues
declined by $234,361 compared to 1997. Direct financing lease revenues increased
by $36,997.  Operating  lease rents  declined as a result of lease  terminations
over the preceding year. Some of the assets coming off of operating  leases were
re-leased under new direct financing lease  arrangements.  These new leases gave
rise to the increase in direct financing lease revenues.

Cash flows from  investing  activities  decreased by $474,828  compared to 1997.
Most of the decrease was due to sales of direct  financing  lease assets in 1998
and 1997, resulting in decreased cash flows from such leases.

There  were no  financing  sources  of cash in the  1998 or 1997  periods.  Debt
principal  payments  have  decreased  as a result of  scheduled  debt  payments.
Distributions  increased  due to higher per Unit rate of  distributions  in 1998
compared to 1997.

Cash flows, three months, 1998 vs. 1997

Lease  revenues  decreased by $88,049.  Lease rentals were the largest source of
cash in the second  quarter of 1998.  The  decrease in lease rents for the three
month period was due to asset sales as noted above for the six month period.

Sources of cash flows  from  investing  activities  decreased  compared  to 197.
Proceeds from the sales of assets decreased by $96,334 compared to 1997.

There were no financing sources of cash in the 1998 or 1997 periods.  Cash flows
used in financing  activities  changed in the three month period due to the same
causes as noted above for the six month period.


Results of Operations

The results of operations in future periods may vary significantly from those of
the first six months of 1998 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.

1998 vs. 1997

Operating  lease revenues  declined by $234,361 (six months) and $101,807 (three
months).  Direct financing lease revenues  increased by $36,997 (six months) and
$19,827  (three  months)  compared to 1997.  Depreciation  expense  decreased by
$77,500 (six months) and $33,555 (three months) compare to 1997. Operating lease
revenues and  depreciation  have declined as leases have reached their scheduled
terminations  and the  underlying  assets have been sold or  re-leased on direct
financing  leases.  Management  fees  are  related  to  lease  revenues  and  to
distributions.  Both of  these  factors  declined  in  1998  compared  to  1997,
resulting in lower management fees.  Interest expense decreased for both the six
and  three  month  periods  due to  lower  average  debt  balances  than in 1997
resulting from scheduled debt payments.


<PAGE>

Other

Year 2000 Issues

The year 2000 issue is the result of computer  programs  being written using two
digits rather than four to define the  applicable  year.  Any computer  programs
that have time  sensitive  software may  recognize a date using "00" as the year
1900  rather  than the year  2000.  This  could  result in a system  failure  or
miscalculation causing disruptions of operations, including, among other things,
a  temporary  inability  to process  transactions  or engage in  similar  normal
business activities.

The Partnership  uses primarily third party software and is  communicating  with
key vendors to ensure that the  Partnership's  systems are year 2000  compliant.
Based on these  discussions,  the  Partnership  does not  expect  that the costs
related to the year 2000 issue will be  significant.  Ultimately,  the potential
impact  of the year  2000  issue  will  depend on the way in which the year 2000
issue is addressed by businesses and other entities whose financial condition or
operational capability is important to the Partnership.

<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 sheet, June 30, 1998.

                       Income  statements  for the six and three  month  periods
                       ended June 30, 1998 and 1997.

                       Statement  of  changes  in  partners'  equity for the six
                       month period ended June 30, 1998.

                       Statements  of cash  flows  for the six and  three  month
                       periods ended June 30, 1998 and 1997.

                       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>

                                   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:
August 12, 1998
                         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 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