Form 10-QSB

                       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 March 31, 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 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



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

                                 MARCH 31, 1998
                                   (Unaudited)


                                     ASSETS



Cash and cash equivalents                                      $1,169,593

Accounts receivable, net of allowance for doubtful 
   accounts of $32,623                                             30,750

Investment in equipment and leases                              2,473,786
                                                          ----------------
Total assets                                                   $3,674,129
                                                          ================


                        LIABILITIES AND PARTNERS' CAPITAL


Non-recourse debt                                                $585,428

Accrued interest                                                    5,488

Accounts payable:
     General Partners                                              65,489
     Other                                                         30,479

Unearned income                                                    18,006
                                                          ----------------
Total liabilities                                                 704,890

Partners' capital:
     General Partners                                              88,336
     Limited partners                                           2,880,903
                                                          ----------------
Total partners' capital                                         2,969,239
                                                          ----------------
Total liabilities and partners' capital                        $3,674,129
                                                          ================



                             See accompanying notes.

<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                                INCOME STATEMENTS

                            THREE MONTH PERIODS ENDED
                             MARCH 31, 1998 and 1997
                                   (Unaudited)


Revenues:                                         1998               1997
                                                  ----               ----
Lease income:
     Operating                                        $141,883         $274,437
     Direct financing                                   63,792           46,622
     Leveraged                                          30,550            6,069
     Gain on sale of lease assets                      255,685           82,072
Interest income                                          6,081            6,227
Other                                                    1,387              819
                                           -------------------- ----------------
                                                       499,378          416,246
                                           -------------------- ----------------
Expenses:
Depreciation and amortization                           69,229          113,174
Interest expense                                        16,946           39,376
Equipment and partnership management
   fees to General Partners                             26,858           25,968
Administrative cost reimbursements to 
   General Partners                                     36,396           37,249
Other                                                   13,021            8,886
Provision for losses                                     4,995            4,162
                                           -------------------- ----------------
                                                       167,445          228,815
                                           -------------------- ----------------
Net Income                                            $331,933         $187,431
                                           ==================== ================

Net income:
     General Partners                                   $3,319           $1,874
     Limited Partners                                  328,614          185,557
                                           -------------------- ----------------
                                                      $331,933         $187,431
                                           ==================== ================

Net income per Limited Partnership unit                  $4.70            $2.65

Weighted average number of units outstanding            69,979           69,979


                    STATEMENT OF CHANGES IN PARTNERS' CAPITAL

                        THREE MONTHS ENDED MARCH 31, 1998
                                   (Unaudited)

<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                                          328,614                3,319          331,933
Distributions                                      (272,772)                   -         (272,772)
                         -----------------  ---------------- -------------------- ----------------
Balance March 31, 1998             69,979        $2,880,903              $88,336       $2,969,239
                         =================  ================ ==================== ================
</TABLE>

                             See accompanying notes.

<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                            STATEMENTS OF CASH FLOWS

                            THREE MONTH PERIODS ENDED
                             MARCH 31, 1998 and 1997
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                              1998               1997
                                                                              ----               ----
<S>                                                                             <C>              <C>       
Operating activities:
Net income                                                                        $331,933         $187,431
Adjustments to reconcile net income to net cash provided by operations:
     Depreciation and amortization                                                  69,229          113,174
     Leveraged lease income                                                        (30,550)          (6,069)
     Gain on sale of lease assets                                                 (255,685)         (82,072)
     Provision for losses                                                            4,995            4,162
     Changes in operating assets and liabilities:
        Accounts receivable                                                          4,961          (16,340)
        Accounts payable, general partner                                           54,597           (3,370)
        Accounts payable, other                                                    (43,807)           7,739
        Accrued interest                                                            (1,129)          (5,910)
        Customer deposits                                                                -          (60,000)
        Unearned income                                                              8,294            6,205
                                                                       -------------------- ----------------
Net cash provided by operations                                                    142,838          144,950
                                                                       -------------------- ----------------

Investing activities:
Reductions of net investment in direct financing leases                             47,413          209,530
Proceeds from sales of lease assets                                                431,241          463,411
                                                                       -------------------- -----------------
Net cash provided by  investing activities                                         478,654          672,941
                                                                       -------------------- -----------------

Financing activities:
Repayment of non-recourse debt                                                     (71,284)        (288,920)
Distributions to limited partners                                                 (272,772)        (472,805)
                                                                       -------------------- ----------------
Net cash used in financing activities                                             (344,056)        (761,725)
                                                                       -------------------- ----------------

Net increase (decrease) in cash and cash equivalents                               277,436           56,166
Cash and cash equivalents at beginning of period                                   892,157          989,337
                                                                       -------------------- ----------------
Cash and cash equivalents at end of period                                      $1,169,593       $1,045,503
                                                                       ==================== ================

Supplemental disclosures of cash flow information:
Cash paid during the period for interest:                                          $18,075          $45,286
                                                                       ==================== ================
</TABLE>







                             See accompanying notes.

<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                          NOTES TO FINANCIAL STATEMENTS

                                 MARCH 31, 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
10KSB.


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.

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.


3. Investment in equipment and leases:

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

<TABLE>
<CAPTION>
                                                                               Depreciation
                                                                               Expense or          Reclass-
                                         December 31,                         Amortization       ifications &         March 31,
                                              1997           Additions          of Leases        Dispositions           1998
                                              ----           ---------          ---------     -  -------------          ----
<S>                                           <C>                  <C>              <C>                 <C>             <C>       
Net investment in operating
   leases                                     $1,749,575                            ($69,229)            ($29,415)      $1,650,931
Net investment in direct
   financing leases                              944,264                             (47,413)            (203,643)         693,208
Net investment in leveraged
   leases                                        118,208                              30,550             (148,758)               -
Equipment held for sale or lease                     388                                   -              206,260          206,648
Reserve for losses                               (72,006)          ($4,995)                -                    -          (77,001)
                                         ---------------- -----------------  ---------------- -------------------- ----------------
                                              $2,740,429           ($4,995)         ($86,092)           ($175,556)      $2,473,786
                                         ================ =================  ================ ==================== ================
</TABLE>

<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                          NOTES TO FINANCIAL STATEMENTS

                                 MARCH 31, 1997
                                   (Unaudited)


3. Investment in equipment and 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 months ended March 31, 1998 and as
of March 31, 1998:

<TABLE>
<CAPTION>
                                 Balance                              Reclass-            Balance
                               December 31,                         ifications &         March 31,
        Equipment type             1997            Additions        Dispositions           1998
        --------------             ----            ---------        ------------           ----
<S>                                <C>                 <C>                 <C>             <C>       
Aircraft                           $2,354,533                                              $2,354,533
Mining                              1,546,341                              ($186,232)       1,360,109
Communications                        445,877                                      -          445,877
Materials handling                    432,139                                (54,592)         377,547
Other                                 183,599                                      -          183,599
                             -----------------  ---------------- -------------------- ----------------
                                    4,962,489                               (240,824)       4,721,665
Less accumulated depreciation      (3,212,914)         ($69,229)             211,409       (3,070,734)
                             -----------------  ---------------- -------------------- ----------------
                                   $1,749,575          ($69,229)            ($29,415)      $1,650,931
                             =================  ================ ==================== ================
</TABLE>

Equipment on operating  leases was acquired in 1988,  1989, 1990, 1992, 1993 and
1994.

At March 31, 1998, the aggregate amounts of future minimum lease payments are as
follows:

      Year ending       Direct
     December 31,      Financing          Operating            Total
     ------------      ---------          ---------            -----
             1998          $237,618          $363,547             $601,165
             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
                   -----------------  ---------------- --------------------
                         $1,137,866        $1,074,814           $2,212,680
                   =================  ================ ====================


<PAGE>

                         ATEL CASH DISTRIBUTION FUND II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                          NOTES TO FINANCIAL STATEMENTS

                                 MARCH 31, 1997
                                   (Unaudited)


4. Non-recourse debt:

The note  payable to financial  institution  is due in monthly  installments  of
principal and interest.  The note is secured by an assignment of lease  payments
and a pledge of the assets which were  purchased  with the proceeds of the note.
Interest rate on the note is 11.25%.

Future minimum principal payments of non-recourse debt are as follows:

   Year ending
   December 31,    Principal          Interest             Total
   ------------    ---------          --------             -----
          1998          $158,764           $43,534             $202,298
          1999           233,531            36,202              269,733
          2000           193,133             9,166              202,299
                -----------------  ---------------- --------------------
                        $585,428           $88,902             $674,330
                =================  ================ ====================


5.  Related party transactions:

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

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.

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

                                               1998               1997
                                               ----               ----
Incentive  management  fees  (computed  
as  5% of  distributions  of  cash  from
operations, as defined in the  Limited  
Partnership  Agreement) and  equipment 
management  fees  (computed as 5% of 
gross revenues from  operating  leases, 
as defined in the Limited Partnership 
Agreement plus 2% of gross revenues from
full payout leases, as defined in the 
Limited Partnership Agreement).                     $26,858          $25,968

Administrative costs reimbursed to 
General Partner                                      36,396           37,249
                                        -------------------- ----------------
                                                    $63,254          $63,217
                                        ==================== ================

<PAGE>

Item 2.  Management's Discussion and Analysis of Financial Condition and
              Results of Operations

Capital Resources and Liquidity

Funds which have been  received,  but which have not yet been invested in leased
equipment, are 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 and the sales of assets upon lease  terminations.  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.

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

The Partnership currently has available adequate reserves to meet 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 March 31, 1998, the  Partnership had borrowed  approximately  $21,700,000.
The remaining unpaid balance on those borrowings was approximately $585,000. The
borrowings  are generally  non-recourse  to the  Partnership,  that is, the only
recourse of the lender for a default by the lessee on the underlying  lease will
be to the equipment or corresponding lease acquired with the loan proceeds.  The
General Partners expect that aggregate  borrowings in the future will not exceed
40% of  aggregate  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 other than for
the acquisition of additional equipment. There were no such commitments at March
31, 1998.

The  Partnership  made a distribution of cash from operations in April 1998. The
amount of the  distribution  was $7.50 per Unit (which is equal to an annualized
rate of 6%).

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

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

Cash Flows

For the first three months of 1998,  lease rents and proceeds  from the sales of
lease assets were the  Partnership's  primary  sources of cash flows.  Operating
cash flows from lease revenues  decreased from $327,128 in 1997 to $236,225,  in
1998 a  decrease  of  $90,903.  The  decrease  is mainly  due to the  effects of
terminated  leases.  The cost of assets on operating  leases has decreased  from
$6,072,599 in 1997 to $4,721,665 in 1998.

Cash flows from investing activities decreased by $194,287 compared to 1997. The
decrease was the result of decreased rents received on direct financing  leases.
Over the last year, a significant  portion of the  Partnership's  direct finance
lease assets have been sold as the related leases matured.

There were no  financing  sources of cash in either  1997 or 1998.  The net cash
used in financing  activities  decreased by $417,669.  Distributions  to limited
partners were reduced as a result of decreased  cash flows in the fourth quarter
of 1997 compared to the fourth quarter of 1996.  Payments on  non-recourse  debt
have  decreased as scheduled  debt  payments  have paid off certain of the notes
payable. As a consequence, the remaining required debt service has been reduced.


Results of Operations

The results of operations in future periods may vary significantly from those of
the first  quarter  of 1997 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.

Compared to 1997,  operating lease revenues decreased by $132,554.  The revenues
decreased  (and are  expected  to  decrease  in future  periods)  as a result of
scheduled lease  terminations and asset sales.  Gains on sales of assets in 1998
consisted almost entirely of the sale of printing equipment on a leveraged lease
to Treasure Chest Advertising.

Depreciation  expense  relates to  operating  lease  assets and has  declined in
relation  to the total  amounts of such  assets  owned by the  Partnership.  The
original cost of such assets owned by the Partnership  decreased from $6,072,599
to $4,721,665 from March 31, 1997 to March 31, 1998.

Interest expense  decreased by $22,430 compared to 1997. This is a direct result
of decreased debt balances  compared to 1997.  These reductions of debt balances
resulted from scheduled debt payments.



<PAGE>

                           PART II. OTHER INFORMATION

Item 1.  Legal Proceedings.

No material legal  proceedings are currently  pending against the Partnership or
against  any  of  its  assets  except  for  the  bankruptcy  of  Rocky  Mountain
Helicopters,  Inc.  noted above in Part I, Item 2 under the caption  "Results of
Operations"  where the Partnership has undertaken legal action in pursuit of its
unsecured claim.

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, March 31, 1998

        Income statements for the three month periods ended March 31, 1998 and 
          1997

        Statement of changes in partners' capital for the three months ended 
          March 31, 1998

        Statements of cash flows for the three month periods ended March 31, 
          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 Fork 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:
May 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 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