UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 ____________________
 FORM 10-QSB
 
 
 [X]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended June 30, 2004
 
 [  ]  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 0-28376
 _______________________
 
 
 
 PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C.
 (Exact name of registrant as specified in its charter)
 
 
 Delaware

94-3209289(State or other jurisdiction of

(I.R.S. Employerincorporation or organization)

Identification No.)200 Nyala Farms RoadWestport, CT

06880(Address of principal executive offices)

(Zip code) 
 Former Address: 235 3rd Street South, Suite 200, St. Petersburg, FL. 33701
 
 Registrant's telephone number, including area code (203) 341-0555
 _______________________
 
 Indicate by 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
 
 Transitional Small Business Disclosure Format: Yes  No  X .
 
 Aggregate market value of voting stock: N/A
 
 
  
 PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C.(A Delaware Limited Liability Company)CONDENSED BALANCE SHEETS(in thousands of dollars, except unit amounts)(unaudited) 
 June 30,
December 31,2004

2003AssetsEquipment held for operating leases, at cost


$
99,927



$
108,625Less accumulated depreciation



(59,067
)



(63,735
)Net equipment



40,860




44,890Cash and cash equivalents



11,363




4,238Restricted cash



--




60Accounts and note receivable, less allowance for doubtfulaccounts of $689 in 2004 and $1,518 in 2003



4,171




3,672Equity investment in affiliated entities



1,203




1,428Debt placement fees, less accumulated amortizationof $131 in 2004 and $123 in 2003



45




53Prepaid expenses



375




407Other assets



5




519Total assets


$
58,022



$
55,267Liabilities and members equityLiabilities:Accounts payable and accrued expenses


$
721



$
857Due to affiliates



333




312Reserves for repairs



1,636




2,572Lessee deposits



1,039




1,641Note payable



13,000




13,000Total liabilities



16,729




18,382Commitments and contingenciesMembers' equity:Class A members (4,971,311 units)



41,293




36,885Class B member



--




--Total members' equity



41,293




36,885Total liabilities and members' equity


$
58,022



$
55,267 
 
 
 
 
 
 See accompanying notes to unaudited condensed financial statements.
  
 PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C.(A Delaware Limited Liability Company)CONDENSED STATEMENTS OF INCOME(in thousands of dollars, except weighted-average Class A unit amounts) (unaudited)
 
 For the Three Months
For the Six MonthsEnded June 30,
Ended June 30,2004
2003

2004
2003RevenuesLease revenue



$
5,256

$
4,650


$
10,624

$
9,041Interest and other income




29


93



64


157Gain on disposition of equipment




2,012


19



2,235


123Loss on disposition of equipment




(3
)

(5
)


(3
)

--Total revenues




7,294


4,757



12,920


9,321ExpensesDepreciation




1,733


2,011



3,524


3,855Repairs and maintenance




577


359



1,095


852Equipment operating expenses




1,314


1,792



2,596


2,402Insurance expense




185


165



374


307Management fees to affiliate




326


269



601


512Interest expense




243


301



488


603General and administrative expensesto affiliates




51


32



135


89Other general and administrative expenses




434


311



848


693Recovery of bad debts




(542
)

(511
)


(811
)

(823
)Total expenses




4,321


4,729



8,850


8,490Equity in net income of equity investments




185


135



338


276Net income



$
3,158

$
163


$
4,408

$
1,107Members' share of net incomeClass A members



$
3,158

$
108


$
4,408

$
833Class B member




--


55



--


274Total



$
3,158

$
163


$
4,408

$
1,107Class A members net income perweighted-average unit



$
0.64

$
0.02


$
0.89

$
0.17 
 
 
 
 
 
 
 
 
 
 
 
 See accompanying notes to unaudited condensed financial statements.
  
 PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C.(A Delaware Limited Liability Company)CONDENSED STATEMENTS OF CHANGES IN MEMBERS' EQUITYFor the Period from December 31, 2003 to June 30, 2004(in thousands of dollars) (unaudited)
 
 
 Class A

Class B
TotalMembers' equity as of December 31, 2003

$
36,885



$
--



$
36,885Net income


4,408




--




4,408Members' equity as of June 30, 2004

$
41,293



$
--



$
41,293 
 
  
 
 
 
 
 
 See accompanying notes to unaudited condensed financial statements.
  
 PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C.(A Delaware Limited Liability Company)CONDENSED STATEMENTS OF CASH FLOWS(in thousands of dollars)(unaudited) 
 For the Six MonthsEnded June 30,Operating activities


2004


2003Net income

$
4,408

$
1,107Adjustments to reconcile net income to net cashprovided by (used in) operating activities:Depreciation


3,524


3,855Amortization of debt placement fees


8


11Recovery of bad debt expense


(811
)

(823
)Net gain on disposition of equipment


(2,232
)

(123
)Equity in net income of equity investments


(338
)

(276
)Distributions from equity investments


563


583Changes in operating assets and liabilities:Accounts and note receivable


312


268Prepaid expenses


32


78Other assets


514


--Accounts payable and accrued expenses


(136
)

687Due to affiliates


21


72Reserve for repairs


(36
)

144Lessee deposits


(602
)

(74
)Net cash provided by operating activities


5,227


5,509Investing activitiesPayments for capitalized repairs and purchase of equipment


--


(19,067
)Decrease in cash held in escrow accounts


--


18,160Proceeds from disposition of equipment


1,838


260Net cash provided by (used in) investing activities


1,838


(647
)Financing activitiesDecrease (increase) in restricted cash


60


(5
)Cash distributions to Class A members


--


(1,243
)Cash distributions to Class B member


--


(274
)Net cash provided by (used in) financing activities


60


(1,522
)Net increase in cash and cash equivalents


7,125


3,340Cash and cash equivalents at beginning of period


4,238


560Cash and cash equivalents at end of period

$
11,363

$
3,900 
 
 
 
 
 
 
 See accompanying notes to unaudited condensed financial statements.
  PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C.
 (A Delaware Limited Liability Company)
 NOTES TO CONDENSED FINANCIAL STATEMENTS
 (unaudited)
 
 1.  Opinion of Management
 
 The unaudited financial statements presented herein are prepared in conformity with generally accepted accounting principles in the United States of America and the instructions for preparing Form 10-QSB under Rule 310 of Regulation S-B of the Securities and Exchange Commission. Rule 310 provides that disclosures that would substantially duplicate those contained in the most recent annual report to the limited partners may be omitted from interim financial statements. The accompanying unaudited condensed financial statements have been prepared on that basis and, therefore, should be read in conjunction with the financial statements and notes presented in the 2003 Annual Report (Form 10-K) of Professional Lease Management Income Fund I, L.L.C. (the Fund) on file with the United States Securities and Exchange Commission. Except as disclosed herein, there have been no material changes to the information presented in the notes to the 2003 Annual Report in Form 10-K.
 
 In the opinion of the management of PLM Financial Services, Inc. (FSI or the Manager) all adjustments necessary, consisting primarily of normal recurring accruals, to present fairly the Funds unaudited balance sheets at June 30, 2004, condensed statements of income for the three and six months ended June 30, 2004 and 2003, condensed statements of changes in members equity for the period from December 31, 2003 to June 30, 2004, and the condensed statements of cash flows for the six months ended June 30, 2004 and 2003 have been made and are reflected.
 
 2.  Schedule of Fund Phases
 
 The Fund may no longer use cash generated form operations or proceeds from asset dispositions to purchase additional equipment.
 
 The Fund will terminate on December 31, 2010, unless terminated earlier upon sale of all equipment or by certain other events.
 
 3.  Reclassifications
 
 Certain amounts previously reported have been reclassified to conform to the 2004 presentation. These reclassifications did not have any effect on total assets, total liabilities, members equity, or net income.
 
 4.  Cash Distributions
 
 Cash distributions are recorded when declared. Cash distributions are generally paid in the same quarter they are declared and may include amounts in excess of net income that are considered a return of capital.
 
 No cash distributions were declared or paid during the six months ended June 30, 2004. For the six months ended June 30, 2003, cash distributions totaled $1.5 million or $0.25 per weighted-average Class A unit. Cash distributions to the Class A unitholders of $0.4 million for the six months ended June 30, 2003 was deemed to be a return of capital.
 
 
 PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C.
 (A Delaware Limited Liability Company)
 NOTES TO CONDENSED FINANCIAL STATEMENTS
 (unaudited)
 
 5.  Transactions with Manager and Affiliates
 
 The balance due to affiliates as of June 30, 2004 and December 31, 2003 represented $0.3 million due to the Manager and its affiliates for management fees.
 
 The Funds proportional share of the affiliated expenses incurred by the affiliated equity investments during 2004 and 2003 is listed in the following table (in thousands of dollars):
 
 For the Three Months
Ended June 30,
For the Six Months
Ended June 30,2004



2003


2004



2003Management fees
$
15


$
16

$
32


$
31Data processing and administrativeexpenses

1



6


3



9 
 These affiliate expenses reduced the Fund's proportional share of the equity interest in the income of equity investments.
 
 6.  Equipment
 
 Owned equipment held for operating leases is stated at cost. The components of owned equipment were as follows (in thousands of dollars):
 
 June 30,
December 31,2004

2003Railcars



$
35,242



$
38,942Marine containers




30,706




30,825Marine vessel




17,000




17,000Aircraft




10,494




15,358Trailers




6,485




6,50099,927




108,625Less accumulated depreciation




(59,067
)



(63,735
)Net equipment



$
40,860



$
44,890 
 Equipment held for operating leases is stated at cost less depreciation and any reductions to the carrying value.
 
 As of June 30, 2004, all owned equipment in the Funds portfolio was on lease except for 103 railcars with a net book value of $0.5 million. As of December 31, 2003, all owned equipment in the Fund's portfolio was on lease except for 289 railcars with a net book value of $1.9 million.
 
 The Fund did not make any equipment purchases or capitalized repairs during the six months ended June 30, 2004. During the six months ended June 30, 2003, the Fund purchased railcars for $19.1 million that it had entered into legally binding agreements to purchase in 2002. The Fund also made capitalized repairs to equipment of $17,000 during the six months ended June 30, 2003.
 
 During the six months ended June 30, 2004, the Fund disposed of a commercial aircraft, marine containers, railcars and trailers with a net book value of $0.5 million for proceeds of $2.7 million including $0.9 million of unused engine reserves. During the six months ended June 30, 2003, the Fund disposed of marine containers and railcars with a net book value of $0.1 million for proceeds of $0.3 million.
 
  PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C.
 (A Delaware Limited Liability Company)
 NOTES TO CONDENSED FINANCIAL STATEMENTS
 (unaudited)
 
 7.  Equity Investments in Affiliated Entities
 
 The Fund owns equipment and other assets jointly with affiliated programs. These are single purpose entities that do not have any debt or other financial encumbrances.
 
 Ownership interest is based on the Funds contribution towards the cost of the assets in the equity investments. The Funds proportional share of equity and income (loss) in each entity is not necessarily the same as its ownership interest. The primary reason for this difference has to do with certain fees such as management and acquisition and lease negotiation fees varying among the owners of the equity investments. The Funds equity interest in the net income (loss) of equity investments is reflected net of management fees paid or payable.
 
 The tables below set forth 100% of the revenues, direct and indirect expenses, and net income (loss) of the entities in which the Fund has an interest, and the Funds proportional share of income (loss) in each entity for the three and six months ended June 30, 2004 and 2003 (in thousands of dollars):
 
 TWA

TWA

PLMFor the three months ended

S/N 49183

MD-82

WorldwideJune 30, 2004

Trust1

Trust2

Leasing3

Total 
 Revenues

$
308

$
308Less: Indirect expenses


17


332Net income (loss)

$
291

$
(24
)Funds share of net income (loss)

$
145

$
(9
)
$
49

$
185 
 TWA


TWAFor the three months ended


S/N 49183


MD-82June 30, 2003


Trust1


Trust2


Total 
 Revenues

$
310

$
310Less: Indirect expenses


22


336Net income (loss)

$
288

$
(26
)Funds share of net income (loss)

$
144

$
(9
)
$
135 
 TWA

TWA

PLMFor the six months ended

S/N 49183

MD-82

WorldwideJune 30, 2004

Trust1

Trust2

Leasing3

Total 
 Revenues

$
634

$
634Less: Indirect expenses


37


666Net income (loss)

$
597

$
(32
)Funds share of net income (loss)

$
298

$
(9
)
$
49

$
338 
 TWA


TWAFor the six months ended


S/N 49183


MD-82June 30, 2003


Trust1


Trust2


Total 
 Revenues

$
625

$
625Less: Direct expenses


(1
)

(1
)Indirect expenses


43


671Net income (loss)

$
583

$
(45
)Funds share of net income (loss)

$
292

$
(16
)
$
276 
 As of June 30, 2004 and December 31, 2003, all jointly-owned equipment in the Funds equity investment portfolio was on lease.
  1   The Fund owns a 50% interest in the TWA S/N 49183 Trust that owns an MD-82 stage III commercial aircraft.
 2  The Fund owns a 50% interest in the TWA MD-82 Trust that owns an MD-82 stage III commercial aircraft.
 3 .  The Fund owns a 25% interest in PLM Worldwide Leasing Corp.
  PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C.
 (A Delaware Limited Liability Company)
 NOTES TO CONDENSED FINANCIAL STATEMENTS
 (unaudited)
 
 8.  Operating Segments
 
 The Fund operates in five different segments: marine container leasing, aircraft leasing, railcar leasing, marine vessel leasing and trailer leasing. Each equipment leasing segment engages in short-term to mid-term operating leases to a variety of customers.
 
 The following tables present a summary of the operating segments (in thousands of dollars):
 
 Marine





MarineFor the three months ended

Container

Aircraft

Railcar

Vessel

TrailerJune 30, 2004

Leasing

Leasing

Leasing

Leasing

Leasing

Other1

Total 
 RevenuesLease revenue
$
1,089

$
243

$
976

$
2,681

$
267

$
--

$
5,256Interest and other income

--


14


--


--


--


15


29Gain (loss) on disposition of equipment

31


1,660


321


--


(3
)

--


2,009Total revenues

1,120


1,917


1,297


2,681


264


15


7,294ExpensesDepreciation

631


--


755


257


90


--


1,733Operations support

25


7


323


1,488


200


33


2,076Management fees to affiliate

54


59


66


134


13


--


326Interest expense

--


--


--


--


--


243


243General and administrative expenses

--


203


94


22


--


166


485(Recovery of) provision for bad debts

--


(545
)

3


--


--


--


(542
)Total expenses

710


(276
)

1,241


1,901


303


442


4,321Equity in net income of equityinvestments

--


185


--


--


--


--


185Net income (loss)
$
410

$
2,378

$
56

$
780

$
(39
)
$
(427
)
$
3,158Total assets as of June 30, 2004
$
15,015

$
1,900

$
21,151

$
7,289

$
929

$
11,738

$
58,022 
 Marine





MarineFor the three months ended

Container

Aircraft

Railcar

Vessel

TrailerJune 30, 2003

Leasing

Leasing

Leasing

Leasing

Leasing

Other2

Total 
 RevenuesLease revenue
$
1,286

$
149

$
1,103

$
1,986

$
126

$
--

$
4,650Interest and other income

--


44


--


42


--


7


93Gain (loss) on disposition of equipment

19


--


(5
)

--


--


--


14Total revenues

1,305


193


1,098


2,028


126


7


4,757ExpensesDepreciation

763


--


848


309


91


--


2,011Operations support

15


26


124


2,034


98


19


2,316Management fees to affiliate

67


33


63


99


7


--


269Interest expense

--


--


--


--


--


301


301General and administrative expenses

--


16


54


18


49


206


343(Recovery of) provision for bad debts

--


(506
)

(8
)

3


--


--


(511
)Total expenses

845


(431
)

1,081


2,463


245


526


4,729Equity in net income of equityinvestments

--


135


--


--


--


--


135Net income (loss)
$
460

$
759

$
17

$
(435
)
$
(119
)
$
(519
)
$
163Equipment purchases andcapitalized improvements
$
--

$
--

$
4,443

$
--

$
--

$
--

$
4,443 
 
  1  Includes certain assets not identifiable to a specific segment such as cash, certain prepaid expenses and other assets. Also includes certain interest income and costs not identifiable to a particular segment, such as interest expense, and certain general and administrative and operations support expenses.
 2  Includes interest income and costs not identifiable to a particular segment, such as interest expense, and certain general and administrative and operations support expenses.
  PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C.
 (A Delaware Limited Liability Company)
 NOTES TO CONDENSED FINANCIAL STATEMENTS
 (unaudited)
 
 8.  Operating Segments (continued)
 
 Marine





MarineFor the six months ended

Container

Aircraft

Railcar

Vessel

TrailerJune 30, 2004

Leasing

Leasing

Leasing

Leasing

Leasing

Other1

Total 
 RevenuesLease revenue
$
2,323

$
584

$
1,906

$
5,265

$
546

$
--

$
10,624Interest and other income

--


34


--


--


--


30


64Gain (loss) on disposition of equipment

64


1,660


511


--


(3
)

--


2,232Total revenues

2,387


2,278


2,417


5,265


543


30


12,920ExpensesDepreciation

1,317


--


1,512


514


181


--


3,524Operations support

44


17


459


3,115


367


63


4,065Management fees to affiliate

116


66


128


263


28


--


601Interest expense

--


--


--


--


--


488


488General and administrative expenses

--


312


226


39


34


372


983Recovery of bad debts

--


(809
)

(1
)

--


(1
)

--


(811
)Total expenses

1,477


(414
)

2,324


3,931


609


923


8,850Equity in net income of equityinvestments

--


338


--


--


--


--


338Net income (loss)
$
910

$
3,030

$
93

$
1,334

$
(66
)
$
(893
)
$
4,408 
 Marine





MarineFor the six months ended

Container

Aircraft

Railcar

Vessel

TrailerJune 30, 2003

Leasing

Leasing

Leasing

Leasing

Leasing

Other1

Total 
 RevenuesLease revenue
$
2,625

$
327

$
1,871

$
3,818

$
400

$
--

$
9,041Interest and other income

--


74


25


42


--


16


157Gain on disposition of equipment

61


--


62


--


--


--


123Total revenues

2,686


401


1,958


3,860


400


16


9,321ExpensesDepreciation

1,594


--


1,462


617


182


--


3,855Operations support

30


34


361


2,877


222


37


3,561Management fees to affiliate

131


58


111


191


21


--


512Interest expense

--


--


--


--


--


603


603General and administrative expenses

--


30


149


35


95


473


782(Recovery of) provision for bad debts

--


(839
)

13


3


--


--


(823
)Total expenses

1,755


(717
)

2,096


3,723


520


1,113


8,490Equity in net income of equityinvestments

--


276


--


--


--


--


276Net income (loss)
$
931

$
1,394

$
(138
)
$
137

$
(120
)
$
(1,097
)
$
1,107Equipment purchases andcapitalized improvements
$
2

$
--

$
19,065

$
--

$
--

$
--

$
19,067 
 9.  Net Income Per Weighted-Average Class A Unit
 
 Net income per weighted-average Class A unit was computed by dividing net income attributable to Class A members by the weighted-average number of Class A units deemed outstanding during the period. The weighted-average number of Class A units deemed outstanding during the three and six months ended June 30, 2004 and 2003 was 4,971,311 units.
 
  
  1  Includes certain interest income and other income and costs not identifiable to a particular segment, such as interest expense, and certain general and administrative and operations support expenses.
  PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C.
 (A Delaware Limited Liability Company)0
 NOTES TO CONDENSED FINANCIAL STATEMENTS
 (unaudited)
 
 10.  Accounts and Note Receivable
 
 Accounts and note receivable represent balances due from current or former lessees for unpaid balances incurred from leasing Fund owned equipment. The components of accounts and notes receivable were as follows (in thousands of dollars):
 
 June 30,
December 31,2004


2003Trade accounts receivable

$4,142

$3,415Note receivable

718

1,775Allowance for doubtful accounts

(689)

(1,518)$4,171

$3,672 
 At June 30, 2004 and December 31, 2003, the balance in note receivable was due from a former aircraft lessee. The note receivable is scheduled to be fully paid by October 2004. Unpaid outstanding balances accrue interest at a rate of 5%. Due to the uncertainty of ultimate collection of the note, the Manager will continue to fully reserve the unpaid outstanding balance less any security deposits and any payments received through August 13, 2004.
 
 11.  Commitments and Contingencies
 
 Commitments as of June 30, 2004 are as follows (in thousands of dollars):
 
 Less than

1-3Current Obligations

Total
1 Year

YearsNote payable


$13,000

$3,000
$10,000 
 12.  Recent Accounting Pronouncements
 
 In January 2003, FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities (FIN 46). FIN 46 requires the Fund to evaluate all existing arrangements to identify situations where the Fund has a variable interest, commonly evidenced by a guarantee arrangement or other commitment to provide financial support, in a variable interest entity, commonly a thinly capitalized entity, and further determine when such variable interest requires the Fund to consolidate the variable interest entities financial statements with its own. The Fund is required to perform this assessment by December 31, 2004 and consolidate any variable interest entities for which the Fund will absorb a majority of the entities expected losses or receive a majority of the expected residual gains.
 
 The Manager is still in the process of evaluating its impact and has not completed its analysis or concluded on the impact that FIN 46 will have on the Fund.
 
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
 (I)  RESULTS OF OPERATIONS
 
 Comparison of the Professional Lease Management Income Fund I, L.L.C.s (the Fund's) Operating Results for the Three Months Ended June 30, 2004 and 2003
 
 (A)  Owned Equipment Operations
 
 Lease revenues less direct expenses (defined as repairs and maintenance, equipment operating, and asset-specific insurance expenses) on owned equipment increased during the three months ended June 30, 2004, compared to the same period of 2003. Gains from the sale of equipment, interest and other income and certain expenses such as management fees to affiliate, depreciation, interest expense and general and administrative expenses relating to the operating segments (see Note 8 to the financial statements), are not included in the owned equipment operation discussion because they are indirect in nature and not a result of operations but the result of owning a portfolio of equipment. The following table presents lease revenues less direct expenses by segment (in thousands of dollars):
 
 For the Three MonthsEnded June 30,2004

2003Marine vessel
$
1,193


$
(48
)Marine containers

1,064



1,271Railcars

653



979Aircraft

236



123Trailers

67



28 
 Marine vessel:  Marine vessel lease revenues and direct expenses were $2.7 million and $1.5 million, respectively, for the three months ended June 30, 2004, compared to $2.0 million and $2.0 million, respectively, during the same period of 2003. Lease revenues increased $0.7 million in the three months ended June 30, 2004 due to a higher lease rate earned on the Funds marine vessel. Direct operating expenses decreased $0.5 million during the three months ended June 30, 2004 due to lower voyage expenses.
 
 Marine containers:  Marine container lease revenues and direct expenses were $1.1 million and $25,000, respectively, for the three months ended June 30, 2004, compared to $1.3 million and $15,000, respectively, during the same period of 2003. The decrease in lease revenues of $0.2 million during the three months ended June 30, 2004 compared to the same period of 2003 was due to a group of marine containers switching from a fixed rate lease to one based on utilization. A significant number of the Funds marine containers currently on a fixed rate lease will be switching to a lease based on utilization over the next 12 months. The Manager anticipates that this will result in a significant decrease in lease revenues.
 
 Railcars:  Railcar lease revenues and direct expenses were $1.0 million and $0.3 million, respectively, for the three months ended June 30, 2004, compared to $1.1 million and $0.1 million, respectively, during the same period of 2003. A decrease in railcar lease revenues of $0.1 million during the three months ended June 30, 2004 was due to additional lease revenues earned during the second quarter of 2003 caused by the purchase of additional railcars during the first quarter of 2003. Lease revenues also decreased $0.1 million during the second quarter 2004 due to the sale of certain railcars that were on lease during 2003. These decreases were partially offset by an increase of $0.1 million caused by the purchase and lease of railcars during 2003. During the three months ended June 30, 2004, an increase in direct expenses of $0.2 million was due primarily to higher repairs and maintenance costs compared to the same period of 2003.
 
 Aircraft:  Aircraft lease revenues and direct expenses were $0.2 million and $7,000, respectively, for the three months ended June 30, 2004, compared to $0.1 million and $26,000, respectively, during the same period of 2003. An increase in lease revenues of $0.1 million was due to one of the Funds owned aircraft being on-lease during the three months ended June 30, 2004 compared to the same period of 2003, during which this aircraft was off-lease the entire three months. In addition, an increase of $33,000 was due to an increase in the lease rate on one of the Fund's owned aircraft compared to the same period of 2003.
 
 Trailers: Trailer lease revenues and direct expenses were $0.3 million and $0.2 million, respectively, for the three months ended June 30, 2004, compared to $0.1 million and $0.1 million, respectively, during the same period of 2003. The increase of $0.1 million in trailer direct expenses was due to an increase in the repairs and maintenance compared to the same period of 2003.
 
 (B)  Interest and Other Income
 
 Interest and other income decreased $0.1 million for the three months ended June 30, 2004 compared to 2003. During the second quarter of 2004, interest income was lower due to a lower outstanding principal balance on the note receivable compared to 2003.
 
 (C)  Indirect Expenses Related to Owned Equipment Operations
 
 Total indirect expenses of $2.3 million for the three months ended June 30, 2004 decreased from $2.4 million for the same period in 2003. Significant variances are explained as follows:
 
 (i)  A $0.3 million decrease in depreciation and amortization expenses from 2003 levels reflects a decrease of $0.2 million caused by the double-declining balance method of depreciation which results in greater depreciation in the first years an asset is owned and a decrease of approximately $0.1 million caused by the sale of owned equipment during 2004 and 2003. These decreases were partially offset by the increase of $33,000 caused by the purchase of railcars during 2003;
 
 (ii)  A $0.1 million decrease in interest expense was due to a lower average outstanding debt balance in the second quarter of 2004 compared to the same period of 2003; and
 
 (iii)  A $0.1 million increase in general and administrative expenses during the three months ended June 30, 2004 was due to administrative cost associated with the return of aircraft and collection of bad debts from lessees.
 
 (D)  Net Gain on Disposition of Owned Equipment
 
 Net gain on disposition of owned equipment for the three months ended June 30, 2004 totaled $2.0 million which resulted from the disposition of a commercial aircraft, marine containers, railcars and a trailer with a net book value of $0.3 million for proceeds of $2.3 million including $0.9 million of unused engine reserves. Net gain on disposition of owned equipment for the second quarter of 2003 totaled $14,000 which resulted from the disposition of marine containers and a railcar with a net book value of $36,000 for proceeds of $0.1 million.
 
 (E)  Equity in Net Income of Equity Investment
 
 Equity in net income of equity investments generally represents the Fund's share of the net income generated from the operation of jointly owned entities accounted for under the equity method of accounting. These entities are single purpose and have no debt or other financial encumbrances.
 
 The following equity investments discussion is based on the Fund's proportional share of revenues, depreciation expense, direct expenses, and administrative expenses in the equity investments:
 
 As of June 30, 2004 and 2003, the Fund owned interests in two trusts that each own a commercial aircraft and an interest in an entity owning other assets. During the three months ended June 30, 2004 and 2003, lease revenues from the two trusts that each own a commercial aircraft of $0.3 million were partially offset by depreciation expense, direct expenses, and administrative expenses of $0.2 million. During the three months ended June 30, 2004, contribution from an entity owning other assets increased $49,000 compared to 2003.
 
 (F)  Net Income
 
 As a result of the foregoing, the Fund had net income of $3.2 million for the three months ended June 30, 2004, compared to net income of $0.2 million during the same period of 2003. The Fund's ability to operate and liquidate assets, secure leases, and re-lease those assets whose leases expire is subject to many factors. Therefore, the Fund's performance in the three months ended June 30, 2004 is not necessarily indicative of future periods.
  
 Comparison of the Fund's Operating Results for the Six Months Ended June 30, 2004 and 2003
 
 (A)  Owned Equipment Operations
 
 Lease revenues less direct expenses on owned equipment increased during the six months ended June 30, 2004, compared to the same period of 2003. The following table presents lease revenues less direct expenses by segment (in thousands of dollars):
 
 For the Six MonthsEnded June 30,2004

2003Marine containers
$
2,279


$
2,595Marine vessel

2,150



941Railcars

1,447



1,510Aircraft

567



293Trailers

179



178 
 Marine containers:  Marine container lease revenues and direct expenses were $2.3 million and $44,000, respectively, for the six months ended June 30, 2004, compared to $2.6 million and $30,000, respectively, during the same period of 2003. The decrease in lease revenues of $0.3 million during the six months ended June 30, 2004 compared to the same period of 2003 was due to a group of marine containers switching from a fixed rate lease to one based on utilization. A significant number of the Funds marine containers currently on a fixed rate lease will be switching to a lease based on utilization over the next 12 months. The Manager anticipates that this will result in a significant decrease in lease revenues.
 
 Marine vessel:  Marine vessel lease revenues and direct expenses were $5.3 million and $3.1 million, respectively, for the six months ended June 30, 2004, compared to $3.8 million and $2.9 million, respectively, during the same period of 2003. Lease revenues increased $1.4 million in the six months ended June 30, 2004 due to a higher lease rate earned on the Funds marine vessel. Direct operating expenses increased $0.2 million during the six months ended June 30, 2004 due to higher voyage expenses compared to the same period of 2003.
 
 Railcars:  Railcar lease revenues and direct expenses were $1.9 million and $0.5 million, respectively, for the six months ended June 30, 2004, compared to $1.9 million and $0.4 million, respectively, during the same period of 2003. Although lease revenues remained relatively the same, an increase of $0.4 million caused by the purchase and lease of railcars during the six months ended June 30, 2003 was offset by a decrease of $0.4 million caused by the sale of railcars that were on-lease during the same period of 2003. The decrease in railcar contribution of $0.1 million was primarily due to higher repairs and maintenance costs compared to the same period of 2003.
 
 Aircraft:  Aircraft lease revenues and direct expenses were $0.6 million and $17,000, respectively, for the six months ended June 30, 2004, compared to $0.3 million and $34,000, respectively, during the same period of 2003. An increase in lease revenues of $0.3 million was due to one of the Funds owned aircraft being on-lease during the six months ended June 30, 2004 compared to the same period of 2003, during which this aircraft was off-lease the entire six months. In addition, an increase of $0.1 million was due to an increase in the lease rate on one of the Fund's owned aircraft compared to the same period of 2003. These increases were partially offset by a decrease of $0.1 million caused by the sale on an aircraft during the six months ended June 30, 2004 that was on lease during the same period of 2003.
 
 (B)  Interest and Other Income
 
 Interest and other income decreased $0.1 million for the six months ended June 30, 2004 compared to 2003. During the six months ended June 30, 2004, interest income was lower due to a lower outstanding principal balance on the note receivable compared to 2003.
 
 (C)  Indirect Expenses Related to Owned Equipment Operations
 
 Total indirect expenses of $4.8 million for the six months ended June 30, 2004 decreased from $5.0 million for the same period in 2003. Significant variances are explained as follows:
 
 (i)  A $0.3 million decrease in depreciation and amortization expenses from 2003 levels reflects a decrease of $0.4 million caused by the double-declining balance method of depreciation which results in greater depreciation in the first years an asset is owned and a decrease of $0.1 million caused by equipment sales during 2004 and 2003. These decreases were partially offset by an increase of $0.2 million caused by the purchase and lease of railcars during 2003;
 
 (ii)  A $0.1 million decrease in interest expense was due to lower average borrowings outstanding during the six months ended June 30, 2004 compared to the same period in 2003. Interest expense is expected to decrease in the future as the existing note payable is repaid;
 
 (iii)  A $0.1 million increase in management fees was due to the increase in lease revenues of $1.6 million; and
 
 (iv)  A $0.2 million increase in general and administrative expenses during the six months ended June 30, 2004 was due to administrative cost associated with the return of aircraft and collection of bad debts from lessees.
 
 (D)  Net Gain on Disposition of Owned Equipment
 
 Net gain on disposition of owned equipment for the six months ended June 30, 2004 totaled $2.2 million which resulted from the disposition of a commercial aircraft, marine containers, railcars, and a trailer with a net book value of $0.5 million for proceeds of $2.7 million including $0.9 million of unused engine reserves. Gain on disposition of owned equipment for the six months ended June 30, 2003 totaled $0.1 million which resulted from the disposition of marine containers and railcars with a net book value of $0.1 million for proceeds of $0.3 million.
 
 (E)  Equity in Net Income of Equity Investment
 
 Equity in net income of equity investments generally represents the Fund's share of the net income generated from the operation of jointly owned entities accounted for under the equity method of accounting. These entities are single purpose and have no debt or other financial encumbrances.
 
 The following equity investments discussion is based on the Fund's proportional share of revenues, depreciation expense, direct expenses, and administrative expenses in the equity investments:
 
 As of June 30, 2004 and 2003, the Fund owned interests in two trusts that each own a commercial aircraft and an interest in an entity owning other assets. During the six months ended June 30, 2004 and 2003, lease revenues from the two trusts that each own a commercial aircraft of $0.6 million were partially offset by depreciation expense, direct expenses, and administrative expenses of $0.3 million. During the six months ended June 30, 2004, contribution from an entity owning other assets increased $49,000 compared to 2003
 
 (F)  Net Income
 
 As a result of the foregoing, the Fund had net income of $4.4 million for the six months ended June 30, 2004, compared to net income of $1.1 million during the same period of 2003. The Fund's ability to operate and liquidate assets, secure leases, and re-lease those assets whose leases expire is subject to many factors. Therefore, the Fund's performance in the six months ended June 30, 2004 is not necessarily indicative of future periods.
 
 (II)  CRITICAL ACCOUNTING POLICIES AND ESTIMATES
 
 The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires PLM Financial Services, Inc. (FSI or the Manager) to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On a regular basis, the Manager reviews these estimates, including those related to asset lives and depreciation methods, impairment of long-lived assets, allowance for doubtful accounts, reserves related to legally mandated equipment repairs  and contingencies and litigation. These estimates are based on the Manager's historical experience and on various other assumptions believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. The Manager believes, however, that the estimates, including those for the above-listed items, are reasonable and that actual results will not vary significantly from the estimated amounts.
 
 The Manager believes the following critical accounting policies affect the more significant judgments and estimates used in the preparation of the Fund's financial statements:
 
 Revenue recognition: Lease revenues are earned by the Fund monthly and no significant amounts are calculated on factors other than the passage of time. The Funds leases are accounted for as operating leases and are non-cancellable. Rents received prior to their due dates are deferred.
 
 Asset lives and depreciation methods: The Funds primary business involves the purchase and subsequent lease of long-lived transportation and related equipment. The Manager has chosen asset lives that it believes correspond to the economic life of the related asset. Depreciation is computed using the double-declining balance method, taking a full month's depreciation in the month of acquisition based upon estimated useful lives of 15 years for railcars and 12 years for all other equipment. The depreciation method changes to straight line when annual depreciation expense using the straight-line method exceeds that calculated by the double-declining balance method. The Manager has chosen a deprecation method that it believes matches the benefit to the Fund from the asset with the associated costs. These judgments have been made based on the Managers expertise in each equipment segment that the Fund operates. If the asset life and depreciation method chosen does not reduce the book value of the asset to at least the potential future cash flows from the asset to the Fund, the Fund would be required to record an impairment loss. Likewise, if the net book value of the asset was less than the economic value, the Fund may record a gain on sale upon final disposition of the asset.
 
 Impairment of long-lived assets: Whenever there is an indicator that an impairment may exist, the Manager reviews the carrying value of its equipment and equity investments in affiliated entities to determine if the carrying value of the assets may not be recoverable in consideration of the current economic conditions. This requires the Manager to make estimates related to future cash flows from each asset as well as the determination if the deterioration is temporary or permanent. If these estimates or the related assumptions change in the future, the Fund may be required to record additional impairment charges.
 
 Allowance for doubtful accounts: The Fund maintains allowances for doubtful accounts for estimated losses resulting from the inability of the lessees to make the lease payments. These estimates are primarily based on the amount of time that has lapsed since the related payments were due as well as specific knowledge related to the ability of the lessees to make the required payments. If the financial condition of the Funds lessees were to deteriorate, additional allowances could be required that would reduce income. Conversely, if the financial condition of the lessees were to improve or if legal remedies to collect past due amounts were successful, the allowance for doubtful accounts may need to be reduced and income would be increased.
 
 Reserves for repairs: The Fund accrues for legally required repairs to equipment such as scheduled major maintenance for marine vessels and engine overhauls to aircraft engines over the period prior to the required repairs. The amount that is reserved is based on the Managers expertise in each equipment segment, the past history of such costs for that specific piece of equipment and discussions with independent, third party equipment brokers. If the amount reserved is not adequate to cover the cost of such repairs or if the repairs must be performed earlier than the Manager estimated, the Fund would incur additional repair and maintenance or equipment operating expenses.
 
 Contingencies and litigation: The Fund is subject to legal proceedings involving ordinary and routine claims related to its business. The ultimate legal and financial liability with respect to such matters cannot be estimated with certainty and requires the use of estimates in recording liabilities for potential litigation settlements. Estimates for losses from litigation are disclosed if considered possible and accrued if considered probable after consultation with outside counsel. If estimates of potential losses increase or the related facts and circumstances change in the future, the Fund may be required to record additional litigation expense.
 
 (III)  FINANCIAL CONDITION - CAPITAL RESOURCES AND LIQUIDITY
 
 For the six months ended June 30, 2004, the Fund generated cash from operations of $5.2 million to meet its operating obligations, and pay debt and interest on the Fund's debt.
 
 Restricted cash decreased $0.1 million resulting from the withdrawal of the Fund from the debt facility that required this deposit.
 
 During the six months ended June 30, 2004, the Fund disposed of owned equipment for proceeds of $2.7 million including $0.9 million of unused engine reserves.
 
 Accounts and note receivable increased $0.5 million during the six months ended June 30, 2004. An increase of $0.3 million due to the timing of lease receipts and a decrease in the allowance for bad debts of $0.8 million due to collection of outstanding receivables was partially offset by a decrease from the collection of $1.1 million from the note receivable.
 
 Equity investments in affiliated entities decreased $0.2 million during the six months ended June 30, 2004 due to cash distributions of $0.6 million from the equity investments to the Fund being partially offset by income of $0.3 million that was recorded by the Fund for its interests in the equity investments.
 
 Prepaid expenses decreased $32,000 during the six months ended June 30, 2004 due to the amortization of insurance expenses during the first six months of 2004.
 
 Other assets decreased $0.5 million during the six months ended June 30, 2004 due to the return of an asset to a lessee that was being held as a security deposit.
 
 Accounts payable decreased $0.1 million during the six months ended June 30, 2004 due to the timing of payments to vendors.
 
 Reserve for repairs decreased $0.9 million due to the sale of an commercial aircraft and the reclassification of certain engine reserves for this aircraft totaling $0.9 million to sale proceeds.
 
 Lessee's deposits decreased $0.6 million during the six months ended June 30, 2004 due to a $0.5 million lessee security deposit being returned to the lessee and a decrease of $0.1 million was caused by the timing of prepaid lease payments being received from lessees compared to December 31, 2003.
 
 The Fund is scheduled to make a debt payment of $3.0 million to the lenders of the note payable on December 31, 2004. The cash for this payment will come from operations and proceeds from equipment dispositions. Beginning January 1, 2005, the Fund may prepay its note payable without penalty using equipment sales proceeds. The Manager anticipates there will be such a prepayment in the first quarter of 2005.
 
 Commitments as of June 30, 2004 are as follows (in thousands of dollars):
 
 Less than
1-3Fund Obligations:

Total
1 Year

YearsNotes payable


$13,000

$3,000

$10,000 
 (IV)  RECENT ACCOUNTING PRONOUNCEMENTS
 
 In January 2003, FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities (FIN 46). FIN 46 requires the Fund to evaluate all existing arrangements to identify situations where the Fund has a variable interest, commonly evidenced by a guarantee arrangement or other commitment to provide financial support, in a variable interest entity, commonly a thinly capitalized entity, and further determine when such variable interest requires the Fund to consolidate the variable interest entities financial statements with its own. The Fund is required to perform this assessment by December 31, 2004 and consolidate any variable interest entities for which the Fund will absorb a majority of the entities expected losses or receive a majority of the expected residual gains.
 
 The Manager is still in the process of evaluating its impact and has not completed its analysis or concluded on the impact that FIN 46 will have on the Fund.
 
 (V)  OUTLOOK FOR THE FUTURE
 
 The ability of the Fund to realize acceptable lease rates on its equipment in the different equipment markets is contingent on many factors, such as specific market conditions and economic activity, technological obsolescence, and government or other regulations. The unpredictability of these factors makes it difficult for the Manager to clearly define trends or influences that may impact the performance of the Fund's equipment. The Manager continually monitors both the equipment markets and the performance of the Fund's equipment in these markets. The Manager may decide to reduce the Fund's exposure to equipment markets if it determines that it cannot operate equipment to achieve acceptable rates of return.
 
 Several factors may affect the Fund's operating performance in the remainder of 2004 and beyond, including changes in the markets for the Fund's equipment and changes in the regulatory environment in which the equipment operates.
 
 The Fund's operation of a diversified equipment portfolio in a broad base of markets is intended to reduce its exposure to volatility in individual equipment sectors.
 
 Other factors affecting the Funds operations in the remainder of 2004 and beyond include:
 
 (1)  Over the next 12 months, a significant number of the Funds marine containers currently on a fixed rate lease will be switching to a lease based on utilization. The Manager anticipates that this will result in a significant decrease in lease revenues;
 
 (2)  Economic recovery in the railcar segment continues to be strong. Orders for new tank railcars, a key leading indicator for the railcar fleet, indicate a backlog of a full year production of approximately 11,000 units. Overall railcar loadings are now forecast to grow approximately 6% in 2004 which is an extremely strong outlook and an increase in the industry consensus forecast since last quarter. The railcar fleet is largely used by a broadly defined chemical sector. Chemical production has grown 3% per year on average over the last two decades.
 
 Although chemical and petroleum railcar loadings are projected to grow by 5% this year, the rapid increase in steel prices which has resulted in increases in the price of a new tank car by over 20%, may cause the industry recovery to slow. The speed of recovery in lease rates continues to lag behind this price increase and lease rates remain low compared to historical norms. While this is likely to change, reduced railcar availability and higher lease costs may slow the industry growth and perhaps cause a shift to other forms of transportation;
 
 (3)  The Funds owned marine  vessel is designated as a Clean Product Carrier . Demand for commodity-based shipping is closely tied to worldwide economic growth patterns, which can affect demand by causing changes in specific grade volume on trade routes. The Manager operates the Funds product tanker in the spot charter markets, carrying mostly gasoline, jet fuel, gas oils and similar petroleum distillates or simple chemicals or vegetable oils, an approach that provides the flexibility to adapt to changes in market conditions.
 
 In the first six months of 2004, freight rates for the Funds marine vessel continued to remain strong due to an increase on the demand side for sea transportation resulting from improving economies worldwide. The demand is expected to continue until new tonnage starts coming on line. The cold weather and demand for refined home heating oil on United States east coast coupled with strong demand for imported gasoline has given an added boost to charter rates in early 2004;
 
 (4)  Market demand for new and used aircraft has been severely impacted by the poor financial condition of the airline industry. The Manager believes that there is a significant oversupply of commercial aircraft available, that has caused a decrease in aircraft fair market values and that this oversupply will continue for some time;
 
 (5)  The Fund is expected to have increased general and administrative costs as it liquidates other investment programs that currently share certain shared general and administrative expenses; and
 
 (6)  General and administrative expenses are expected to increase over the next 18 months due to additional expenses required to meet compliance standards of the Sarbanes - Oxley Act.
 
 During 2001, the lessee of three Stage II Boeing 737-200 commercial aircraft notified the Manager of its intention to return these aircraft and stopped making lease payments. During October 2002, the Manager reached an agreement with the lessee of these aircraft for the past due lease payments. The lessee made an initial payment during October 2002, to be followed by 23 equal monthly installments beginning in November 2002. Unpaid outstanding amounts accrue interest at a rate of 5%. The balance outstanding at June 30, 2004 was $0.7 million. Due to the uncertainty of ultimate collection, the Manager fully reserved the unpaid outstanding balance less the security deposit from this lessee and any payments received through August 13, 2004. As of August 13, 2004, the lessee was current with all the installment payments due to the Fund except for the payment due during August 2004.
 
 Additionally, the same lessee leased one of these aircraft on a month to month lease agreement until it was sold during May 2004. As of August 13, 2004, the lessee owes the Fund $0.6 million. This receivable was reserved for as a bad debt as of June 30, 2004. The Manager is currently reviewing its options including the possibility of sending the lessee a notification of default.
 
 The Manager leased the remaining two Stage II Boeing 737-200 commercial aircraft to a lessee located in Argentina with an option to purchase these aircraft at the end of the 3 year lease. This lessee paid the Fund $0.6 million as a non-refundable lease deposit during 2003. Lease payments are due to the Fund monthly in advance. As of August 13, 2004, this lessee is two months in arrears with its lease payments to the Fund totaling $0.2 million. The Manager has not reserved the amount of unpaid lease payments since there is a lease deposit that could be used to cover the balance due. The Manager is currently reviewing its options including the possibility of sending the lessee a notification of default. Due to the age of these aircraft and the economic condition of the airline industry, should the Manager repossess these aircraft, it will be difficult to remarket and may be off-lease for a considerable period of time.
 
 Cash flow and disposition proceeds generated from operations after January 1, 2003 cannot be used to purchase additional equipment. The Fund will terminate on December 31, 2010, unless terminated earlier upon sale of all equipment or by certain other events.
 
 Over the next 18 months, the Fund is required to pay $8.0 million in debt payments to the lenders of the note payable. Beginning January 1, 2005, the Fund may prepay its note payable without penalty using cash received from equipment dispositions. The Manager anticipates there will be such a prepayment in the first quarter of 2005. In addition, a number of the aircraft lessees have had financial difficulties resulting in additional costs and losses to the Fund. As a result of this, the Manager has determined that in order to meet these required expenditures, cash distributions to the members have been discontinued in order to build working capital reserves. The Manager will review operations on a quarterly basis to determine if the Fund can declare a cash distribution to the members.
 
 Cash distributions when paid to the members generally consist of both a return of and a return on capital. Cash distributions do not represent and are not indicative of yield on investment. Actual yield on investment cannot be determined with any certainty until conclusion of the Fund and will be dependent upon the collection of all future contracted rent, the generation of renewal and/or re-lease rents and the residual value realized for each asset at its disposal.
 
 (VI)  FORWARD-LOOKING INFORMATION
 
 Except for the historical information contained herein, this Form 10-QSB contains forward-looking statements that involve risks and uncertainties, such as statements of the Funds plans, objectives, expectations, and intentions. The cautionary statements made in this Form 10-QSB should be read as being applicable to all related forward-looking statements wherever they appear in this Form 10-QSB. There are a number of important factors that could cause actual results to differ materially from those expressed in any forward-looking statements made herein. These factors include, but are not limited to, the collection of the Funds contracted rents, the realization of residual proceeds, and future economic conditions.
 
 ITEM 3.  CONTROLS AND PROCEDURES
 
 Limitations on the Effectiveness of Controls
 
 The Managers management, including its President and Chief Financial Officer (CFO), does not expect that our internal controls or disclosure control will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.
 
 Because of the inherent limitations in all control systems, no evaluation of control can provide absolute assurance that all control issues and instances of fraud, if any, within the Fund have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, collusion of two or more people, or by management override of the control. The design of any system of controls also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
 
 Notwithstanding the forgoing limitations, we believe that our internal controls and disclosure control provide reasonable assurances that the objectives of our control system are met.
 
 Quarterly Evaluation of the Funds Disclosure Controls and Internal Controls
 
 (1)  Within the 90-day period prior to the filing of this report, the Manager carried out an evaluation, under the supervision and with the participation of the Managers management, including its President and CFO, of the effectiveness of the design and operation of the Funds disclosure controls and procedures pursuant to Rule 13a-14 under the Securities Exchange Act of 1934 (the Exchange Act). Based upon that evaluation, the President and CFO concluded that the Funds disclosure controls and procedures are effective in timely alerting them to material information relating to the Funds required to be included in the Funds exchange act filings.
 
 (2)  There have been no significant changes in the Funds internal controls or in other factors which could significantly affect internal controls subsequent to the date the Manager carried out its evaluations.
 
  
 PART II - OTHER INFORMATION
 
 
 
 ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
 
 (a)  Exhibits
 
 31.1  Certificate of President of the General Partner pursuant to Section 302 of Sarbanes - Oxley Act.
 
 31.2  Certificate of Chief Financial Officer of the General Partner pursuant to Section 302 of Sarbanes - Oxley Act.
 
 32.1  Certificate of President of the Manager pursuant to Section 906 of Sarbanes - Oxley Act.
 
 32.2  Certificate of Chief Financial Officer of the Manager pursuant to Section 906 of Sarbanes - Oxley Act.
 
 (b)  Reports on Form 8-K
 
 None.
 
  
 
 
 
 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.
 
 
 
 PLM PROFESSIONAL LEASE MANAGEMENT INCOME FUND I
 
 By:  PLM Financial Services, Inc.
 General Partner
 
 
 
 Date:  August 13, 2004  By:  /s/ Richard K Brock
 Richard K Brock
 Chief Financial Officer