**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 September 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 Road****Westport, CT**

**06880**(Address of principal executive offices)

(Zip code) 
 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) 
 September 30,

December 31,2004



2003**Assets**Equipment held for operating leases, at cost

$
98,692


$
108,625Less accumulated depreciation


(59,735
)


(63,735
)Net equipment


38,957



44,890Cash and cash equivalents


15,073



4,238Restricted cash


--



60Accounts and other receivable, less allowance for doubtfulaccounts of $23 in 2004 and $1,518 in 2003


4,792



3,672Equity investment in affiliated entities


1,046



1,428Prepaid expenses


608



407Other assets


45



572Total assets

$
60,521


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

$
1,126


$
857Due to affiliates


339



312Reserves for repairs


1,696



2,572Lessee deposits


990



1,641Note payable


13,000



13,000Total liabilities


17,151



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


43,370



36,885Class B member


--



--Total members' equity


43,370



36,885Total liabilities and members' equity

$
60,521


$
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 Nine MonthsEnded September 30,

Ended September 30,2004



2003



2004



2003**Revenues**Lease revenue
$
5,165


$
4,488


$
15,789


$
13,529Interest and other income

668



87



732



244Gain on disposition of equipment

170



38



2,405



156Loss on disposition of equipment

--



(5
)


(3
)


--Total revenues

6,003



4,608



18,923



13,929**Expenses**Depreciation

1,710



2,015



5,234



5,864Repairs and maintenance

706



344



1,801



1,196Equipment operating expenses

1,207



1,054



3,803



3,456Insurance expense

168



137



542



444Management fees to affiliate

302



281



903



793Interest expense

248



304



736



907General and administrative expensesto affiliates

95



35



230



124Other general and administrative expenses

280



348



1,128



1,041Impairment loss on equipment

--



309



--



315Recovery of bad debts

(665
)


(475
)


(1,476
)


(1,298
)Total expenses

4,051



4,352



12,901



12,842Equity in net income of equity investments

125



126



463



402Net income
$
2,077


$
382


$
6,485


$
1,489**Members' share of net income**Class A members
$
2,077


$
163


$
6,485


$
996Class B member

--



219



--



493Total
$
2,077


$
382


$
6,485


$
1,489Class A members net income perweighted-average unit
$
0.42


$
0.03


$
1.30


$
0.20 
 
 
 
 
 
 
 
 
 
 
 
 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' EQUITY****For the Period from December 31, 2003 to September 30, 2004**(in thousands of dollars) (unaudited)
 
 
 Class A
Class B                          TotalMembers' equity as of December 31, 2003

$
36,885




$
36,885Net income


6,485





6,485Members' equity as of September 30, 2004

$
43,370




$
43,370 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
         
 
 
 
 
 
 
 
 
 
 
 
 
 
 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 Nine Months
Ended September 30,**Operating activities**


2004


2003Net income

$
6,485

$
1,489Adjustments to reconcile net income to net cashprovided by (used in) operating activities:Depreciation


5,234


5,864Amortization of debt placement fees


13


13Recovery of bad debt expense


(1,476
)

(1,298
)Net gain on disposition of equipment


(2,402
)

(156
)Impairment loss on equipment


--


315Equity in net income of equity investments


(463
)

(402
)Distributions from equity investments


845


864Changes in operating assets and liabilities:Accounts and other receivable


356


890Prepaid expenses


(201
)

161Other assets


514


--Accounts payable and accrued expenses


269


109Due to affiliates


27


55Reserve for repairs


24


116Lessee deposits


(651
)

(61
)Net cash provided by operating activities


8,574


7,959**Investing activities**Payments for capitalized repairs and purchase of equipment


--


(19,853
)Decrease in cash held in escrow accounts


--


19,792Proceeds from disposition of equipment


2,201


348Net cash provided by investing activities


2,201


287**Financing activities**Decrease (increase) in restricted cash


60


(5
)Cash distributions to Class A members


--


(2,486
)Cash distributions to Class B member


--


(493
)Net cash provided by (used in) financing activities


60


(2,984
)Net increase in cash and cash equivalents


10,835


5,262Cash and cash equivalents at beginning of period


4,238


560Cash and cash equivalents at end of period

$
15,073

$
5,822**Supplemental information**Interest paid

$
479

$
786 
 
 
 
  
 
 
 
 
 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 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 condensed balance sheets at September 30, 2004 and December 31, 2003, condensed statements of income for the three and nine months ended September 30, 2004 and 2003, condensed statements of changes in members equity for the period from December 31, 2003 to September 30, 2004, and the condensed statements of cash flows for the nine months ended September 30, 2004 and 2003 have been made and are reflected.
 
 2.  Schedule of Fund Phases
 
 The Fund may no longer use cash generated from 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 nine months ended September 30, 2004. For the nine months ended September 30, 2003, cash distributions totaled $3.0 million or $0.50 per weighted-average Class A unit. Cash distributions to the Class A unitholders of $1.5 million for the nine months ended September 30, 2003 were 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 September 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 September 30,
For the Nine Months
Ended September 30,2004


2003





2004

2003Management fees

$
15

$
15




$
47

$46Data processing and administrativeexpenses


1


1





4

3 
 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):
 
 September 30,

December 31,2004



2003Railcars
$
34,080


$
38,942Marine containers

30,633



30,825Marine vessel

17,000



17,000Aircraft

10,494



15,358Trailers

6,485



6,50098,692



108,625Less accumulated depreciation

(59,735
)


(63,735
)Net equipment
$
38,957


$
44,890 
 Equipment held for operating leases is stated at cost less depreciation and any reductions to the carrying value.
 
 As of September 30, 2004, all owned equipment in the Funds portfolio was on lease except for 85 railcars with a net book value of $0.7 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 nine months ended September 30, 2004. During the nine months ended September 30, 2003, the Fund purchased railcars for $19.7 million that it had entered into legally binding agreements to purchase in 2002. The Fund also made capitalized repairs to equipment of $0.2 million during the nine months ended September 30, 2003.
 
 During the nine months ended September 30, 2004, the Fund disposed of a commercial aircraft, marine containers, railcars and a trailer with a net book value of $0.7 million for proceeds of $2.2 million and the recognition of $0.9 million of the related unused engine reserves. During the nine months ended September 30, 2003, the Fund disposed of marine containers, trailers and railcars with a net book value of $0.2 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, depreciation and amortization expense, 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 nine months ended September 30, 2004 and 2003 (in thousands of dollars):
 
 TWA

TWA
PLMFor the three months ended

S/N 49183

MD-82
WorldwideSeptember 30, 2004

Trust1

Trust2
Leasing3
TotalRevenue
$
308

$                                       308Less: Depreciation and amortization expenses

--

314Direct expenses

--

--Indirect expenses

18

19Net income (loss)
$
290

$                                                     (25)Fund
$
145

$                                                     (9)
$                                                   (11)
$                                      125TWA

TWAFor the three months ended

S/N 49183

MD-82September 30, 2003

Trust1

Trust2
TotalRevenues
$
300
$
300Less: Depreciation and amortization expenses

--

314Direct expenses

--

--Indirect expenses

22

18Net income (loss)
$
278

$                                                   (32)Fund
$
138

$                                                     (12)
$                                       126TWA

TWA
PLMFor the nine months ended

S/N 49183

MD-82
WorldwideSeptember 30, 2004

Trust1

Trust2
Leasing3
TotalRevenues
$
942

$                                                    942Less: Depreciation and amortization expenses

--

943Direct expenses

--

--Indirect expenses

55

56Net income (loss)
$
887

(57)Fund
$
443

$                                                    (18)
$                                                      38
$                                       463
 
 
 
 
 
 
 
 
 
 
 
 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)**
 
 7.  Equity Investments in Affiliated Entities (continued)
 
 TWA


TWAFor the nine months ended


S/N 49183


MD-82September 30, 2003


Trust1


Trust2


Total 
 Revenues

$
925

$
925Less: Depreciation and amortization expenses


--


943Direct expenses


(1
)

(1
)Indirect expenses


65


60Net income (loss)

$
861

$
(77
)Funds share of net income (loss)

$
430

$
(28
)
$
402 
 As of September 30, 2004 and December 31, 2003, all jointly-owned equipment in the Funds equity investment portfolio was on lease.
 
 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

TrailerSeptember 30, 2004

Leasing

Leasing

Leasing

Leasing

Leasing

Other3

Total 
 **Revenues**Lease revenue
$
1,237

$
251

$
929

$
2,482

$
266

$
--

$
5,165Interest and other income

--


608


16


--


--


44


668Gain on disposition of equipment

27


--


143


--


--


--


170Total revenues

1,264


859


1,088


2,482


266


44


6,003**Expenses**Depreciation

612


--


750


257


91


--


1,710Operations support

21


7


469


1,345


207


32


2,081Management fees to affiliate

62


41


62


124


13


--


302Interest expense

--


--


--


--


--


248


248General and administrative expenses

--


9


170


20


--


176


375(Recovery of) provision for bad debts

--


(674
)

9


--


--


--


(665
)Total expenses

695


(617
)

1,460


1,746


311


456


4,051Equity in net income of equityinvestments

--


125


--


--


--


--


125Net income (loss)
$
569

$
1,601

$
(372
)
$
736

$
(45
)
$
(412
)
$
2,077Total assets as of September 30, 2004
$
14,118

$
2,402

$
20,559

$
7,397

$
839

$
15,206

$
60,521 
 
 
 
 
 
 
 
 
 
 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
Includes certain assets not identifiable to a specific segment such as cash and certain prepaid expenses. 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.  --   **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 three months ended

Container

Aircraft

Railcar

Vessel

TrailerSeptember 30, 2003

Leasing

Leasing

Leasing

Leasing

Leasing

Other1

Total 
 **Revenues**Lease revenue
$
1,269

$
267

$
1,026

$
1,687

$
239

$
--

$
4,488Interest and other income

--


33


--


--


--


54


87Gain (loss) on disposition of equipment

29


--


(5
)

--


9


--


33Total revenues

1,298


300


1,021


1,687


248


54


4,608**Expenses**Depreciation

741


--


875


308


91


--


2,015Operations support

19


7


152


1,258


80


19


1,535Management fees to affiliate

64


65


57


84


11


--


281Interest expense

--


--


--


--


--


304


304General and administrative expenses

--


63


119


18


59


124


383Impairment loss on equipment

--


--


309


--


--


--


309(Recovery of) provision for bad debts

--


(512
)

36


1


--


--


(475
)Total expenses

824


(377
)

1,548


1,669


241


447


4,352Equity in net income of equityinvestments

--


126


--


--


--


--


126Net income (loss)
$
474

$
803

$
(527
)
$
18

$
7

$
(393
)
$
382 
 
 Marine





MarineFor the nine months ended

Container

Aircraft

Railcar

Vessel

TrailerSeptember 30, 2004

Leasing

Leasing

Leasing

Leasing

Leasing

Other1

Total 
 **Revenues**Lease revenue
$
3,560

$
835

$
2,835

$
7,747

$
812

$
--

$
15,789Interest and other income

--


642


16


--


--


74


732Gain (loss) on disposition of equipment

91


1,660


654


--


(3
)

--


2,402Total revenues

3,651


3,137


3,505


7,747


809


74


18,923**Expenses**Depreciation

1,929


--


2,262


771


272


--


5,234Operations support

65


24


928


4,460


574


95


6,146Management fees to affiliate

178


107


190


387


41


--


903Interest expense

--


--


--


--


--


736


736General and administrative expenses

--


321


463


59


34


481


1,358(Recovery of) provision for bad debts

--


(1,483
)

8


--


(1
)

--


(1,476
)Total expenses

2,172


(1,031
)

3,851


5,677


920


1,312


12,901Equity in net income of equityinvestments

--


463


--


--


--


--


463Net income (loss)
$
1,479

$
4,631

$
(346
)
$
2,070

$
(111
)
$
(1,238
)
$
6,485 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 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)**
 
 8.
Operating Segments(continued) 
 Marine





MarineFor the nine months ended

Container

Aircraft

Railcar

Vessel

TrailerSeptember 30, 2003

Leasing

Leasing

Leasing

Leasing

Leasing

Other1

Total 
 **Revenues**Lease revenue
$
3,894

$
594

$
2,897

$
5,505

$
639

$
--

$
13,529Interest and other income

--


107


25


42


--


70


244Gain on disposition of equipment

90


--


57


--


9


--


156Total revenues

3,984


701


2,979


5,547


648


70


13,929**Expenses**Depreciation

2,335


--


2,331


925


273


--


5,864Operations support

49


41


513


4,135


302


56


5,096Management fees to affiliate

195


123


168


275


32


--


793Interest expense

--


--


--


--


--


907


907General and administrative expenses

--


93


268


53


154


597


1,165Impairment loss on equipment

--


--


315


--


--


--


315(Recovery of) provision for bad debts

--


(1,351
)

49


4


--


--


(1,298
)Total expenses

2,579


(1,094
)

3,644


5,392


761


1,560


12,842Equity in net income of equityinvestments

--


402


--


--


--


--


402Net income (loss)
$
1,405

$
2,197

$
(665
)
$
155

$
(113
)
$
(1,490
)
$
1,489Equipment purchases andcapitalized improvements
$
2

$
--

$
19,851

$
--

$
--

$
--

$
19,853 
 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 nine months ended September 30, 2004 and 2003 was 4,971,311 units.
 
 10.  Accounts and Other receivable
 
 Accounts and other receivable represent balances due from current or former lessees for unpaid balances incurred from leasing the Fund's owned equipment. The components of accounts and notes receivable were as follows (in thousands of dollars):
 
 September 30, 2004
December 31, 2003Trade accounts receivable

$3,459

$3,415Other receivable

1,356

1,775Allowance for doubtful accounts

(23)

(1,518)$4,792

$3,672 
 At December 31, 2003, the balance in other receivable was due from a former aircraft lessee for unpaid lease payments. Unpaid outstanding balances accrued interest at a rate of 5%. In addition, the former lessee also had $0.5 million of unpaid lease payments in trade accounts receivable. Due to the uncertainty of ultimate collection of the these receivables, the Manager had fully reserved the unpaid outstanding balances of $2.3 million from this lessee less any security deposits and any payments received through March 29, 2004.
 
 
 
 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 Other receivable (continued)
 
 At September 30, 2004, the balance in other receivable was due from the same former aircraft lessee for past due lease payments and in settlement for returning aircraft not in accordance with the lease agreement. The other receivable is scheduled to be fully paid by April 2005. Interest accrues at a rate of 5% on the outstanding other receivable balance. During the nine months ended September 2004, the former aircraft lessee made its monthly payments to the Fund. During September 2004, the Manager, based on the prior performance of this lessee and based on the Manager's evaluation on the ultimate collection of the this receivable, reversed any remaining reserve for this lessee.
 
 11. Commitments and Contingencies
 
 Commitments as of September 30, 2004 are as follows (in thousands of dollars):
 
 Current Obligations
Total
Less than 1 Year
1-3 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. For existing entities, 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.
 
 For newly formed entities, FIN 46 is effective. FIN 46 did not impact the accounting for new entities formed in 2004.
 
  --   
 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 September 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 September 30, 2004, compared to the same period of 2003. Gains or losses from the sale of equipment, interest and other income and certain expenses such as management fees to affiliate, depreciation, interest expense, general and administrative expenses, impairment loss on equipment, and (recovery of) provision for bad debts 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 September 30,2004

2003Marine containers
$
1,216


$
1,250Marine vessel

1,137



429Railcars

460



874Aircraft

244



260Trailers

59



159 
 Marine containers:  Marine container lease revenues and direct expenses were $1.2 million and $21,000, respectively, for the three months ended September 30, 2004, compared to $1.3 million and $19,000, respectively, during the same period of 2003. The decrease in lease revenues of $32,000 during the three months ended September 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 nine months. The Manager anticipates that this will result in a significant decrease in container lease revenues.
 
 Marine vessel:  Marine vessel lease revenues and direct expenses were $2.5 million and $1.3 million, respectively, for the three months ended September 30, 2004, compared to $1.7 million and $1.3 million, respectively, during the same period of 2003. Lease revenues increased $0.8 million in the three months ended September 30, 2004 due to a higher lease rate earned on the Funds marine vessel.
 
 Railcars:  Railcar lease revenues and direct expenses were $0.9 million and $0.5 million, respectively, for the three months ended September 30, 2004, compared to $1.0 million and $0.2 million, respectively, during the same period of 2003. A decrease in railcar lease revenues of $0.1 million during the three months ended September 30, 2004 was due to the sale of railcars that were on lease during 2003. During the three months ended September 30, 2004, an increase in direct expenses of $0.3 million was due to higher repairs and maintenance costs required by new governmental regulations. These repairs are one-time costs. A similar event did not occur during the same period of 2003.
 
 Aircraft:  Aircraft lease revenues and direct expenses were $0.3 million and $7,000, respectively, for the three months ended September 30, 2004 and 2003. The Fund's owned aircraft are on lease through November 2006 and as such, lease revenues are expected to remain at their current level through the end of the lease.
 
 Trailers: Trailer lease revenues and direct expenses were $0.3 million and $0.2 million, respectively, for the three months ended September 30, 2004, compared to $0.2 million and $0.1 million, respectively, during the same period of 2003. Trailer lease revenues increased $27,000 due to earning a higher lease rate compared to the same period of 2003. Trailer direct expenses increased $0.1 million due to an increase in repairs and maintenance.
 
 (B)  Interest and Other Income
 
 Interest and other income increased $0.6 million in the three months ended September 30, 2004 compared to 2003. During the third quarter of 2004, a former aircraft lessee agreed to pay $0.6 million in consideration for not returning the aircraft in the condition required by the lease agreement. A similar event did not occur during the same period of 2003.
 
 (C)  Indirect Expenses Related to Owned Equipment Operations
 
 Total indirect expenses of $2.0 million for the three months ended September 30, 2004 decreased from $2.8 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;
 
 (ii)  A $0.3 million decrease in the impairment loss on equipment resulted from the Partnership reducing the carrying value of the owned railcars $0.3 million to their estimated fair value during the three months ended September 30, 2003. No impairment of equipment was required during the same period of 2004;
 
 (iii)  Recovery of bad debts increased $0.2 million in the three months ended September 30, 2004 compared to the same period of 2003 based on the Managers evaluation of the collectability of receivables; and
 
 (iv)  A $0.1 million decrease in interest expense was due to a lower average outstanding debt balance in the third quarter of 2004 compared to the same period of 2003.
 
 (D)  Net Gain (Loss) on Disposition of Owned Equipment
 
 Gain on disposition of owned equipment for the three months ended September 30, 2004 totaled $0.2 million which resulted from the disposition of marine containers and railcars with a net book value of $0.2 million for proceeds of $0.4 million. Net gain on disposition of owned equipment for the third quarter of 2003 totaled $33,000 which resulted from the disposition of marine containers, trailers and railcars with a net book value of $0.1 million for proceeds of $0.1 million.
 
 (E)  Equity in Net Income of Equity Investments
 
 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 September 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 September 30, 2004 and 2003, lease revenues of $0.3 million from the two trusts that each own a commercial aircraft were partially offset by depreciation expense, direct expenses, and administrative expenses of $0.2 million. During the three months ended September 30, 2004, contribution from an entity owning other assets decreased $11,000 compared to 2003.
 
 (F)  Net Income
 
 As a result of the foregoing, the Fund had net income of $2.1 million for the three months ended September 30, 2004, compared to net income of $0.4 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 September 30, 2004 is not necessarily indicative of future periods.
  --   
 Comparison of the Fund's Operating Results for the Nine Months Ended September 30, 2004 and 2003
 
 (A) Owned Equipment Operations
 
 Lease revenues less direct expenses on owned equipment increased during the nine months ended September 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 Nine MonthsEnded September 30,2004

2003Marine containers
$
3,495


$
3,845Marine vessel

3,287



1,370Railcars

1,907



2,384Aircraft

811



553Trailers

238



337 
 Marine containers:  Marine container lease revenues and direct expenses were $3.6 million and $0.1 million, respectively, for the nine months ended September 30, 2004, compared to $3.9 million and $49,000, respectively, during the same period of 2003. The decrease in lease revenues of $0.3 million during the nine months ended September 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 nine 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 $7.7 million and $4.5 million, respectively, for the nine months ended September 30, 2004, compared to $5.5 million and $4.1 million, respectively, during the same period of 2003. Lease revenues increased $2.2 million in the nine months ended September 30, 2004 due to a higher lease rate earned on the Funds marine vessel. Direct operating expenses increased $0.3 million during the nine months ended September 30, 2004 due to higher voyage expenses compared to the same period of 2003.
 
 Railcars:  Railcar lease revenues and direct expenses were $2.8 million and $0.9 million, respectively, for the nine months ended September 30, 2004, compared to $2.9 million and $0.5 million, respectively, during the same period of 2003. Lease revenues decreased $0.1 million due to the sale of railcars that were on-lease during the same period of 2003. The increase in railcar direct expenses of $0.4 million was primarily due to higher repairs and maintenance costs required by new governmental regulations. These repairs are one-time costs. A similar event did not occur during the same period of 2003.
 
 Aircraft:  Aircraft lease revenues and direct expenses were $0.8 million and $24,000, respectively, for the nine months ended September 30, 2004, compared to $0.6 million and $41,000, 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 nine months ended September 30, 2004 compared to the same period of 2003, during which this aircraft was off-lease for six months. In addition, an increase in lease revenues of $0.1 million was due to an increase in the lease rate on two of the Fund's owned aircraft compared to the same period of 2003. These increases were partially offset by a decrease of $0.2 million caused by the sale on an aircraft during the nine months ended September 30, 2004 that was on lease during the same period of 2003.
 
 Trailers: Trailer lease revenues and direct expenses were $0.8 million and $0.6 million, respectively, for the nine months ended September 30, 2004, compared to $0.6 million and $0.3 million, respectively, during the same period of 2003. Trailer lease revenues increased $0.2 million due to earning a higher lease rate compared to the same period of 2003. Trailer direct expenses increased $0.3 million due to an increase in repairs and maintenance.
 
 (B)  Interest and Other Income
 
 Interest and other income increased $0.5 million in the nine months ended September 30, 2004 compared to 2003. During the third quarter of 2004, a former aircraft lessee agreed to pay $0.6 million in consideration for not returning the aircraft in the condition required by the lease agreement. A similar event did not occur during the same period of 2003. This increase was partially offset by a decrease of $0.1 million in interest income caused by lower outstanding principal balance on the other receivable compared to 2003.
 
 (C)  Indirect Expenses Related to Owned Equipment Operations
 
 Total indirect expenses of $6.9 million for the nine months ended September 30, 2004 decreased from $7.8 million for the same period in 2003. Significant variances are explained as follows:
 
 (i)  A $0.6 million decrease in depreciation and amortization expenses from 2003 levels reflects a decrease of $0.6 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 $0.2 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 of railcars during 2003;
 
 (ii)  A $0.3 million decrease in the impairment loss on equipment resulted from the Partnership reducing the carrying value of the owned railcars $0.3 million to their estimated fair value during the nine months ended September 30, 2003. No impairment of equipment was required during the same period of 2004;
 
 (iii)  Recovery of bad debts increased $0.2 million in the nine months ended September 30, 2004 compared to the same period of 2003 based on the Managers evaluation of the collectability of receivables;
 
 (iv)  A $0.2 million decrease in interest expense was due to lower average borrowings outstanding during the nine months ended September 30, 2004 compared to the same period in 2003. Interest expenseis expected to decrease in the future as the existing note payable is repaid;
 
 (v)  A $0.2 million increase in general and administrative expenses during the nine months ended September 30, 2004 was due to administrative costs associated with the return of aircraft and collection of bad debts from lessees; and
 
 (vi)  A $0.1 million increase in management fees to affiliate was due to higher lease revenues earned during the nine months ended September 30, 2004 compared to the same period in 2003.
 
 (D)  Net Gain on Disposition of Owned Equipment
 
 Net gain on disposition of owned equipment for the nine months ended September 30, 2004 totaled $2.4 million which resulted from the disposition of a commercial aircraft, marine containers, railcars, and a trailer with a net book value of $0.7 million for proceeds of $2.2 million and the recognition of $0.9 million of unused engine reserves. Net gain on disposition of owned equipment for the nine months ended September 30, 2003 totaled $0.2 million which resulted from the disposition of marine containers, trailers and railcars with a net book value of $0.2 million for proceeds of $0.3 million.
 
 (E)  Equity in Net Income of Equity Investments
 
 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 September 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 nine months ended September 30, 2004 and 2003, lease revenues of $0.9 million from the two trusts that each own a commercial aircraft were partially offset by depreciation expense, direct expenses, and administrative expenses of $0.5 million. During the nine months ended September 30, 2004, contribution from an entity owning other assets increased $38,000 compared to 2003.
  --   
 (F) Net Income
 
 As a result of the foregoing, the Fund had net income of $6.5 million for the nine months ended September 30, 2004, compared to net income of $1.5 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 nine months ended September 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 nine months ended September 30, 2004, the Fund generated cash from operations of $8.6 million to meet its operating obligations, and pay debt and interest on the Fund's debt.
 
 Restricted cash decreased $0.1 million during the nine months ended September 30, 2004 resulting from the withdrawal of the Fund from the warehouse debt facility that required this deposit.
 
 During the nine months ended September 30, 2004, the Fund disposed of owned equipment for proceeds of $2.2 million and reclassified unused engine reserves of $0.9 million as additional gain on disposition.
 
 Accounts and other receivable increased $1.1 million during the nine months ended September 30, 2004. An increase of $1.5 million was due to the outstanding receivables collected at September 30, 2004 that were previously reserved for as a bad debt. An increase of $44,000 was due to the timing of lease receipts. These increases were partially offset by a decrease from the collection of $0.4 million from the other receivable.
 
 Equity investments in affiliated entities decreased $0.4 million during the nine months ended September 30, 2004 due to cash distributions of $0.8 million from the equity investments to the Fund being partially offset by income of $0.5 million that was recorded by the Fund for its interests in the equity investments.
 
 Prepaid expenses increased $0.2 million during the nine months ended September 30, 2004 due to an increase of $0.5 million caused by the prepayment of certain marine vessel expenses being partially offset by a decrease of $0.3 million caused by the amortization of insurance expenses during the first nine months of 2004.
 
 Other assets decreased $0.5 million during the nine months ended September 30, 2004 due to the return of an asset to a lessee that was being held as a security deposit.
 
 Accounts payable increased $0.1 million during the nine months ended September 30, 2004 due to the timing of payments to vendors and increased $0.2 million due to the accrual of interest on the note payable.
 
 Reserve for repairs decreased $0.9 million due to the sale of an commercial aircraft and the unused engine reserves for this aircraft totaling $0.9 million being reclassified as additional gain on disposition.
 
 Lessee's deposits decreased $0.7 million during the nine months ended September 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 with cash generated from equipment sales proceeds. The Manager anticipates there will be such a prepayment of a minimum of $2.5 million in the first quarter of 2005.
 
 Commitments as of September 30, 2004 are as follows (in thousands of dollars):
    
 
 Less than
1-3Fund Obligations:
Total              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. For existing entities, 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.
 
 For newly formed entities, FIN 46 is effective. FIN 46 did not impact the accounting for new entities formed in 2004.
 
 (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 nine 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. Overall railcar loadings continue to be forecast to grow approximately 6% for the remainder of 2004. Railcar manufacturers now have full production schedules until the summer of 2005 for tank railcars and until 2006 for box railcars.
 
 The Fund's railcar fleet is largely used by a broadly defined chemical sector. Chemical and petroleum railcar loadings are projected to grow at a substantially higher rate this year than the 3% per year long run average. The continuation of high steel prices have resulted in increases in the price of a new tank railcars and lease rates have now increased in response to this price increase. While this improves returns for railcar lessors in the short run, reduced railcar availability and higher lease costs along with railroad operating inefficiencies may cause the chemical industry growth to slow and perhaps cause chemical producers to shift to other forms of transportation. Also, there are a number of potential new railroad operating requirements and regulations which, if adopted, could increase the cost of railcar ownership. At present, the Fund's tank railcar fleet is highly utilized and appears to be in a position to remain so for the foreseeable future;
 
 (3)  The Funds owned marine ** vessel constructed in 1985, 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. The Fund's marine vessel is 19 years old which may limit its future marketability. Marine vessels 20 years of age typically earn a lower lease rate than newer marine vessels and may have increased off-hire time.
 
 In the first nine 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 even though until new tonnage has started 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;
 
 A former aircraft lessee returned it's leased aircraft in a condition not in accordance with the lease agreement. In addition, this lessee owed the Fund approximately $0.8 million for past lease payments. In September 2004, the Fund and the former lessee entered into an agreement totaling $1.4 million to include the unpaid lease payments and a settlement for returning the leased aircraft in a condition not in accordance with the lease agreement. The note requires payments of $0.2 million per month through April 2005, at which time the outstanding remaining balance will be paid using security deposits and cash held in an escrow account. Unpaid outstanding amounts accrue interest at a rate of 5%. As of November 12, 2004, payments on this note are current.
 
 The Manager leased the Fund's 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.
 
 (5)  The Fund is expected to have increased general and administrative costs as the Manager liquidates other investment programs that currently share certain general and administrative expenses; and
 
 (6)  General and administrative expenses are expected to increase over the next 15 months due to additional expenses required to meet compliance standards of the Sarbanes - Oxley Act.
 
 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 15 months, the Fund is required to pay $8.0 million in debt payments to the lender of the note payable. Beginning January 1, 2005, the Fund may prepay its note payable without penalty using cash proceeds from equipment dispositions. The Manager anticipates there will be such a prepayment of a minimum of $2.5 million in the first quarter of 2005. In addition, a number of the Fund's 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 Manager pursuant to Section 302 of Sarbanes - Oxley Act. 
 31.2
Certificate of Chief Financial Officer of the Manager 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
 
 1.
Report 8-K dated September 27, 2004, announcing thatErnst & Young LLP would not act as the Funds independent auditor after the review and the filing of the related quarterly report on Form 10-QSB. 
 2.
Report 8-KA dated October 13, 2004, announcing thatErnst & Young LLPhad declinedto stand for re-election as the Funds independent auditor after that review and the filing of the related quarterly report on Form 10-QSB. 
 
  --   
 
 
 
 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.
 Manager
 
 
 
 Date:  November 12, 2004  By:  /s/ Richard K Brock
 Richard K Brock
 Chief Financial Officer
 
 
 
 
 
 
 
 
    **Exhibit** **31.1**
  **CONTROL CERTIFICATION**
 
 I, James A. Coyne, certify that:
 
 1.  I have reviewed this quarterly report on Form 10-QSB of Professional Lease Management Income Fund I, L.L.C.
 
 2.  Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report.
 
 3.  Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report.
 
 4.  The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
 
 a)  designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and
 
 b)  evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation.
 
 5.  The registrants other certifying officers and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent functions):
 
 a)  all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
 
 b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls over financial reporting.
 
 6.  The registrants other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
 
 
 
 
 
 By: /s/ James A. Coyne
 James A. Coyne
 President
 
      **Exhibit 31.2**
  
  **CONTROL CERTIFICATION**
 
 I, Richard K Brock, certify that:
 
 1.  I have reviewed this quarterly report on Form 10-QSB of Professional Lease Management Income Fund I, L.L.C.
 
 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report.
 
 3.  Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report.
 
 4.  The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
 
 a)  designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and
 
 b)  evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation.
 
 5.  The registrants other certifying officers and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent functions):
 
 a)  all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
 
 b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls over financial reporting.
 
 6.  The registrants other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
 
 
 
 
 By:  /s/ Richard K Brock
 Richard K Brock
 Chief Financial Officer
 (Principal Financial Officer)
 
 
 
 
 
 
 
 **Exhibit 32.1**
 
 Certification Pursuant to 18 U.S.C. Section 1350,
 As Adopted Pursuant to Section 906 of the
 Sarbanes - Oxley Act of 2002
 
 In connection with the Quarterly Report of PLM Income Fund I (the Fund), on Form 10-QSB for the period ended September 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the Report), the undersigned, the President of the Manager and of the Fund, hereby certifies pursuant to 18 U.S.C. §1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:
 
 (1)  the Report of the Fund filed today fully complies with the requirements of Section 13(a) and 15 (d) of the Securities Exchange Act of 1934; and
 
 (2)  the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Fund.
 
 
 
 /s/ James A. Coyne
 James A. Coyne
 President of PLM Financial Services, Inc.
 November 12, 2004
 
     
 
 
 **Exhibit 32.2**
 
 Certification Pursuant to 18 U.S.C. Section 1350,
 As Adopted Pursuant to Section 906 of the
 Sarbanes - Oxley Act of 2002
 
 In connection with the Quarterly Report of PLM Income Fund I (the Fund), on Form 10-QSB for the period ended September 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the Report), the undersigned, the Chief Financial Officer of the Manager and of the Fund, hereby certifies pursuant to 18 U.S.C. §1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:
 
 (1)  the Report of the Fund filed today fully complies with the requirements of Section 13(a) and 15 (d) of the Securities Exchange Act of 1934; and
 
 (2)  the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Fund.
 
 
 
 /s/ Richard K Brock
 Richard K Brock
 Chief Financial Officer of PLM Financial Services, Inc.
 (Principal Financial Officer)
 November 12, 2004