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 fiscal quarter ended March 31, 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.)235 3rdStreet South, Suite 200St. Petersburg, FL

33701(Address of principal executive offices)

(Zip code) 
 Registrant's telephone number, including area code (727) 803-1800
 _______________________
 
 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) 
 March 31,
December 31,2004




2003AssetsEquipment held for operating leases, at cost



$
107,073



$
108,625Less accumulated depreciation




(64,217
)



(63,735
)Net equipment




42,856




44,890Cash and cash equivalents




8,092




4,238Restricted cash




--




60Accounts and note receivable, less allowance for doubtfulaccounts of $1,231 in 2004 and $1,518 in 2003




3,721




3,672Equity investment in affiliated entities




1,300




1,428Debt placement fees, less accumulated amortizationof $127 in 2004 and $123 in 2003




49




53Prepaid expenses




455




407Other assets




519




519Total assets



$
56,992



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



$
1,408



$
857Due to affiliates




355




312Reserves for repairs




2,487




2,572Lessee deposits




1,607




1,641Note payable




13,000




13,000Total liabilities




18,857




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




38,135




36,885Class B member




--




--Total members' equity




38,163




36,885Total liabilities and members' equity



$
56,992



$
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
Ended March 31,2004


2003RevenuesLease revenue

$
5,368

$
4,391Interest and other income


35


64Gain on disposition of equipment


223


109Total revenues


5,626


4,564ExpensesDepreciation


1,791


1,844Repairs and maintenance


518


493Equipment operating expenses


1,282


610Insurance expense


189


142Management fees to affiliate


275


243Interest expense


245


302General and administrative expenses to affiliates


84


57Other general and administrative expenses


414


382Recovery of bad debt expense


(269
)

(312
)Total expenses


4,529


3,761Equity in net income of equity investments


153


141Net income

$
1,250

$
944Members' share of net incomeClass A members

$
1,250

$
725Class B member


--


219Total

$
1,250

$
944Class A members net incomeper weighted-average member unit

$
0.25

$
0.15 
 
 
 
 
 
 
 
 
 
 
 
 
 
 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 March 31, 2004(in thousands of dollars) (unaudited)
 
 
 Class A
Class B
TotalMembers' equity as of December 31, 2003

$
36,885

$
--

$
36,885Net income


1,250


--


1,250Members' equity as of March 31, 2004

$
38,135

$
--

$
38,135 
 
  
 
 
 
 
 
 
 
 
 
 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 Three Months
Ended March 31,Operating activities


2004


2003Net income

$
1,250

$
944Adjustments to reconcile net income to net cashprovided by (used in) operating activities:Depreciation


1,791


1,844Amortization of debt placement fees


4


6Recovery of bad debt expense


(269
)

(312
)Gain on disposition of equipment


(223
)

(109
)Equity in net income of equity investments


(153
)

(141
)Distributions from equity investments


281


298Changes in operating assets and liabilities:Accounts and note receivable


220


(86
)Prepaid expenses


(48
)

6Accounts payable and accrued expenses


551


479Due to affiliates


43


13Reserve for repairs


(85
)

72Lessee deposits


(34
)

33Net cash provided by operating activities


3,328


3,047Investing activitiesPayments for capitalized repairs and purchase of equipment


--


(14,622
)Decrease in cash held in escrow accounts


--


14,606Proceeds from disposition of equipment


466


118Net cash provided by investing activities


466


102Financing activitiesDecrease in restricted cash


60


--Cash distributions to Class A members


--


(625
)Cash distributions to Class B member


--


(219
)Net cash provided by (used in) financing activities


60


(844
)Net increase in cash and cash equivalents


3,854


2,305Cash and cash equivalents at beginning of period


4,238


560Cash and cash equivalents at end of period

$
8,092

$
2,865 
 
 
 
 
 
 
 
 
 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 March 31, 2004 and December 31, 2003, condensed statements of income for the three months ended March 31, 2004 and 2003, condensed statements of changes in member equity for the period from December 31, 2003 to March 31, 2004, and the condensed statements of cash flows for the three months ended March 31, 2004 and 2003 have been made and are reflected.
 
 Effective with the filing of this quarterly report, the Fund will file all future quarterly and annual reports as an SB filer as allowed under Regulation S-B until such point that the Fund no longer qualifies to be an SB filer.
 
 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 three months ended March 31, 2004. For the three months ended March 31, 2003, cash distributions totaled $0.8 million or $0.13 per weighted-average Class A unit. None of the cash distributions to the Class A unitholders for the three months ended March 31, 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 March 31, 2004 and December 31, 2003 represented $0.4 million and $0.3 million, respectively, due to the Manager and its affiliates for management fees.
 
 During the three months ended March 31, 2004 and 2003 the Funds proportional share of affiliated fees paid or accrued by its equity investments to FSI or its affiliates was as follows: management fees, $16,000 for both periods, and administrative and data processing services, $2,000 and $1,000, respectively.
 
 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):
 
 March 31,

December 31,2004




2003Railcars

$
37,481



$
38,942Marine containers


30,734




30,825Marine vessel


17,000




17,000Aircraft


15,358




15,358Trailers


6,500




6,500107,073




108,625Less accumulated depreciation


(64,217
)



(63,735
)Net equipment

$
42,856



$
44,890 
 Equipment held for operating leases is stated at cost less depreciation and any reductions due to impairment of the asset value.
 
 As of March 31, 2004, all owned equipment in the Funds portfolio was on lease except for one commercial aircraft and 233 railcars with a net book value of $1.7 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.
 
 No equipment purchases or capitalized improvements were accrued or paid during the three months ended March 31, 2004. During the three months ended March 31, 2003, the Fund purchased railcars for $14.6 million that it had entered into legally binding agreements to purchase in 2002. The Fund also made capitalized improvements to equipment of $17,000 during the three months ended March 31, 2003.
 
 During the three months ended March 31, 2004, the Fund disposed of marine containers and railcars with a net book value of $0.2 million for proceeds of $0.5 million. During the three months ended March 31, 2003, the Fund disposed of marine containers and railcars with a net book value of $0.1 million for proceeds of $0.2 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 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 equipment 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 assets, liabilities, and equity of the entities in which the Fund has an interest and the Funds proportional share of equity in each entity as of March 31, 2004 and December 31, 2003 (in thousands of dollars):
 
 TWA
TWAS/N 49183
MD-82As of March 31, 2004

Trust1
Trust2
Total 
 AssetsEquipment less accumulated depreciation

$
--

$
2,620Accounts receivable


26


26Total assets

$
26

$
2,646LiabilitiesAccounts payable

$
2

$
--Due to affiliates


6


6Total liabilities


8


6Equity


18


2,640Total liabilities and equity

$
26

$
2,646Funds share of equity

$
9

$
1,291

$
1,300 
 TWA
TWAS/N 49183
MD-82As of December 31, 2003

Trust1
Trust2
Total 
 AssetsEquipment less accumulated depreciation

$
--

$
2,935Total assets

$
--

$
2,935LiabilitiesAccounts payable

$
3

$
--Due to affiliates


5


5Total liabilities


8


5Equity


(8
)

2,930Total liabilities and equity

$
--

$
2,935Funds share of equity

$
--

$
1,428

$
1,428 
 
  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.
  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)
 
 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 months ended March 31, 2004 and 2003 (in thousands of dollars):
 
 TWA
TWAFor the three months ended

S/N 49183
MD-82March 31, 2004

Trust1
Trust2
Total 
 Revenues

$
326

$
326Less: Indirect expenses


20


334Net income (loss)

$
306

$
(8
)Funds share of net income

$
153

$
--

$
153 
 
 TWA
TWAFor the three months ended

S/N 49183
MD-82March 31, 2003

Trust1
Trust2
Total 
 Revenues

$
315

$
315Less: Direct expenses


(1
)

(1
)Indirect expenses


21


335Net income (loss)

$
295

$
(19
)Funds share of net income (loss)

$
147

$
(6
)
$
141 
 As of March 31, 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.
  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
TrailerMarch 31, 2004






















Leasing
Leasing
Leasing
Leasing
Leasing
Other1
Total 
 RevenuesLease revenue

$1,234
$341
$930
$2,584
$279
$--
$5,368Interest and other income

--
20
--
--
--
15
35Gain on disposition of equipment

33
--
190
--
--
--
223Total revenues

1,267
361
1,120
2,584
279
15
5,626ExpensesOperations support

19
10
136
1,627
167
30
1,989Depreciation

686
--
757
257
91
--
1,791Management fees to affiliate

62
7
62
129
15
--
275Interest expense

--
--
--
--
--
245
245General and administrative expenses

--
109
132
17
34
206
498Recovery of bad debts

--
(264)
(4)
--
(1)
--
(269)Total expenses

767
(138)
1,083
2,030
306
481
4,529Equity in net income of equityinvestments

--
153
--
--
--
--
153Net income (loss)

$500
$652
$37
$554
$(27)
$(466)
$1,250Total assets as of March 31, 2004

$16,083
$2,056
$22,075
$7,160
$1,022
$8,596
$56,992 
 Marine


MarineFor the three months ended







Container
Aircraft
Railcar
Vessel
TrailerMarch 31, 2003







Leasing
Leasing
Leasing
Leasing
Leasing
Other2
Total 
 RevenuesLease revenue

$1,339
$178
$768
$1,832
$274
$--
$4,391Interest and other income

--
30
25
--
--
9
64Gain on disposition of equipment

42
--
67
--
--
--
109Total revenues

1,381
208
860
1,832
274
9
4,564ExpensesOperations support

15
8
237
843
124
18
1,245Depreciation

831
--
614
308
91
--
1,844Management fees to affiliate

64
25
48
92
14
--
243Interest expense

--
--
--
--
--
302
302General and administrative expenses

--
14
95
17
46
267
439(Recovery of) provision for bad debts

--
(333)
21
--
--
--
(312)Total expenses

910
(286)
1,015
1,260
275
587
3,761Equity in net income of equityinvestments

--
141
--
--
--
--
141Net income (loss)

$471
$635
$(155)
$572
$(1)
$(578)
$944Equipment purchases andcapitalized improvements

$--
$--
$14,622
$--
$--
$--
$14,622 
 
  1  Includes certain assets not identifiable to a specific segment such as cash, deferred charges and 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)
 
 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 months ended March 31, 2004 and 2003 was 4,971,311 units.
 
 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):
 
 March 31,
December 31,2004
2003Trade accounts receivable
$3,702
$3,415Notes receivable
1,250
1,775Allowance for doubtful accounts
(1,231)
(1,518)$3,721
$3,672 
 At March 31, 2004 and December 31, 2003, the balance in note receivable was due from an aircraft lessee. The note receivable is scheduled to be fully paid by October 2004. Unpaid outstanding balances will 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 May 14, 2004.
 
 11.  Commitments and Contingencies
 
 Commitments as of March 31, 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.
 
 13. Subsequent Events
 
 During April 2004, the Fund's off-lease aircraft with a net book value of $-0- was sold for $0.8 million.
  
 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 March 31, 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 March 31, 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 March 31,2004

2003Marine containers
$
1,215


$
1,324Marine vessel

957



989Railcars

794



531Aircraft

331



170Trailers

112



150 
 Marine containers:  Marine container lease revenues and direct expenses were $1.2 million and $19,000, respectively, for the three months ended March 31, 2004, compared to $1.3 million and $15,000, respectively, during the same period of 2003. The decrease in lease revenues of $0.1 million during the three months ended March 31, 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 24 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 $2.6 million and $1.6 million, respectively, for the three months ended March 31, 2004, compared to $1.8 million and $0.8 million, respectively, during the same period of 2003. Lease revenues increased $0.8 million in the three months ended March 31, 2004 due to a higher lease rate earned on the Funds marine vessel. Direct operating expenses increased $0.8 million during the three months ended March 31, 2004 due to higher voyage expenses.
 
 Railcars:  Railcar lease revenues and direct expenses were $0.9 million and $0.1 million, respectively, for the three months ended March 31, 2004, compared to $0.8 million and $0.2 million, respectively, during the same period of 2003. An increase in railcar lease revenues of $0.2 million during the three months ended March 31, 2004 was due to the purchase and lease of railcars during 2003. During the three months ended March 31, 2004, a decrease in direct expenses of $0.1 million was due primarily to lower repairs and maintenance compared to the same period of 2003.
 
 Aircraft:  Aircraft lease revenues and direct expenses were $0.3 million and $10,000, respectively, for the three months ended March 31, 2004, compared to $0.2 million and $8,000, 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 March 31, 2004 compared to the same period of 2003, during which this aircraft was off-lease the entire three months and an increase of $18,000 was due to an increase in the lease rate on one of the Fund's owned aircraft compared to the same period of 2003.
  
 (B)  Indirect Expenses Related to Owned Equipment Operations
 
 Total indirect expenses of $2.6 million for the three months ended March 31, 2004 increased from $2.5 million for the same period in 2003. Significant variances are explained as follows:
 
 (i)  A $0.1 million increase in general and administrative expenses during the three months ended March 31, 2004 was due to administrative cost associated with the return of aircraft and collection of bad debts from lessees;
 
 (ii)  A $32,000 increase in management fees was due to the increase in lease revenues of $1.0 million;
 
 (iii)  Recovery of bad debts decreased $43,000 in the first three months of 2004 compared to the same period of 2003. During 2004 and 2003, recovery of bad debts of $0.3 million was due to the collection of bad debts that had been previously written off;
 
 (iv)  A $0.1 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 partially offset by the increase of $0.1 million caused by the purchase of railcars during 2003; and
 
 (v)  A $0.1 million decrease in interest expense was due to lower average borrowings outstanding during the three months ended March 31, 2004 compared to the same period in 2003.
 
 (C)  Net Gain on Disposition of Owned Equipment
 
 Net gain on disposition of owned equipment for the three months ended March 31, 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 $0.5 million. Gain on disposition of owned equipment for the first quarter of 2003 totaled $0.1 million which resulted from the sale of marine containers and railcars with a net book value of $0.1 million for proceeds of $0.2 million.
 
 (D)  Equity in Net Income of Equity Investment
 
 Equity in net income of equity investments represents the Fund's share of the net income generated from the operation of jointly owned assets 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 March 31, 2004 and 2003, the Fund owned interests in two trusts that each own a commercial aircraft. During the three months ended March 31, 2004 and 2003, lease revenues of $0.3 million were partially offset by depreciation expense, direct expenses, and administrative expenses of $0.2 million.
 
 (E)  Net Income
 
 As a result of the foregoing, the Fund had net income of $1.3 million for the three months ended March 31, 2004, compared to net income of $0.9 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 March 31, 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 noncancellable. 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 dry docking 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 three months ended March 31, 2004, the Fund generated cash from operations of $3.3 million to meet its operating obligations, and pay debt and interest on the Fund's debt.
 
 During the three months ended March 31, 2004, the Fund disposed of owned equipment for proceeds of $0.5 million.
 
 Accounts and note receivable increased $49,000 in the three months ended March 31, 2004. The increase of $0.3 million due to the timing of lease receipts and a decrease in the allowance for bad debts of $0.3 million due to collection of outstanding receivables was partially offset by a decrease from the collection of $0.5 million from the note receivable.
 
 Equity investments in affiliated entities decreased $0.1 million during the three months ended March 31, 2004 due to cash distributions of $0.3 million from the equity investments to the Fund being partially offset by income of $0.2 million that was recorded by the Fund for its interests in the equity investments.
 
 Prepaid expenses increased $48,000 during the three months ended March 31, 2004 due to the payment of insurance expenses during the first quarter of 2004 that will be amortized over the term of the policy.
 
 Accounts payable increased $0.6 million during the three months ended March 31, 2004. The increase of $0.3 million was due to the timing of payments to vendors and the increase of $0.2 million was due to the accrual of the interest payment due semi-annually on note payable.
 
 Due to affiliates increased $43,000 during the three months ended March 31, 2004 due to timing of the payment to affiliates.
 
 Reserve for repairs decreased $0.1 million during the three months ended March 31, 2004 due to a $0.2 million payment for the dry dock partially offset by the accrual of marine vessel dry-docking reserves of $0.1 million.
 
 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.
 
 (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.
 
 Recently, worldwide steel prices have increased due to the demand in China for steel. While the General Partner is unable to determine if the price of steel will remain at these levels, if they do remain at the current level, or were to increase further, the General Partner would expect to see increases in the price of new or used transportation equipment such as railcars, marine containers and marine vessels that contain this product. In addition, the increase in the price of new steel effectively increases the price paid for scrap steel. Currently, the price of certain new equipment has increased as much as 30% over the past few months. Accordingly, if these prices become sustained for a long period of time, the General Partner would expect the lease rates for this type of equipment to increase as a result of this.
 
 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)  Starting in 2003 and continuing through 2005, 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 seems to be back on track after an uncertain second half of 2003. Orders for new railcars, a key leading indicator, jumped to 18,000 in the first quarter of 2004 from approximately 12,000 in the fourth quarter of 2003. Overall railcar loadings are now forecast to grow approximately 5% in 2004 which is an extremely strong outlook. Chemical and petroleum railcar loadings, the most important drivers for the majority of the Partnerships fleet, increased 2% and 3% in the first quarter, as reported by the American Association of Railroads. Industry fleet utilization numbers are not specifically available, but are generally considered to have increased in all railcar types. The speed of recovery in lease rates continues to be dependent on the number of idle railcars in fleets owned by various shippers and leasing competitors who have been very aggressive in quoted rates compared to historical norms. Another key will be the ability of the railroads to operate efficiently at the higher volumes and avoid congestion. At this point, congestion has been localized and has not had a significant effect;
 
 (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 quarter 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 mid year. 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.
 
 The Manager is seeing an increase in the market price for product tankers. As market prices for the Fund's owned product tanker have increased, the Manager is currently in the process of determining whether this is an advantageous time to sell this marine vessel; and
 
 (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.
 
 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 this 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 will accrue interest at a rate of 5%. The balance outstanding at March 31, 2004 was $1.2 million. Due to the uncertainty of ultimate collection, the Manager will continue to fully reserve the unpaid outstanding balance less the security deposit from this lessee. As of May 14, 2004, the lessee was current with all the installment payments due to the Fund except for the installment payment due during May 2004.
 
 Additionally, the same lessee is continuing to lease one of these aircraft on a month to month lease agreement. As of May 14, 2004, the lessee is 11 months in arrears with its lease payments to the Fund totaling $0.6 million. The Manager is currently reviewing its options including the possibility of sending the lessee a notification of default. Due to the age of this aircraft and the economic condition of the airline industry, should the Manager repossess this aircraft, it will be difficult to remarket and may be off-lease for a considerable period of time.
 
 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 prepaid lease deposit during 2003. Lease payments are due to the Fund monthly in advance. As of May 14, 2004, this lessee is four months in arrears with its lease payments to the Fund. The Manager has not reserved the amount of unpaid lease payments since there is a prepaid 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.
 
 The lessee of the Funds two partially owned MD-82 commercial aircraft encountered financial difficulties during 2002 and 2003. The lessee restructured leases (including a $5,000 a month reduction in the lease payment for each aircraft owned by entities in which the Fund has an interest) and renegotiated labor contracts. While the Manager believes the financial condition of this lessee has stabilized, it is possible that it could encounter new difficulties in the future. If this aircraft were to be returned prior to its lease expiration in 2008, the aircraft could be off-lease for a significant period of time or re-leased at a significantly lower lease rate.
 
 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 21 months, the Fund is required to pay $8.0 million in debt payments to the lenders of the note payable. 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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 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:  May 14, 2004  By: /s/ Richard K Brock
 Richard K Brock
 Chief Financial Officer