UNITED STATES
                                        SECURITIES AND EXCHANGE COMMISSION
                                              Washington, D.C. 20549
                                               --------------------
                                                     FORM 10-K


[X]      Annual  Report  Pursuant  to  Section  13 or  15(d)  of the  Securities
         Exchange Act of 1934 For the fiscal year ended December 31, 1997.

[ ]      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 33-83216-01
                             -----------------------



               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. Employer
incorporation or organization)                          Identification No.)

One Market, Steuart Street Tower
   Suite 800, San Francisco, CA                            94105-1301
(Address of principal executive offices)                   (Zip code)



        Registrant's telephone number, including area code (415) 974-1399
                             -----------------------

         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

Aggregate Market Value of Voting Stock:  N/A

An index of exhibits filed with this Form 10-K is located at page 40

Total number of pages in this report:  123



<PAGE>



                                     PART I
ITEM 1.       BUSINESS

(A)      Background

Professional  Lease  Management  Income  Fund I, L.L.C.  (the Fund),  a Delaware
Limited Liability  Company,  was formed on August 22, 1994, to purchase,  lease,
charter,  or otherwise  invest in, a diversified  portfolio of  long-lived,  low
obsolescence  capital  equipment that is transportable by and among  prospective
users (the  Equipment).  The  securities  represent  limited  liability  company
interests  (the  Class A Units)  that were  offered  to the  public.  The Fund's
offering  became  effective on January 23, 1995.  PLM Financial  Services,  Inc.
(FSI) is the Manager of the Fund and is the initial Class B member. The purchase
price of the Class A Units was $20.00  per Class A Unit.  On May 13,  1996,  the
Fund ceased its  offering of Class A Units  ($100,000,000).  As of December  31,
1997, there were 4,999,581 Units outstanding.

The primary objectives of the Fund are:

(1) Investment in and leasing of capital  equipment:  to invest in a diversified
leasing  portfolio  of low  obsolescence  Equipment  having  long lives and high
residual values, at prices that the Manager believes to be below inherent values
and to place the Equipment on lease or under other contractual arrangements with
creditworthy lessees and operators of Equipment;

(2) Safety  through  diversification:  to create a significant  degree of safety
relative  to other  equipment  leasing  investments  through  the  purchase of a
diversified Equipment portfolio. This diversification may reduce the exposure to
market  fluctuations  in any one sector.  The purchase of used  long-lived,  low
obsolescence  Equipment  typically at prices which are  substantially  below the
cost of new equipment should also reduce the impact of economic depreciation and
may create the opportunity for appreciation in certain market situations,  where
supply and demand return to balance from oversupply conditions; while providing:

(3)  Cash  distributions:   to  generate  cash   distributions,   which  may  be
substantially tax-deferred (i.e., distributions which are not subject to current
taxation)  during the early years of the Fund,  to  investors  beginning  in the
month after the minimum number of Class A Units were sold a portion of which may
represent a return of an investor's investment; and

(4) Growth potential through  reinvestment:  to increase the Fund's revenue base
by reinvesting a portion of its operating  cash flow in additional  Equipment in
order to grow the size of its portfolio.  Since net income and distributions are
affected by a variety of factors,  including  purchase  prices,  lease rates and
costs and  expenses,  growth in the size of the Fund's  portfolio  does not mean
that in all cases  the  Fund's  aggregate  net  income  and  distributions  will
increase upon the reinvestment of operating cash flow.

Beginning in the Fund's  eighth year of  operations,  the Manager plans to begin
liquidating  the Fund in an  orderly  fashion,  unless  the  Fund is  terminated
earlier upon sale of all of the equipment or by certain  other events.  However,
under certain  circumstances,  the term of the Fund may be extended. In no event
will the Fund extend beyond December 31, 2010.

                                                      


<PAGE>



Table 1, below,  lists the cost of  equipment in the Fund's  portfolio,  and the
cost of investments in unconsolidated  special-purpose entities, at December 31,
1997 (in thousands of dollars):

                                     TABLE 1
<TABLE>
<CAPTION>


 Units                 Type                                           Manufacturer                          Cost
--------------------------------------------------------------------------------------------------------------------------

Owned equipment held for operating leases:



    <S>   <C>                                         <C>                                             <C>            
      1   Anchor handling supply vessel               Moss Point                                      $         8,500
      1   Bulk carrier marine vessel                  Hitachi Shipbuilding & Engineering Co.                   12,257
      5   737-200A stage II commercial
             aircraft                                 Boeing                                                   24,605
    246   Box cars                                    Various                                                   4,972
    325   Pressurized tank cars                       Various                                                   8,541
    100   Covered hopper railcars                     Various                                                   5,445
    152   Foodservice refrigerated trailers           Various                                                   6,994
     54   Over the road refrigerated trailers         Various                                                   1,092
    447   Piggyback trailers                          Various                                                   6,726
                                                                                                     ---------------------
          Total equipment                                                                             $        79,132<F1>
                                                                                                     =====================


Investments in unconsolidated special-purpose entities:


    33%   Two trusts consisting of:
            Three 737-200A stage II

               commercial aircraft                    Boeing
            Two stage II JT8D aircraft engines        Pratt Whitney
            Portfolio of rotable components           Various                                         $         9,999<F2>
    25%   Trust consisting of four 737-200A
             stage II commercial aircraft             Boeing                                                    5,610<F3>
    25%   Trust consisting of four 737-200A

             stage II commercial aircraft             Boeing                                                    4,300<F3>

    50%   Cargo marine vessel                         O. C. Staalskibsvaerft A/F                                3,836<F4>

    50%   Trust committed to purchase one
            MD DC9-82 stage III commercial
            aircraft                                                                                              682<F3>
    61%   Mobile offshore drilling unit               AT & CH de France                                        12,100<F3>)
                                                                                                     ---------------------
              Total investments                                                                       $        36,527<F1>
                                                                                                     =====================
<FN>

<F1> Includes proceeds from capital contributions, debt, and operations invested
in equipment. Includes costs capitalized, subsequent to the date of purchase.

<F2> Jointly owned by Fund I and three affiliated programs.
                                                                                                                     
<F3> Jointly owned by Fund I and two  affiliated  programs.  

<F4> Jointly owned by Fund I and an affiliated program.

</FN>
                                                                                                     =====================
</TABLE>

At December 31, 1997, approximately 33% of the Fund's trailer equipment operated
in rental yards owned and maintained by PLM Rental, Inc., the short-term trailer
rental  subsidiary of PLM  International  doing business as PLM Trailer Leasing.
Revenues  collected under  short-term  rental  agreements with the rental yards'
customers  are  credited to the owners of the  related  equipment  as  received.
Direct expenses  associated with the equipment are charged directly to the Fund.
An allocation of indirect  expenses of the rental yard operations are charged to
the Fund monthly.

The lessees of the equipment include, but are not limited to: Canadian Airlines,
Transportation  Airline Portugal, and Norfolk Southern. As of December 31, 1997,
all of the equipment was on lease except for one railcar. 

<PAGE>




(B)      Management of Fund Equipment

The Fund has entered into an equipment  management agreement with PLM Investment
Management,  Inc. (IMI), a wholly-owned subsidiary of FSI, for the management of
equipment.  The Funds' management agreement with IMI is to co-terminate with the
dissolution  of the fund  unless  the  Class A  members  vote to  terminate  the
agreement prior to that date or at the discretion of the Manager. IMI has agreed
to perform all services  necessary to manage the equipment on behalf of the Fund
and to perform or contract for the  performance of all obligations of the lessor
under the Fund's leases.  In consideration  for its services and pursuant to the
Operating  Agreement,  IMI will be entitled to a monthly  management  fee.  (See
Notes 1 and 2 to the Financial Statements).


(C)      Competition

(1)      Operating Leases versus Full Payout Leases

Generally,  the equipment  owned by the Fund is leased out on an operating lease
basis wherein rents owed during the initial  noncancelable term of the lease are
insufficient  to  recover  the  purchase  price of the  equipment.  The short to
mid-term nature of operating leases generally  command a higher rental rate than
longer term, full payout leases and offers lessees relative flexibility in their
equipment  commitment.  In addition,  the rental  obligation  under an operating
lease need not be capitalized on the lessee's balance sheet.

The Fund encounters considerable  competition from lessors utilizing full payout
leases on new  equipment,  i.e.,  leases  which have terms equal to the expected
economic life of the equipment.  Full payout leases are written for longer terms
and for lower monthly rates than the Fund offers.  While some lessees prefer the
flexibility  offered by a shorter term operating lease, other lessees prefer the
rate advantages  possible with a full payout lease.  Competitors of the Fund may
write full payout leases at considerably lower rates, or larger competitors with
a lower cost of capital  may offer  operating  leases at lower  rates,  and as a
result, the Fund may be at a competitive disadvantage.

(2)      Manufacturers and Equipment Lessors

The Fund also competes with equipment  manufacturers  who offer operating leases
and full payout leases.  Manufacturers may provide ancillary  services which the
Fund cannot offer, such as specialized  maintenance  service (including possible
substitution  of  equipment),   training,   warranty   services,   and  trade-in
privileges.

The Fund competes with many equipment  lessors,  including ACF Industries,  Inc.
(Shippers Car Line Division),  General Electric  Railcar  Services  Corporation,
General Electric Capital Aviation Services Corporation, and other companies that
lease the same types of equipment.

(D)      Demand

The  Fund  has  investments  in  transportation-related  capital  equipment  and
relocatable  environments.  Types of transportation  equipment owned by the Fund
include  aircraft,   marine  vessels,   railcars,   and  trailers.   Relocatable
environments are functionally  self-contained  transportable equipment,  such as
mobile offshore  drilling  units.  Except for those aircraft leased to passenger
air  carriers,   the  Fund's  equipment  is  used  to  transport  materials  and
commodities, rather than people.


The following  section describes the international and national markets in which
the Fund's capital equipment operates:

                                                     


<PAGE>




(1)  Aircraft

(a)  Commercial Aircraft

The commercial  aircraft  market  experienced  another good year in 1997, with a
third consecutive year of profits by the world's airlines.  Airline  managements
have continued to emphasize cost reductions and a moderate increase in capacity.
However,  even the  limited  volume of new  aircraft  deliveries  has caused the
market to change from being in  equilibrium  at the end of 1996 to having excess
supply.  This  market  imbalance  is expected  to  continue,  with the number of
surplus aircraft  increasing from  approximately 350 aircraft at the end of 1996
to an estimated 600 aircraft by the end of the decade.

The changes  taking  place in the  commercial  aircraft  market also reflect the
impact of noise  legislation  enacted in the United  States and Europe.  Between
1997 and the end of  2002,  approximately  1,400  Stage II  aircraft  (Stage  II
aircraft are aircraft  that have been shown to comply with Stage II noise levels
prescribed  in Federal  Aviation  Regulation  section  C36.5) are forecast to be
retired, primarily due to noncompliance with Stage III noise requirements (Stage
III  aicraft  are  aircraft  that have been shown to comply with Stage III noise
levels   prescribed  in  Federal  Aviation   Regulation   section  C36.5)  noise
requirements.  This  represents  about  41%  of the  Stage  II  aircraft  now in
commercial service worldwide. By 2002, about 2,000 (59%) of the current fleet of
Stage  II  aircraft  will  remain  in  operational   service  outside  of  Stage
III-legislated  regions or as aircraft that have had hushkits  installed so that
engine noise levels meet the quieter Stage III requirements. The cost to install
a hushkit is approximately $1.5 million,  depending on the type of aircraft. All
aircraft currently being manufactured meet Stage III requirements.

The Fund's fleet of aircraft is  positioned to provide a balance of Stage II and
Stage III  aircraft  in the  portfolio.  This  strategy  is intended to optimize
individual  aircraft and the corresponding  lease rentals with projected demand.
The Stage II aircraft  either are positioned  with air carriers that are outside
Stage III-legislated  areas, are scheduled for Stage III hushkit installation in
1998-99,  or are anticipated to be sold or leased outside Stage III areas before
the year 2000.

Specifically,  the Fund has  entered  into  agreements  to install  hushkits  on
selected  late-model  Boeing 737-200 advanced  aircraft over the next two years.
These  modifications  are expected to enhance the current and residual  value of
the  aircraft,   while  allowing  them  to  continue   operating  in  the  Stage
III-legislated areas of North America and Europe.

(b)  Aircraft Engines and Rotable Components

The demand for spare engines has increased, particularly for the Pratt & Whitney
State II JT8D  engine,  which  powers  many of the  Fund's  Stage II  commercial
aircraft.

Aircraft  rotables are replacement  spare parts held in inventory by an airline.
These parts are components that are removed from an aircraft or engine,  undergo
overhaul,  and  are  recertified  and  refit  to the  aircraft  in an  "as  new"
condition.  Components,  or rotables,  carry  specific  identification  numbers,
allowing each part to be  individually  tracked  during it's life.  The types of
rotables  owned and leased by the Fund  include  landing  gear,  certain  engine
components,   avionics,   auxiliary  power  units,  replacement  doors,  control
surfaces,  pumps, valves, and other comparable equipment. The Fund plans to sell
its aircraft rotables in 1998.

(2)  Marine Vessels

Dry Bulk Vessels

The Fund owns or has  investments  with other  affiliated  programs  in small to
medium-sized  dry bulk vessels  that are traded in  worldwide  markets and carry
commodity cargos.  Dry bulk markets  experienced flat freight rates, with supply
increases outrunning demand growth. Demand for commodity shipping closely tracks
worldwide economic growth patterns;  however,  economic development alters trade
patterns  from time to time,  causing  changes  in volume on trade  routes.  The
Manager  operates  the Fund's  marine  vessels  under spot  charters  and period
charters.  It is believed that this operating  approach provides the flexibility
to adapt to changing demand patterns.

Freight rates for dry bulk vessels in 1997 maintained the levels  experienced in
the fourth  quarter of 1996.  Freight rates had declined  significantly  in 1996
until a moderate  recovery occurred late in the year due to an increase in grain
trade.  The size of the  overall  dry bulk  carrier  fleet  increased  by 3%, as
measured by the number of vessels, and by 5%, as measured by deadweight tonnage.
Scrapping of ships was not a significant factor in 1997: 126 dry bulk ships were
scrapped  while 247 were  delivered.  Total dry trade (as measured in deadweight
tons) grew by 3% in 1997,  versus 1% in 1996.  This balance of supply and demand
made market conditions soft,  providing little foundation for increasing freight
rates.

Growth in 1998 is expected to be approximately  2%, with most commodity  trading
flat.  The  majority  of growth is  forecast to come from grain (2%) and thermal
coal (6%). The primary  variable in forecasts is Asian growth;  if there is some
recovery from the economic  shakeup of the second half of 1997,  then there will
be prospects for  improvement in 1998.  Delivery of ships in 1998 is expected to
be about the same as in 1997;  however,  an increase in scrapping is anticipated
to strengthen the market.

Current rates do not justify any new construction of dry bulk carriers and there
should be a  significant  drop in orders  over the next two years.  If growth in
demand  matches  historic  averages of around 3%, then the current excess supply
should be absorbed by the end of 1999, leading to the possible  strengthening of
freight rates.

(b) Anchor Handling Supply Vessels

The  Fund  owns one U.S.  flag  anchor  handling/tug/supply  boat  utilized  for
supporting drilling operations of rigs in the U.S. Gulf of Mexico.  Although the
boat can be utilized in other geographic  regions,  the preferred market for the
vessel is the U.S. Gulf of Mexico due to the  requirement  for U.S. flag vessels
in this region.  Demand for anchor  handling  boats is dependent  primarily upon
demand for  floating  drilling  services by oil  companies.  Demand in this area
during 1997 was very strong and kept  utilization  to 20 to 26 boats in the area
near 100 percent. During 1997, no more than two boats were idle at any one time.
Prospects  for 1998 indicate that the robust market in the Gulf of Mexico should
continue throughout the year. Oil company capital spending programs for 1998 are
predicted to be higher or at the same level as 1997,  indicating  that  drilling
requirements  will continue at high levels.  With strong  floating  drilling rig
utilization  as has been  forecast,  demand for  anchor  handling  boats  should
continue at levels which  utilize th entire U.S.  Gulf of Mexico fleet of anchor
handling/tug/supply vessels.

(c) Container Feeder Vessels

Container  feeder  vessels are  utilized to transport  containerized  cargo from
smaller  outlying  ports to main  transport  hub ports  from which such cargo is
moved by  regularly  scheduled  liner  service.  Container  feeder  vessels  are
typically  classified  as those  capable of carrying up to  approximately  1,000
twenty foot equivalent unit containers (TEUs). This trade has been characterized
by growth in both supply and demand for the past several years.  Over the second
half of 1997, the supply of container  ships  (including both main liner vessels
and feeder  vessels) grew by over 500,000 TEUs to  approximately  3,750,000 TEUs
total  capacity.  In 1998,  that fleet should grow another 500,000 TEUs from new
deliveries;  growth in 1999 should drop to 200,000  TEUs.  For vessels less than
500 TEUs, the fleet growth has been less and future growth will be less than for
the higher capacity vessels, which are subject to a much higher orderbook.

The effect of the large increase in supply of container  slots in ships has been
to decrease  charter rates for container  feeder  vessels  despite the fact that
trade growth in container traffic has been robust (i.e.,  between 5% and 10% for
the past several years). Container trade growth should continue at near-historic
levels due to expansion of containerization to more and more cargoes. Primarily,
the introduction of  significantly  larger main liner ships has lowered the unit
cost of transport of a container, inducing greater traffic on main liner routes.
Expectations  for 1998 are for a flat year in charter  rates  while 1999  should
show some  improvement  as  deliveries  of new ships  decreases and trade growth
catches up to fleet growth.  The  uncertain  factor at this time is the economic
picture for Asia,  which is the main source of  containerized  cargoes.  Exports
from Asian countries may increase with the  devaluation of national  currencies.
If this did occur,  some charter rate improvement  should be expected;  however,
the current outlook is quite uncertain.

                                                     


<PAGE>




Railcars

Pressurized Tank Cars

Pressurized  tank cars are used  primarily in the  petrochemical  and fertilizer
industries  to transport  liquefied  petroleum gas and  anhydrous  ammonia.  The
utilization  rate on the  Fund's  fleet of  pressurized  tank  cars was over 98%
during 1997.  The demand for natural gas is anticipated to grow through 1999, as
the developing world, former Communist  countries,  and the industrialized world
all increase their energy  consumption.  World demand for fertilizer is expected
to increase,  based on an awareness of the  necessity of  fertilizing  crops and
improving diets, the shortage of farm land, and population  growth in developing
nations.

Based on ongoing renewals with current lessees,  demand for these cars continues
to be strong and is projected to remain so during 1998.

(b)  Covered Hopper (Grain) Cars

Industrywide,  the size of the covered  hopper car fleet has  increased  only 9%
over the last 10 years,  from a total of 299,172 cars in 1985 to 325,882 cars in
1995.  Covered  hopper cars  accounted for 30% of all new railcar  deliveries in
1995 and 50% of new  deliveries  in 1996.  During 1997,  there was some downward
pressure on rental rates,  as demand for covered hopper cars softened  somewhat.
Grain car loadings decreased 2% compared to the same period in 1996.

 Box Cars

Car loadings for paper and paper products were relatively  unchanged  during the
first 45 weeks of 1997, compared to loadings for the same period in 1996.

All 246 of the  Fund's  box  cars  transport  paper  and  paper  goods,  and are
currently on lease until 2000 or 2001.

(4)  Trailers

(a)  Intermodal Trailers

In all intermodal  equipment areas,  1997 was a remarkably strong year. The U.S.
inventory of intermodal equipment totaled  approximately  164,000 units in 1997,
divided  between  about 55%  intermodal  trailers and 45%  domestic  containers.
Trailer loadings increased  approximately 4% in 1997 due to a robust economy and
a continuing  shortage of drivers in over-the-road  markets.  The expectation is
for flat to slightly  declining  utilization of intermodal trailer fleets in the
near future.

 Over-the-Road Refrigerated Trailers

The  temperature-controlled  over-the-road  trailer  market  recovered  in 1997;
freight levels improved and equipment oversupply was reduced as industry players
actively  retired older  trailers and  consolidated  fleets.  Most  refrigerated
carriers posted revenue growth of between 2% and 5% in 1997, and accordingly are
planning  fleet  upgrades.   In  addition,   with   refrigeration   and  trailer
technologies   changing  rapidly  and  industry  regulations  becoming  tighter,
trucking companies are managing their refrigerated fleets more effectively.

As a  result  of  these  changes  in  the  refrigerated  trailer  market,  it is
anticipated that trucking  companies will utilize short-term trailer leases more
frequently to supplement  their  fleets.  Such a trend should  benefit the Fund,
which  generally  leases its  equipment on a short-term  basis from rental yards
owned and operated by PLM subsidiaries.

Foodservice Distribution Trailers

Consumer  demand is fueling  double-digit  growth in the  foodservice  industry,
reflecting the consumer trend toward eating fresher,  more convenient foods. The
frequency  of  purchasing  prepared  meals and eating out  continues  to grow in
proportion to overall  consumer  spending.  The Fund will continue to expand its
marketing to the  foodservice  industry,  based on the growth  potential of this
market  and the  initial  strong  utilization  of its  specialized  refrigerated
trailer fleet.

 Mobile Offshore Drilling Units

Worldwide  demand in all  sectors of the  mobile  offshore  drilling  unit (rig)
industry in 1997 was a continuation  of the increases  experienced in 1996. This
increase  in demand  was spread  over all the  geographic  regions  of  offshore
drilling and affected  both jackup and floating  rigs.  Potential  demand during
1997 was difficult to estimate because of the shortage of rigs.

The tightness in the market caused  significant  increases in contract day rates
throughout the year. Day rates at the end of 1997 approached  levels  justifying
new rig construction. While continuing market improvement can be attributed to a
number of factors,  the primary reason is worldwide growth in the use of oil and
natural gas for energy.  Stable prices at moderate  levels have  encouraged such
growth, while providing adequate margins for oil and natural gas exploration and
production development.

The trend of contractor  consolidation continued in 1997; three major mergers or
acquisitions initiated late in 1997 are expected to be consummated by the end of
1998.  For 1998,  utilization  and demand are  expected  to remain at the levels
reached in 1997. Industry participants project that demand for both floating and
jackup rigs will continue at current high levels through 1998,  with  additional
rig supply absorbed by demand  increases.  Day rates are expected to continue to
increase; however, the rate of increase will slow, since the current high levels
have induced long-term contracting with few opportunities for increases. .

The floating rig sector has  experienced a strengthening  in market  conditions.
Technological advances and more efficient operations have improved the economics
of drilling and production in the deep-water  operations for which floating rigs
are utilized.  Overall, demand for floating rigs increased from 128 rig-years in
1996 to 131 rig-years in 1997,  growth being  constrained by a limited supply of
rigs. The increase in demand and utilization prompted  significant  increases in
contract day rates and floating rig market  values.  Twenty-five  floating  rigs
were  ordered  in  1996  and  several   conversion  and  upgrade  projects  were
contracted, none of which will be delivered until late 1998.

(E)      Government Regulations

The use, maintenance, and ownership of equipment is regulated by federal, state,
local and/or  foreign  governmental  authorities.  Such  regulations  may impose
restrictions  and  financial  burdens on the Fund's  ownership  and operation of
equipment.   Changes  in  government   regulations,   industry   standards,   or
deregulation  may also  affect  the  ownership,  operation,  and  resale  of the
equipment.  Substantial  portions of the Fund's  equipment  portfolio are either
registered or operated internationally. Such equipment may be subject to adverse
political,  government, or legal actions, including the risk of expropriation or
loss arising  from  hostilities.  Certain of the Fund's  equipment is subject to
extensive  safety and operating  regulations  which may require the removal from
service or extensive modification of such equipment to meet these regulations at
considerable  cost to the Fund.  Such  regulations  include (but are not limited
to):

     (1)  the  United  States  Oil  Pollution  Act of  1990  (which  established
liability for operators and owners of vessels and mobile offshore drilling units
that create environmental pollution). This regulation has resulted in higher oil
pollution liability  insurance to the Fund. The lessee typically  reimburses the
Fund for these additional costs;

     (2) the United States Department of Transportation's  Aircraft Capacity Act
of 1990 (which limits or eliminates the operation of commercial  aircraft in the
United States that do not meet certain noise, aging, and corrosion criteria). In
addition,  under U.S. Federal Aviation Regulations,  after December 31, 1999, no
person shall operate an aircraft to or from any airport in the contiguous United
States  unless  that  airplane  has been  shown to comply  with  Stage III noise
levels.  The cost to hushkit a Stage II aircraft is approximately  $1.5 million,
depending on the type of aircraft.

                                                      -5-


<PAGE>




     (3) the Montreal  Protocol on  Substances  that Deplete the Ozone layer and
the U.S.  Clean Air Act  Amendments  of 1990  (which  call for the  control  and
eventual  replacement of substances  that have been found to cause or contribute
significantly to harmful effects on the stratospheric  ozone layer and which are
used  extensively  as  refrigerants  in  refrigerated  marine cargo  containers,
over-the-road trailers, etc.);

     (4) the U.S. Department of Transportation's Hazardous Materials Regulations
(which regulate the  classification of and packaging  requirements for hazardous
materials and which could apply particularly to the Fund's tank cars).

As of December 31, 1997, the Fund is in compliance  with the above  governmental
regulations.  Typically,  costs related to extensive equipment  modifications to
meet government regulations are passed on to the lessee of that equipment.

ITEM 2.           PROPERTIES

The Fund neither owns nor leases any properties  other than the equipment it has
purchased for leasing purposes. At December 31, 1997, the Fund owned a portfolio
of   transportation   equipment   and   investments   in   equipment   owned  by
special-purpose  entities  as  described  in Part I, Table 1. The Fund  acquired
equipment  with the proceeds of the Fund  offering  through the end of 1996.  In
December  of  1996,  the Fund  closed a $25.0  million  long-term  note  with an
institutional  investor. The Fund acquired additional equipment in 1997 with the
proceeds of the long-term note and any surplus cash flow, and intends to acquire
additional equipment in 1998.

The Fund  maintains its principal  office at One Market,  Steuart  Street Tower,
Suite 800, San  Francisco,  California  94105-1301.  All office  facilities  are
provided by FSI without reimbursement by the Fund.

ITEM 3.           LEGAL PROCEEDINGS

None.

ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters  were  submitted  to a vote of the Fund's  members  during the fourth
quarter of its fiscal year ended December 31, 1997.






















                      (This space intentionally left blank)


                                                     


<PAGE>



                                     PART II

ITEM 5.       MARKET FOR THE FUND'S EQUITY AND RELATED UNITHOLDER MATTERS

Pursuant  to the terms of the  operating  agreement,  the  Manager is  generally
entitled  to  a  1%  interest  in  the  profits  and  losses  and  15%  of  cash
distributions.  After the investors  receive cash  distributions  equal to their
original capital  contributions the Manager's interest in the cash distributions
of the Fund  will  increase  to 25%.  The  Manager  is the sole  holder  of such
interests.  Gross income in each year of the Fund will be specially allocated to
the  Manager in the amount  equal to the lesser of (i) the deficit  balance,  if
any, in the  Manager's  capital  account  calculated  under  generally  accepted
accounting  principles using the straight-line method of depreciation,  and (ii)
the deficit balance,  if any, in the Manager's capital account  calculated under
federal  income tax  regulations.  The  remaining  interests  in the profits and
losses and  distributions  of the Fund are owned as of December 31, 1997, by the
approximately 5,000 holders of Units in the Fund.















                      (This space intentionally left blank)

                                                     


<PAGE>



ITEM 6.       SELECTED FINANCIAL DATA

Table 2, below, lists selected financial data for the Fund:

                                     TABLE 2

                   For the Years Ended December 31, 1997, 1996
                        and 1995, and for the period from
                           inception (August 22, 1994)
                              to December 31, 1994
         (in thousands of dollars, except weighted-average unit amounts)

<TABLE>
<CAPTION>

                                                                        1997                1996               1995          1994
                                                                     --------------------------------------------------------------

<S>                                                                    <C>              <C>                <C>             <C>    
Operating results:
  Total revenues                                                       $    19,445      $    11,295        $     4,150     $    --
  Net gain on disposition of
    equipment                                                                1,682               --                 25          --
  Equity in net income (loss) of
    unconsolidated special-purpose
    entities                                                                 1,270             (256)                69          --
  Net loss                                                                  (2,052)          (2,392)              (618)         --

At year-end:
  Total assets                                                         $   101,482      $    87,755        $    62,589     $    --
  Total liabilities                                                         29,008            1,466              1,187          --

Cash distributions                                                     $    11,763      $     9,832        $     1,303     $    --

Cash distribution representing
   a return of capital to Class A members                              $     9,998      $     8,471        $     1,180     $    --

Per weighted average Class A unit:


Net loss                                                               $     (0.75)                                             N/A
                                                                                         Various, according to interim closings

Cash distributions                                                     $      2.00                                              N/A

Cash distributions representing a return of capital                    $      2.00                                              N/A


</TABLE>




                                                      


<PAGE>



ITEM 7.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 
                  AND RESULTS OF OPERATIONS
                  

Introduction

Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations relates to the Financial  Statements of Professional Lease Management
Income Fund I, L.L.C.  (the Fund).  The  following  discussion  and  analysis of
operations focuses on the performance of the Fund's equipment in various sectors
of the transportation  industry,  and its effect on the Fund's overall financial
condition.

Results of Operations - Factors Affecting Performance

(A)      Re-leasing and Repricing Activity

The  exposure  of the Fund's  equipment  portfolio  to  re-pricing  risk  occurs
whenever the leases for the equipment expire or are otherwise terminated and the
equipment must be remarketed.  Major factors influencing the current market rate
for transportation equipment include supply and demand for similar or comparable
types or kinds of transport capacity, desirability of the equipment in the lease
market,  market  conditions  for the  particular  industry  segment in which the
equipment is to be leased,  overall  economic  conditions both  domestically and
worldwide,  various regulations concerning the use of the equipment, and others.
The Fund experienced  re-pricing  exposure for the year ended December 31, 1997,
primarily due to its air, trailer, and marine vessel portfolios.

(B)      Reinvestment Risk

Reinvestment  risk occurs when 1) the Fund cannot  generate  sufficient  surplus
cash after fulfillment of operating obligations and distributions to reinvest in
additional  equipment  during  the  reinvestment  phase of Fund  operations;  2)
equipment is sold or liquidated  for less than  threshold  amounts;  3) proceeds
from  sales,  losses,  or surplus  cash  available  for  reinvestment  cannot be
reinvested at threshold lease rates; or 4) proceeds from dispositions or surplus
cash available for reinvestment cannot be deployed in a timely manner.

During  the first six years of  operations,  the Fund  intends to  increase  its
equipment  portfolio by investing  surplus cash in  additional  equipment  after
fulfilling  operating  requirements and payments of distributions to the Members
in additional equipment.  Subsequent to the end of the reinvestment period as of
January 1, 2002,  the Fund will continue to operate for an additional two years,
then begin an orderly liquidation over an anticipated two-year period.

Other  nonoperating  funds  for  reinvestment  are  generated  from  the sale of
equipment,  the receipt of funds  realized from the payment of  stipulated  loss
values on  equipment  lost or disposed of during the time it is subject to lease
agreements,  or the exercise of purchase  options  written  into  certain  lease
agreements.  Equipment  sales generally  result from  evaluations by the Manager
that continued  ownership of certain equipment is either inadequate to meet Fund
performance  goals,  or  that  market  conditions,   market  values,  and  other
considerations indicate it is the appropriate time to sell certain equipment.

During  1997,  the Fund  acquired  a marine  vessel for $8.5  million,  a mobile
offshore  drilling unit for $10.5  million and 25 trailers for $0.3 million.  In
addition,  the Fund  purchased an additional  26% interest in a mobile  offshore
drilling unit for $5.1 million,  bringing its initial  investment from 35% up to
61%. In  addition,  in 1997 the Fund  committed to purchase a 50% interest in an
entity that will own a DC-9 stage III  aircraft.  The Fund placed a $0.7 million
deposit  on  this   aircraft  in  1997  which  was  included  in  investment  in
unconsolidated  special purpose  entities on the balance sheet This purchase was
completed  in  January  1998.  The Fund  also  reached  an  agreement  to buy an
anchor-handling  vessel for $9.2 million in the first quarter of 1998.  The Fund
placed a $0.9  million  deposit  on this  vessel in 1997  which is  included  in
deposit on equipment on the balance sheet. The remaining  interests are owned by
affiliated partnerships.

During 1997,  the Fund sold a mobile  offshore  drilling unit and three trailers
with a net book value of $9.2 million for proceeds of $11.0 million,  less sales
commissions of $0.1 million.


            


<PAGE>



(C)      Equipment Valuation and Write-downs

In March 1995, the Financial  Accounting Standards Board (FASB) issued statement
No. 121,  "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed  Of" (SFAS 121).  This  standard  is  effective  for years
beginning  after  December  15,  1995.  The Fund  adopted  SFAS 121 in 1995.  In
accordance  with SFAS 121, the Fund reviews the carrying  value of its equipment
at least  annually  in relation to expected  future  market  conditions  for the
purpose of assessing the  recoverability of the recorded  amounts.  If projected
undiscounted  cash flows (future  lease  revenue plus residual  values) are less
than the carrying value of the equipment,  a loss on revaluation is recorded. No
adjustments to reflect  impairment of individual  equipment carrying values were
required for the years ended December 31, 1997 or 1996.

As of December 31, 1997, the Manager  estimates the current fair market value of
the Fund's  equipment  portfolio,  including  equipment owned by  unconsolidated
special-purpose entities, to be approximately $108.6 million.

Financial Condition - Capital Resources and Liquidity

The Fund's  initial  contributed  capital was composed of the proceeds  from its
initial  offering,  which were  supplemented  in March 1997 by permanent debt of
$25.0  million.  The Fund  intends  to rely on  operating  cash flow to meet its
operating obligations,  make cash distributions to Class A Unitholders, and grow
the Fund's equipment  portfolio  through  reinvestment of any remaining  surplus
cash available in additional equipment.

Starting in 1998, the Fund may, at the Manager's sole  discretion,  redeem up to
2% of the outstanding Class A Units that may be tendered each year. The purchase
price paid by the Fund for  outstanding  Class A Units upon  redemption  will be
equal to 105% of the amount Class A Members paid for the Class A Units, less the
amount of cash  distributions  Class A Members  have  received  relating to such
Class A Units.  The price may not bear any relationship to the fair market value
of a Class A Unit.

In December  1996,  the Fund entered into an agreement to issue a $25.0  million
long-term note to an institutional  investor. The note bears interest at a fixed
rate of 7.33% per annum and has a final  maturity in 2006.  Interest on the note
is payable semi-annually.  The note will be repaid in five principal payments of
$3.0 million on December 31, 2000,  2001, 2002, 2003, and 2004 and two principal
payments of $5.0 million on December 31, 2005, and 2006. The agreement  requires
the  Fund to  maintain  certain  financial  covenants  related  to  fixed-charge
coverage. The loan was funded in March 1997. Proceeds from the note were used to
fund additional  equipment  acquisitions in 1997 and interests in unconsolidated
special purpose entities in 1998.

The  Manager  has  entered  into a joint  $50.0  million  credit  facility  (the
Committed  Bridge  Facility) on behalf of the Fund, PLM Equipment Growth Fund V,
PLM Equipment  Growth Fund VI, and PLM  Equipment  Growth & Income Fund VII (all
affiliated  investment  programs),  TEC  Acquisub,  Inc.  (TECAI),  an  indirect
wholly-owned subsidiary of the General Partner, and American Finance Group, Inc.
(AFG),  a subsidiary of PLM  International,  Inc.,  which may be used to provide
interim  financing  of up to (i) 70% of the  aggregate  book value or 50% of the
aggregate net fair market value of eligible  equipment  owned by the Fund,  plus
(ii)  50% of  unrestricted  cash  held by the  borrower.  The  Committed  Bridge
Facility  became  available  to the Fund on May 8,  1995,  and was  amended  and
restated  on December 2, 1997,  to expire on  November  2, 1998.  The Fund,  the
affiliated  partnerships,  and TECAI, may collectively borrow up to $35.0 of the
Committed Bridge  Facility.  AFG may borrow up to $50.0 million of the Committed
Bridge Facility.  The Committed Bridge Facility also provides for a $5.0 million
Letter of Credit Facility for the eligible borrowers.  Outstanding borrowings by
the Fund,  TECAI,  AFG, or PLM  Equipment  Growth Funds V through VII reduce the
amount available to each other under the Committed  Bridge Facility.  Individual
borrowings for the Fund may be outstanding  for no more than 179 days,  with all
advances  due no later than  November 2, 1998.  The  Committed  Bridge  Facility
prohibits the Fund from incurring any additional indebtedness.  Interest accrues
at either the prime rate or adjusted LIBOR plus 1.625% at the borrower's option,
and is set at the  time of an  advance  of  funds.  Borrowings  by the  Fund are
guaranteed  by the PLM.  As of  December  31,  1997,  AFG had $23.0  million  in
outstanding   borrowings.   No  other  eligible  borrower  had  any  outstanding
borrowings.  The Manager  believes it will renew the Committed  Bridge  Facility
upon its expiration with similar terms as those in the current  Committed Bridge
Facility.

The  Manager  has  not  planned  any  expenditures,  nor  is  it  aware  of  any
contingencies  that would  cause it to require  any  additional  capital to that
mentioned above.

For the year ended December 31, 1997, the Fund  generated  sufficient  operating
income to meet its operating  obligations and pay distributions to those Class A
and B Unitholders.

Results of Operations - Year over Year Detail Comparison

Comparison of the Fund's Operating  Results for the Year Ended December 31, 1997
and 1996

(A)       Owned Equipment Operations

Lease revenues less direct expenses  (defined as repair and maintenance,  marine
equipment operating,  and asset-specific  insurance expenses) on owned equipment
increased  during the year ended December 31, 1997,  compared to the same period
of 1996. The following  table  presents  lease revenues less direct  expenses by
owned equipment type (in thousands of dollars):

<TABLE>
<CAPTION>

                                                                               For the Year
                                                                            Ended December 31,
                                                                          1997               1996
                                                                      -------------------------------

<S>                                                                     <C>               <C>     
Aircraft                                                                $  4,994          $  1,994
Trailers                                                                   3,250             1,880
Rail equipment                                                             2,712             2,371
Marine vessels                                                             2,085             1,242
Mobile offshore drilling unit                                              1,562                --

</TABLE>

Aircraft:  Aircraft  lease  revenues and direct  expenses  were $5.0 million and
$43,000, respectively, during the year ended December 31, 1997, compared to $2.0
million and  $21,000,  respectively,  during the same  period of 1996.  Aircraft
contribution  increased due to the purchase of four 737-200A Stage II commercial
aircraft  in the third  quarter of 1996.  These  aircraft  were on lease for the
entire year of 1997.

Trailers:  Trailer  revenues  and direct  expenses  were $3.7  million  and $0.4
million,  respectively,  for the year of 1997, compared to $2.1 million and $0.2
million,  respectively,  during the same  period in 1996.  Trailer  contribution
increased due to the purchase of additional  trailers  throughout 1996 and 1997.
These trailers were operating in the short-term rental facilities for the entire
year of 1997.

Rail equipment: Railcar lease revenues and direct expenses were $3.4 million and
$0.7 million,  respectively,  for the year ended December 31, 1997,  compared to
$3.1  million and $0.8  million,  respectively,  during the same period of 1996.
Lease  revenues  rose 10% in the year of 1997,  compared  to the same  period of
1996.  The  increase  was due to  railcars  owned  and on lease  for all of 1997
compared to being  owned and on lease for part of the year ended 1996.  Expenses
decreased  due to lower  running  repairs in the year ended  December  31, 1997,
compared  to the same period of 1996.  Although  the Fund  purchased  additional
railcars in the last two months of 1996,  these  railcars  were off lease in the
first eight months of 1997 and did not make a significant  net  contribution  to
the Fund in 1997.

Marine  vessels:  Marine  vessel lease  revenues and direct  expenses  were $3.7
million and $1.6 million,  respectively,  for the year ended  December 31, 1997,
compared to $2.7 million and $1.4 million, respectively,  during the same period
of 1996.  Marine vessel  contribution  increased due to the purchase of a marine
vessel at the end of the second quarter of 1997.  This increase in  contribution
due to this  additional  vessel,  was offset  slightly  by a  decrease  in lease
revenue due to lower  re-lease  rates for another marine vessel as a result of a
softer bulk carrier vessel market and higher  insurance  expense on the dry bulk
vessel.

Mobile offshore drilling unit (rig): Rig lease revenues and direct expenses were
$1.6 million and $22,000,  respectively,  for the year ended  December 31, 1997.
This  rig was  purchased  in the  first  quarter  of  1997.  The rig was sold in
December 1997 as part of the original purchase agreement that gave the charterer
the option to purchase  the rig. The Fund did not own any rigs in the year ended
December 31, 1996.

                                                   


<PAGE>




(B)                    Interest and Other Income

Interest and other  income  decreased  $1.0  million due to lower cash  balances
available for  investment in the year ended  December 31, 1997,  compared to the
same period of 1996.

(C)                    Indirect Expenses Related to Owned Equipment Operations

Total  indirect  expenses of $20.0 million for the year ended  December 31, 1997
increased from $11.0 million for the same period of 1996.  Significant variances
are explained as follows:

(1) A $6.6 million increase in depreciation and amortization  expenses from 1996
levels reflects the purchase of equipment during 1997 and 1996.

(2) A $1.4 million increase in interest expense was due to the Fund's borrowings
under the long-term senior note agreement in 1997.

(3) A $0.8 million increase in administrative expenses from 1996 levels resulted
primarily from increased  administrative  costs  associated  with the short-term
trailer rental facilities due to additional trailers operating in the facilities
in the first year of 1997, compared to the same period of 1996.

(4) A $0.4 million increase in management fees to affiliate  reflects the higher
levels of lease  revenues  in 1997,  compared  to 1996,  due to the  purchase of
equipment throughout 1996 and 1997.

(D)                    Net Gain on Disposition of Owned Equipment

Net gain on the  disposition  of equipment for the year ended  December 31, 1997
totaled $1.7 million, and resulted from the sale of trailers and the sale of the
rig with a net book value of $9.2 million,  for proceeds of $11.0 million net of
sales  commissions  of $0.1 million.  There was no  disposition  of equipment in
1996.

Equity in Net Loss of Unconsolidated Special-Purpose Entities

Equity in net loss of  unconsolidated  special-purpose  entities  represents net
loss generated from the operation of  jointly-owned  assets  accounted for under
the equity method (see Note 4 to the financial statements).

Net income (loss) generated from the operation of jointly-owned assets accounted
for under the equity method are presented as follows (in thousands of dollars):

<TABLE>
<CAPTION>

                                                                               For the Year
                                                                            Ended December 31,
                                                                          1997               1996
                                                                      -------------------------------

<S>                                                                     <C>               <C>     
Aircraft, aircraft engines and rotable components                       $  1,795          $    260
Mobile offshore drilling unit                                               (183)              (94 )
Marine vessel                                                               (342)             (422 )

</TABLE>

Aircraft,  aircraft engines and rotable components:  As of December 31, 1997 and
1996, the Fund owned an interest in a trust that owns four commercial  aircraft,
an interest in another trust that owns four commercial aircraft, and an interest
in two trusts that own three commercial  aircraft,  two aircraft engines,  and a
portfolio  of rotable  components.  Aircraft  revenues  and  expenses  were $5.9
million and $4.2 million,  respectively,  for the year ended  December 31, 1997,
compared to $5.6 million and $5.4 million, respectively,  during the same period
in 1996.  The increase in revenues was because of the purchase of an interest in
a trust that owns  commercial  aircraft at the end of the first quarter of 1996.
These  aircraft were on lease for the entire year of 1997,  compared to only six
months in the same  period in 1996.  The  increase  in  revenues  caused by this
additional equipment was partially offset by a decrease in lease revenues due to
lower lease rates for a trust for the year ended  December 31, 1997  compared to
the  same  period  in  1996.   Expenses   decreased   due  to  the  use  of  the
double-declining   balance   depreciation   method,  which  results  in  greater
depreciation in the first years an asset is owned.

Mobile offshore drilling unit: As of December 31, 1997 and 1996, the Fund had an
interest in an entity that owns a mobile offshore  drilling unit (rig) purchased
during  the fourth  quarter of 1996.  The  Fund's  interest  in this  investment
increased  in the first  quarter of 1997 from 35% to 61%.  During the year ended
December 31, 1997,  revenues of $2.0  million  were offset by  depreciation  and
administrative expenses of $2.2 million.

Marine vessel:  As of December 31, 1997 and 1996, the Fund had an interest in an
entity that owns a marine vessel.  Marine vessel revenues and expenses were $1.2
million and $1.6 million,  respectively,  for the year ended  December 31, 1997,
compared to $0.9 million and $1.3 million, respectively,  during the same period
in 1996.  Revenues and expenses during 1997 represent a full year, when compared
to 1996,  in which  revenues and  expenses  were for only seven  months,  as the
vessel was  purchased  in the  second  quarter of 1996.  In  addition,  expenses
increased due to required repairs needed on this marine vessel in the year ended
December 31, 1997. Similar repairs were not required on the vessel in 1996.

(F)       Net Loss

As a result of the  foregoing,  the Fund had a net loss of $2.1  million for the
year of 1997,  compared to a net loss of $2.4 million  during the same period of
1996.  The Fund's  ability to acquire,  operate,  and liquidate  assets,  secure
leases,  and  re-lease  those  assets  whose  leases  expire is  subject to many
factors,  and the Fund's  performance in the year ended December 31, 1997 is not
necessarily  indicative of future periods.  In the year ended December 31, 1997,
the Fund  distributed  $10.0  million  to the  Class A  members,  or  $2.00  per
weighted-average Class A unit.

Comparison of the Fund's Operating  Results for the Year Ended December 31, 1996
and 1995

(A)     Owned Equipment Operations

The Fund commenced  significant  operations in May 1995. As of May 13, 1996, the
Fund completed its  equity-raising  stage. As of December 31, 1996, the Fund had
purchased and placed into service $70.3 million of equipment,  compared to $36.1
million at December 31,  1995.  All of these  purchases  were  completed  with a
combination of proceeds from equity raised,  interim  financing,  and an advance
from an  affiliate  of the  Manager.  The nine day advance  from the Manager was
repaid (including  interest at commercial loan rates) in July of 1995.  Revenues
of $11.3  million  were  generated  during the year  ended  December  31,  1996,
compared to $4.2 million in the same period in 1995.  The variance is due to the
Fund's equipment  purchasing  activities  throughout 1995 and 1996.  Expenses of
$13.4  million for the year ended  December  31,  1996  consisted  primarily  of
depreciation  expense,  using the  double-declining  balance method,  and normal
operating  costs incurred as equipment is being purchased and placed in service.
Expenses for the same period in 1995 totaled $4.8  million,  and also  primarily
consisted of  depreciation  expense and normal  operating  costs  incurred  when
equipment is purchased and placed in service.

Equity in Net Loss of Unconsolidated Special-Purpose Entities

Equity in net loss of  unconsolidated  special-purpose  entities  represents net
loss generated from the operation of  jointly-owned  assets  accounted for under
the equity method (see Note 4 to the financial statements).

As of December 31, 1996, the Fund had interests in entities which  purchased and
placed into service $30.7 million of assets. The Fund's investment  consisted of
a 35% interest in an entity that owned a mobile  offshore  drilling  unit, a 50%
interest in an entity  which owned a marine  vessel,  a 17%  interest in a trust
that owned six Boeing  737-200A  aircraft,  a 25% interest in a trust that owned
four Boeing  737-200A  aircraft,  and a 33%  interest in two trusts (the Trusts)
that owned three Boeing 737-200A  aircraft,  two spare Pratt & Whitney  JT8D-17A
engines  and a package of rotable  components.  Revenues  of $6.6  million  were
generated  during the year ended December 31, 1996,  compared to $1.3 million in
the same period in 1995. The variance is due to the Fund's equipment  purchasing
activities throughout 1996. Expenses of $6.8 million for the year ended December
31,  1996,  compared  to $1.2  million  in the same  period  in 1995,  consisted
primarily of depreciation expense for both periods. As of December 31, 1996, the
Fund had made a deposit for a 50% interest in a trust.  The assets in this trust
were purchased on January 6, 1997.

During September of 1996, an affiliated program converted its partial beneficial
interests in the trust  holding five  commercial  aircraft and the trust holding
seven  commercial  aircraft  into the sole  ownership  of two of the  commercial
aircraft,  resulting in a change in the beneficial  interests for the Fund. This
change has no effect on the income or loss recognized in the year ended December
31, 1996.

The Fund's  performance  during  1996 is not  necessarily  indicative  of future
periods.

Geographic Information

The Fund operates its equipment in national and international markets.  Although
these  operations  expose the Fund to certain  currency,  political,  credit and
economic risks,  the Manager believes these risks are minimal or has implemented
strategies  to control  the risks as  follows:  Currency  risks are at a minimum
because  all  invoicing,  with  the  exception  of a small  number  of  railcars
operating in Canada, is conducted in U.S. dollars. Political risks are minimized
generally  through the avoidance of  operations in countries  that do not have a
stable judicial system and established  commercial business laws. Credit support
strategies  for lessees range from letters of credit  supported by U.S. banks to
cash deposits. Although these credit support mechanisms generally allow the Fund
to maintain its lease yield,  there are risks  associated  with  slow-to-respond
judicial systems when legal remedies are required to secure payment or repossess
equipment.  Economic  risks are  inherent in all  international  markets and the
Manager  strives to minimize this risk with market  analysis prior to committing
equipment  to a particular  geographic  area.  Refer to Note 3 of the  Financial
Statements  for  information  on the  revenues,  income,  and net book  value in
various geographic regions.

Revenues and net operating income by geographic  region are impacted by the time
period  the  assets are owned and the  useful  life  ascribed  to the assets for
depreciation  purposes.  Net  income  (loss)  from  equipment  is  significantly
impacted by  depreciation  charges  which are greatest in the early years due to
the  use  of  the   double-declining   balance  method  of   depreciation.   The
relationships  of geographic  revenues,  net income (loss) and net book value of
equipment  are  expected  to  significantly  change in the future as  additional
equipment is purchased in various  equipment  markets and geographic  areas.  An
explanation of the current relationships is presented below:

The Fund's equipment on lease to U.S. domiciled lessees accounted for 24% of the
lease revenues  generated by wholly-owned  and partially owned equipment while a
net operating  income of $0.2 million was generated  compared to $2.1 million in
loss for the entire Fund. The primary reason for this  relationship  is the fact
that the Fund  depreciates  its rail equipment over a 15 year period versus 5 to
12 years for other equipment types owned and leased in other geographic regions.

The Fund's equipment leased to Canadian  domiciled lessees consists of railcars,
an  aircraft  and an  interest  in an entity  which  owns four  aircraft.  Lease
revenues  in  Canada  accounted  for 16% of  total  lease  evenues  while  these
operations  accounted for $0.1 million in net income  compared to a $2.1 million
total net operating loss for the entire Fund.

Two  wholly-owned  marine  vessels,  a 50%  investment in an entity which owns a
marine  vessel and a 61%  investment  in an entity which owns a mobile  offshore
drilling unit,  which was leased in various regions  throughout the period,  and
accounted for 32% of the revenues and $0.9 million in net income compared to the
$2.1  million net  operating  loss for the entire  Fund.  These  marine  assets,
representing  47% of the net book value of the Fund's assets and  investments in
unconsolidated  special-purpose  entities,  generated a significant depreciation
charge for the period that exceeded the revenues less direct  operating costs of
the vessels.  As  depreciation  charges in the future  decline,  the vessels are
expected to generate net income for the Fund.

European  operations  consist of  interests  in entities  that own  aircraft and
aircraft  rotables that  generated  revenues that accounted for 13% of combined,
wholly-owned and partially owned equipment revenues. The net income generated by
this  equipment  accounted  for $1.7  million  in income for the period as lease
revenues  exceeded  depreciation  charges.  While this  equipment is expected to
remain  profitable  during the lease term  expiring in January 1998 the Fund may
not be able to remarket this equipment at comparable rates in the future.


              


<PAGE>



South American  operations consist of four aircraft that are generating revenues
that  accounted  for 15% of the  total  revenues  and  $2.4  million  of the net
operating loss for the period.  The net operating loss was generated as a result
of the shorter  depreciable life on the aircraft leased in South America. As the
depreciation  recorded by the Fund declines in future periods,  the aircraft are
expected to generate net operating income for the Fund.

Year 2000 Compliance

The Manager is currently  addressing the Year 2000 computer  software issue. The
Manager is creating a timetable for carrying out any program  modifications that
may be required.

Accounting Pronouncements

In  June  1997,  the  Financial   Accounting  Standards  Board  issued  two  new
statements:  SFAS No. 130,  "Reporting  Comprehensive  Income,"  which  requires
enterprises to report,  by major  component and in total,  all changes in equity
from  nonowner  sources;  and SFAS No. 131,  "Disclosures  about  Segments of an
Enterprise  and  Related  Information,"  which  establishes  annual and  interim
reporting  standards  for a public  company's  operating  segments  and  related
disclosures about its products, services, geographic areas, and major customers.
Both  statements are effective for the Company's  fiscal year ended December 31,
1998,  with  earlier  application  permitted.  The effect of  adoption  of these
statements will be limited to the form and content of the Fund's disclosures and
will not impact  the  Fund's  results of  operations,  cash flow,  or  financial
position.

Inflation

Inflation had no significant  impact on the Fund's operations during 1997, 1996,
or 1995.

Forward Looking Information

Except for historical  information contained herein, the discussion in this Form
10-K 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-K  should  be read as  being
applicable  to all related  forward-looking  statements  wherever they appear in
this Form 10-K.  The Fund's actual  results could differ  materially  from those
discussed here.

Outlook for the Future

Several factors may affect the Fund's operating  performance in 1998 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  intends to use excess cash flow,  after  payment of expenses  and cash
distributions to acquire additional  equipment during the first six years of the
Fund's operations. The Manager believes these acquisitions may cause the Fund to
generate additional earnings and cash flow for the Fund.

The Fund relies on operating cash flow to meet its operating  obligations,  make
cash  distributions to Class A and B Unitholders,  and grow the Fund's equipment
portfolio  through  reinvestment  of any  remaining  surplus  cash  available in
additional equipment.

(1)      Repricing and Reinvestment Risk

Certain  portions  of the Fund's  marine  vessel,  aircraft  engines and rotable
components, and trailer portfolios will be remarketed in 1998 as existing leases
expire,   exposing  the  Fund  to   considerable   repricing   risk/opportunity.
Additionally,  the Manager may select to sell certain underperforming equipment,
or equipment whose continued operation may become prohibitively  expensive,  and
thus faces reinvestment risk. In either case, the Manager intends to re-lease or
sell equipment at prevailing market rates;  however,  the Manager cannot predict
these future rates with any certainty at this time and cannot  accurately assess
the effect of such activity on future Fund performance.


                      


<PAGE>



(2)      Residual Risk

A portion of the total return on the Class A and B  Unitholders'  investment  in
the Fund is expected to be  realized  on the sale or  liquidation  of the Fund's
equipment portfolio, the majority of which is anticipated during the liquidation
phase of the Fund's  operations.  The Manager's Credit Review Committee  selects
equipment for acquisition based on many factors,  including anticipated residual
values from the eventual sale of that equipment. These residuals may be affected
by several factors during the time the equipment is held,  including  changes in
regulatory  environments  in which  the  equipment  is  operated,  the  onset of
technological  obsolescence,  changes in the equipment markets, perceived values
for  equipment  at the time of sale,  and others.  As the impact of any of these
factors becomes difficult to forecast with accuracy over extended time horizons,
the Manager cannot predict with certainty that the  anticipated  residual values
for  equipment  selected  for  acquisition  will  actually be realized  when the
equipment is sold.

Prior to the liquidation phase of the Fund's operations,  the Manager may decide
to selectively sell equipment  either when it has determined that  opportunities
exist to realize  significant gains on the sales;  when continuing  ownership of
the equipment becomes  prohibitively  expensive;  or when the Manager determines
that  continuing  ownership of the  equipment may result in the  realization  of
unsatisfactory  residual  values.  At this time, the Manager cannot predict when
such occasions may occur,  and thus cannot predict with any certainty the impact
of such events on Fund operations.

(B)      Impact of Government Regulations on Future Operations

The Manager operates the Fund's equipment in accordance with current  applicable
regulations  (see Item 1,  Section E  "Government  Regulations").  However,  the
continuing  implementation  of  new  or  modified  regulations  by  some  of the
authorities  mentioned  previously,  or others,  may adversely affect the Fund's
ability to continue to own or operate equipment in its portfolio.  Additionally,
regulatory  systems vary from country to country,  which may increase the burden
to the Fund of meeting  regulatory  compliance for the same  equipment  operated
between countries.  Under U.S. Federal Aviation Regulations,  after December 31,
1999,  no  person  shall  operate  an  aircraft  to or from any  airport  in the
contiguous  United  States  unless that  airplane  has been shown to comply with
stage III noise levels.  Currently,  the Manager has observed  rising  insurance
costs to operate certain  vessels into U.S. ports resulting from  implementation
of the  U.S.  Oil  Pollution  Act of 1990.  Ongoing  changes  in the  regulatory
environment, both in the U.S. and internationally,  cannot be predicted with any
accuracy and preclude the Manager from determining the impact of such changes on
Fund operations, purchases, or sale of equipment.

(C)      Distributions

Pursuant to the Fifth Amended and Restated  Operating  Agreement of Professional
Lease Management Income Fund I, L.L.C. (the operating agreement),  the Fund will
cease to reinvest surplus cash in additional  equipment beginning in its seventh
year of  operations.  The Manager  intends to pursue a strategy  of  selectively
redeploying  equipment  to  achieve  competitive  returns.  By  the  end  of the
reinvestment  period,  the  Manager  intends  to  have  assembled  an  equipment
portfolio  capable of achieving a level of operating cash flow for the remaining
life of the Fund  sufficient to meet its  obligations  and sustain a predictable
level of distributions to the Class A Unitholders.

ITEM 8.       FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The  financial  statements  for the Fund are  listed on the  Index to  Financial
Statements included in Item 14(a) of this Annual Report on Form 10-K.

ITEM  9.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE

None.




                      (This space intentionally left blank)

   

<PAGE>



                                    PART III

ITEM 10.         DIRECTORS AND EXECUTIVE OFFICERS OF PLM INTERNATIONAL AND 
                 PLM FINANCIAL SERVICES, INC.

As of the date of this annual  report,  the directors and executive  officers of
PLM  International  (and key executive  officers of its subsidiaries) and of PLM
Financial Services, Inc. are as follows:
<TABLE>
<CAPTION>

Name                                     Age                   Position
-------------------------------------------------------------------------------------------------------------------------

<S>                                      <C>                   <C>
Robert N. Tidball                        59                    Chairman of the Board, Director, President, 
                                                               and Chief Executive Officer, PLM International, Inc.; 
                                                               Director, PLM Financial Services, Inc.; 
                                                               Vice President, PLM Railcar Management Services, Inc.; 
                                                               President, PLM Worldwide Management Services Ltd.

Randall L.-W. Caudill                    50                    Director, PLM International, Inc.

Douglas P. Goodrich                      51                    Director and Senior Vice President, PLM International; 
                                                               Director and President, PLM Financial Services, Inc.; 
                                                               President, PLM Transportation Equipment Corporation; 
                                                               President, PLM Railcar Management Services, Inc.

Harold R. Somerset                       63                    Director, PLM International, Inc.

Robert L. Witt                           57                    Director, PLM International, Inc.

J. Michael Allgood                       49                    Vice President and Chief Financial Officer, 
                                                               PLM International, Inc. and PLM Financial Services, Inc.

Stephen M. Bess                          51                    President, PLM Investment Management, Inc. 
                                                               and PLM Securities Corp.; Vice President and Director, 
                                                               PLM Financial Services, Inc.

Richard K Brock                          35                    Vice President and Corporate Controller, 
                                                               PLM International, Inc. and PLM Financial Services, Inc.

Frank Diodati                            43                    President, PLM Railcar Management Services Canada Limited

Steven O. Layne                          43                    Vice President, PLM Transportation Equipment Corporation; 
                                                               Vice President, PLM Worldwide Management Services Ltd.

Susan C. Santo                           35                    Vice President, Secretary, and General Counsel, 
                                                               PLM International, Inc. and PLM Financial Services, Inc.

Thomas L. Wilmore                        55                    Vice President, PLM Transportation Equipment Corporation; 
                                                               Vice President, PLM Railcar Management Services, Inc.

</TABLE>

Robert N.  Tidball  was  appointed  Chairman  of the  Board in  August  1997 and
President and Chief Executive Officer of PLM International in March 1989. At the
time of his appointment,  he was Executive Vice President of PLM  International.
Mr.  Tidball became a director of PLM  International  in April 1989. Mr. Tidball
was  appointed  Director of PLM  Financial  Services,  Inc. in July 1997 and was
elected President of PLM Worldwide Management Services Limited in February 1998.
He has served as an officer of PLM Railcar Management Services,  Inc. since June
1987.  Mr.  Tidball was  Executive  Vice  President  of Hunter  Keith,  Inc.,  a
Minneapolis-based  investment  banking  firm,  from March 1984 to January  1986.
Prior to Hunter Keith, he was Vice President,  General Manager,  and Director of
North American Car Corporation and a director of the American Railcar  Institute
and the Railway Supply Association.

Randall L.-W.  Caudill was elected to the Board of Directors in September  1997.
He is  President  of  Dunsford  Hill  Capital  Partners,  a San  Francisco-based
financial consulting firm serving emerging growth companies in the United States
and  abroad,  as well as a senior  advisor  to the  investment  banking  firm of
Prudential  Securities,  where he has been employed since 1987. Mr. Caudill also
serves as a director of VaxGen, Inc. and SBE, Inc.

Douglas  P.  Goodrich  was  elected  to the  Board of  Directors  in July  1996,
appointed  Senior  Vice  President  of PLM  International  in  March  1994,  and
appointed Director and President of PLM Financial  Services,  Inc. in June 1996.
Mr.  Goodrich  has also served as Senior Vice  President  of PLM  Transportation
Equipment Corporation since July 1989 and as President of PLM Railcar Management
Services,  Inc. since September 1992,  having been a senior vice president since
June 1987.  Mr.  Goodrich was an executive  vice  president of G.I.C.  Financial
Services  Corporation,  a  subsidiary  of  Guardian  Industries  Corporation  of
Chicago, Illinois, from December 1980 to September 1985.

Harold R. Somerset was elected to the Board of Directors of PLM International in
July 1994.  From February 1988 to December 1993, Mr.  Somerset was President and
Chief Executive  Officer of California & Hawaiian Sugar Corporation (C&H Sugar),
a recently acquired subsidiary of Alexander & Baldwin,  Inc. Mr. Somerset joined
C&H Sugar in 1984 as  Executive  Vice  President  and Chief  Operating  Officer,
having  served on its Board of  Directors  since  1978,  a position  in which he
continues  to serve.  Between  1972 and 1984,  Mr.  Somerset  served in  various
capacities with Alexander & Baldwin,  Inc., a publicly held land and agriculture
company headquartered in Honolulu, Hawaii, including Executive Vice President of
Agriculture and Vice President, General Counsel, and Secretary. In addition to a
law degree from Harvard Law School,  Mr.  Somerset  also holds  degrees in civil
engineering from the Rensselaer  Polytechnic Institute and in marine engineering
from the U.S. Naval Academy. Mr. Somerset also serves on the boards of directors
for various other  companies  and  organizations,  including  Longs Drug Stores,
Inc., a publicly held company.

Robert L. Witt was elected to the Board of Directors  in June 1997.  Since 1993,
Mr. Witt has been a principal with WWS  Associates,  a consulting and investment
group specializing in start-up situations and private  organizations about to go
public.  Prior to that, he was Chief Executive Officer and Chairman of the Board
of Hexcel  Corporation,  an international  advanced materials company with sales
primarily in the aerospace,  transportation, and general industrial markets. Mr.
Witt also serves on the boards of  directors  for various  other  companies  and
organizations.

J. Michael Allgood was appointed Vice President and Chief  Financial  Officer of
PLM International in October 1992 and Vice President and Chief Financial Officer
of PLM Financial Services,  Inc. in December 1992. Between July 1991 and October
1992,  Mr.  Allgood  was a  consultant  to  various  private  and  public-sector
companies  and  institutions   specializing  in  financial   operations  systems
development.  In October 1987, Mr. Allgood  co-founded  Electra Aviation Limited
and its holding  company,  Aviation  Holdings Plc of London,  where he served as
Chief Financial Officer until July 1991. Between June 1981 and October 1987, Mr.
Allgood  served as a first vice  president  with  American  Express Bank Ltd. In
February 1978,  Mr. Allgood  founded and until June 1981 served as a director of
Trade Projects  International/Philadelphia  Overseas  Finance  Company,  a joint
venture with  Philadelphia  National Bank. From March 1975 to February 1978, Mr.
Allgood served in various capacities with Citibank, N.A.

Stephen M. Bess was appointed Director of PLM Financial  Services,  Inc. in July
1997.  Mr. Bess was appointed  President of PLM  Securities  Corporation in June
1996 and President of PLM  Investment  Management,  Inc. in August 1989,  having
served as Senior Vice President of PLM Investment Management,  Inc. beginning in
February  1984 and as  Corporate  Controller  of PLM  Financial  Services,  Inc.
beginning in October 1983. Mr. Bess served as Corporate  Controller of PLM, Inc.
beginning  in December  1982.  Mr. Bess was Vice  President-Controller  of Trans
Ocean Leasing  Corporation,  a container leasing company,  from November 1978 to
November  1982,  and Group Finance  Manager with the Field  Operations  Group of
Memorex  Corporation,  a manufacturer  of computer  peripheral  equipment,  from
October 1975 to November 1978.


Richard K Brock was appointed  Vice  President  and Corporate  Controller of PLM
International and PLM Financial Services, Inc. in June 1997, having served as an
accounting  manager  beginning in September 1991 and as Director of Planning and
General  Accounting  beginning  in  February  1994.  Mr.  Brock  was a  division
controller of Learning Tree International,  a technical education company,  from
February 1988 through July 1991.

Frank Diodati was appointed  President of PLM Railcar Management Services Canada
Limited in 1986. Previously,  Mr. Diodati was Manager of Marketing and Sales for
G.E. Railcar Services Canada Limited.

Steven O. Layne was appointed  Vice  President of PLM  Transportation  Equipment
Corporation's  Air Group in November  1992, and was appointed Vice President and
Director of PLM Worldwide  Management  Services  Limited in September  1995. Mr.
Layne was its Vice President,  Commuter and Corporate Aircraft beginning in July
1990.  Prior to joining PLM, Mr. Layne was Director of Commercial  Marketing for
Bromon Aircraft Corporation, a joint venture of General Electric Corporation and
the  Government  Development  Bank of Puerto  Rico.  Mr. Layne is a major in the
United States Air Force Reserves and a senior pilot with 13 years of accumulated
service.

Susan C. Santo  became Vice  President,  Secretary,  and General  Counsel of PLM
International and PLM Financial Services,  Inc. in November 1997. She has worked
as an  attorney  for PLM  International  since  1990 and  served  as its  Senior
Attorney since 1994.  Previously,  Ms. Santo was engaged in the private practice
of law in San  Francisco.  Ms. Santo  received her J.D.  from the  University of
California, Hastings College of the Law.

Thomas L.  Wilmore was  appointed  Vice  President,  Rail of PLM  Transportation
Equipment  Corporation  in March  1994,  and has  served  as Vice  President  of
Marketing for PLM Railcar  Management  Services,  Inc. since May 1988.  Prior to
joining PLM, Mr. Wilmore was Assistant  Vice President and Regional  Manager for
MNC Leasing  Corporation  in Towson,  Maryland from February 1987 to April 1988.
From July 1985 to  February  1987,  he was  President  and  co-owner of Guardian
Industries  Corporation,  Chicago,  and between December 1980 and July 1985, Mr.
Wilmore was an executive vice  president for its  subsidiary,  G.I.C.  Financial
Services  Corporation.  Mr.  Wilmore also served as Vice  President of Sales for
Gould Financial Services,  located in Rolling Meadows,  Illinois, from June 1978
to December 1980.

The directors of PLM International, Inc., are elected for a three-year term, and
the directors of PLM Financial Services, Inc. are elected for a one-year term or
until their successors are elected and qualified.  No family relationships exist
between any director or executive officer of PLM Financial Services, Inc.

ITEM 11.          EXECUTIVE COMPENSATION

The Fund has no  directors,  officers,  or  employees.  The Fund has no pension,
profit sharing, retirement, or similar benefit plan in effect as of December 31,
1997.

                                                     


<PAGE>



ITEM 12.       SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     (A)      Security Ownership of Certain Beneficial Owners

         The  Manager is  generally  entitled  to a 1%  interest  in profits and
losses and a 15% interest in the Fund's cash  distributions,  subject to certain
allocation provisions.  After the investors receive cash equal to their original
capital  contribution,  the Manager's  interest in the distributions of the Fund
will  increase to 25%. As of December  31,  1997,  no investor  was known by the
Manager to beneficially own more than 5% of the Units of the Fund.

     (B)      Security Ownership of Management

         Neither the Manager and its  affiliates  nor any  executive  officer or
director  of the  Manager  and its  affiliates  own any  Units of the Fund as of
December 31, 1997.

ITEM 13.       CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     (A)      Transactions with Management and Others

         During 1997,  the Fund paid or accrued the following fees to FSI or its
         affiliates:  management  fees - $1.0 million.  The Fund  reimbursed FSI
         and/or  its  affiliates  $0.9  million  for   administrative  and  data
         processing  services  performed on behalf of the Fund during 1997.  The
         Fund paid Transportation  Equipment Indemnity Fund Ltd. (TEI), a wholly
         owned,  Bermuda-based  subsidiary  of PLM  International,  $24,000  for
         insurance  coverages during 1997 substantially all of which was paid to
         third party reinsurance underwriters or placed in risk pools managed by
         TEI on  behalf  of  affiliated  programs  and PLM  International  which
         provide threshold  coverages on marine vessel loss of hire and hull and
         machinery damage. All pooling  arrangement funds are either paid out to
         cover applicable losses or refunded pro rata by TEI.

         During  1997,  the  unconsolidated  special-purpose  entities  paid  or
         accrued  the  following  fees to FSI or its  affiliates  (based  on the
         Fund's  proportional  share  of  ownership):  management  fees  -  $0.4
         million; and administrative and data processing services - $0.1million.
         The USPE's also paid TEI $10,000 for insurance coverages during 1997.

     (B)      Certain Business Relationships

     None.

     (C)      Indebtedness of Management

     None.

     (D)      Transactions With Promoters

     None.

    

<PAGE>



                                     PART IV

ITEM 14.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

     (a)      1.  Financial Statements

              The  financial  statements  listed  in the  accompanying  Index to
Financial Statements are filed as part of this Annual Report on Form 10-K.

     (b)    Reports on Form 8-K

              None.

     (c)    Exhibits

     4.   Limited   Partnership   Agreement  of  Partnership,   incorporated  by
          reference  to the  Partnership's  Registration  Statement  on Form S-1
          (Reg.  No.  33-55796)  which became  effective with the Securities and
          Exchange Commission on May 25, 1993.

     10.1 Management Agreement between Fund and PLM Investment Management, Inc.,
          incorporated by reference to the Fund's Registration Statement on Form
          S-1 (Reg. No. 33-55796) which became effective with the Securities and
          Exchange Commission on May 25, 1993.

     10.2 $25.0 Million Note Agreement, dated as of December 30, 1996.

     10.3 Third Amended and Restated  Warehousing Credit Agreement,  dated as of
          December 2, 1997, with First Union National Bank of North Carolina and
          others

     24.  Powers of Attorney.

                                            


<PAGE>



                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the Fund has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.

The Fund has no directors  or officers.  The Manager has signed on behalf of the
Fund by duly authorized officers.


                                   PROFESSIONAL LEASE MANAGEMENT INCOME
Date:  March 24, 1998              FUND I

                                   By:      PLM Financial Services, Inc.
                                            Manager



                                   By:      /s/ Douglas P. Goodrich
                                            -------------------------
                                            Douglas P. Goodrich
                                            President



                                   By:      /s/ Richard K Brock
                                            --------------------------
                                            Richard K Brock
                                            Vice President and
                                            Controller

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the  following  directors of the Fund's  Manager on the
dates indicated.


Name                           Capacity                           Date


*_________________________
  Robert N. Tidball            Director - FSI                  March 24, 1998


*_________________________
  Douglas P. Goodrich          Director - FSI                  March 24, 1998


*_________________________
  Steven M. Bess               Director - FSI                  March 24, 1998





* Susan C. Santo, by signing her name hereto,  does sign this document on behalf
of the persons  indicated  above pursuant to powers of attorney duly executed by
such persons and filed with the Securities and Exchange Commission.




/s/ Susan C. Santo
--------------------------------
Susan C. Santo
Attorney-in-Fact

                                                  


<PAGE>





                   PROFESSIONAL LEASE MANAGEMENT INCOME FUND I
                          (A Limited Liability Company)

                          INDEX TO FINANCIAL STATEMENTS

                                  (Item 14(a))


                                                                    Page

Report of Independent Auditors                                       26

Balance sheets as of December 31, 1997 and 1996                      27

Statements of operations for the years ended
     December 31, 1997, 1996 and 1995                                28

Statement of changes in members' equity for the years ended
     December 31, 1997, 1996, and 1995                               29

Statements of cash flows for the years ended December 31, 1997, 1996,
     and 1995                                                         30

Notes to financial statements                                    31 - 39


All other  financial  statement  schedules  have been  omitted  as the  required
information  is not pertinent to the  Registrant or is not material,  or because
the  information  required  is included in the  financial  statements  and notes
thereto.


                                                


<PAGE>



                                          REPORT OF INDEPENDENT AUDITORS


The Members
Professional Lease Management Income Fund I, L.L.C.:


We have audited the financial statements of Professional Lease Management Income
Fund I, L.L.C. as listed in the accompanying  index. These financial  statements
are the  responsibility  of the  Fund's  management.  Our  responsibility  is to
express an opinion on these financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial position of Professional Lease Management
Income Fund I, L.L.C.  as of December 31, 1997 and 1996,  and the results of its
operations and its cash flows for the three-year period ended December 31, 1997,
in conformity with generally accepted accounting principles.


/S/ KPMG PEAT MARWICK LLP
-------------------------------------


SAN FRANCISCO, CALIFORNIA
March 12, 1998





<PAGE>




               PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C.
                     (A Delaware Limited Liability Company)
                                 BALANCE SHEETS
                                  December 31,
               (in thousands of dollars, except per unit amounts)

<TABLE>
<CAPTION>


                                                                                      1997                   1996
                                                                               -----------------------------------------
<S>                                                                              <C>                    <C>         
Assets:

Equipment held for operating lease, at cost                                      $      79,132          $     70,333
  Less accumulated depreciation                                                        (26,749)              (12,189 )
                                                                               -----------------------------------------
    Net equipment                                                                       52,383                58,144

Cash and cash equivalents                                                               19,179                 1,692
Restricted cash                                                                             --                   223
Investment in unconsolidated special-purpose entities                                   26,252                25,349
Accounts receivable, less of allowance for doubtful accounts
  of $70 in 1997 and $36 in 1996                                                         2,026                 1,534
Deposit on equipment                                                                       920                    --
Prepaid expenses                                                                           341                   505
Debt placement fees, less accumulated amortization                                         160                    --
Organization and offering costs, less of accumulated amortization                          221                   308
                                                                               -----------------------------------------
Total assets                                                                     $     101,482          $     87,755
                                                                               =========================================

Liabilities and member's equity:

Liabilities:
Accounts payable and accrued expenses                                            $         594          $        430
Due to affiliates                                                                        2,005                   163
Lessee deposits and reserves for repairs                                                 1,409                   873
Note payable                                                                            25,000                    --
                                                                               -----------------------------------------
    Total liabilities                                                                   29,008                 1,466
                                                                               -----------------------------------------

Members' equity:

Class A members (4,999,581 Units at December 31, 1997 and
    1996)                                                                               72,298                86,024
Class B member                                                                             176                   265
                                                                               -----------------------------------------
    Total members' equity                                                               72,474                86,289
                                                                               -----------------------------------------
Total liabilities and members' equity                                            $     101,482          $     87,755
                                                                               =========================================


</TABLE>


                       See accompanying notes to financial
                                  statements.



<PAGE>



               PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C.
                     (A Delaware Limited Liability Company)
                            STATEMENTS OF OPERATIONS
                        For the Year Ended December 31,
         (in thousands of dollars, except weighted-average unit amounts


<TABLE>
<CAPTION>


                                                                 1997                 1996                 1995
                                                          ------------------------------------------------------------
<S>                                                        <C>                   <C>                  <C>          
Revenues:

Lease revenue                                              $        17,358       $        9,939       $       3,992
Interest and other income                                              405                1,356                 133
Net gain on disposition of equipment                                 1,682                   --                  25
                                                          ------------------------------------------------------------
  Total revenues                                                    19,445               11,295               4,150
                                                          ------------------------------------------------------------

Expenses:

Depreciation and amortization                                       15,990                9,408               2,917
Repairs and maintenance                                              1,414                1,363                 571
Equipment operating expenses                                           813                  926                 479
Interest expense                                                     1,418                    9                 230
Insurance expense to affiliate                                          24                    7                   4
Other insurance expense                                                419                  180                  46
Management fees to affiliate                                           951                  585                 284
General and administrative expenses to affiliates                      893                  313                 118
Other general and administrative expenses                              845                  640                 188
                                                          ------------------------------------------------------------
  Total expenses                                                    22,767               13,431               4,837
                                                          ------------------------------------------------------------

Equity in net income (loss) of
  unconsolidated special-purpose entities                            1,270                 (256 )                69
                                                          ------------------------------------------------------------

Net loss                                                   $        (2,052)      $       (2,392 )     $        (618)
                                                          ============================================================

Members' share of net income (loss):

Class A members                                            $        (3,728)      $       (3,705 )     $        (612)
Class B member                                                       1,676                1,313                  (6)
                                                          --------------------------------------------------------------

Total                                                      $        (2,052)      $       (2,392 )     $        (618)
                                                          ============================================================

Net income (loss) per weighted-average
 Class A unit: (4,999,581 in 1997 and 1996,
  2,831,388 in 1995)                                       $         (0.75)      $          N/A       $         N/A
                                                          ============================================================

Cash distributions                                         $        11,763       $        9,832       $       1,303
                                                          ============================================================

Cash distribution per weighted-average
  Class A units                                            $          2.00       $          N/A       $         N/A
                                                          ============================================================

</TABLE>




                       See accompanying notes to financial
                                  statements.

                           


<PAGE>





               PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C.
                     (A Delaware Limited Liability Company)

                   STATEMENT OF CHANGES IN MEMBERS' EQUITY For
                the Year Ended December 31, 1997, 1996, and 1995
                            (in thousands of dollars)


<TABLE>
<CAPTION>



                                                           Class A              Class B               Total
                                                     -------------------------------------------------------------

<S>                                                    <C>                   <C>                  <C>          
Member's equity as of December 31, 1994                $           --        $          --        $          --

Members' capital contributions                                 56,628                9,536               66,164

Syndication costs                                                  --               (9,101)              (9,101 )

Net loss                                                         (612)                  (6)                (618 )

Cash distributions                                             (1,180)                (123)              (1,303 )
                                                     -------------------------------------------------------------

Members' equity as of December 31, 1995                        54,836                  306               55,142

Members' capital contributions                                 43,364                5,069               48,433

Syndication costs                                                  --               (5,062)              (5,062 )

Net income (loss)                                              (3,705)               1,313               (2,392 )

Cash distributions                                             (8,471)              (1,361)              (9,832 )
                                                     -------------------------------------------------------------

Members' equity as of December 31, 1996                        86,024                  265               86,289

Net income (loss)                                              (3,728)               1,676               (2,052 )

Cash distributions                                             (9,998)              (1,765)             (11,763 )
                                                     -------------------------------------------------------------

Members' equity as of December 31, 1997                $       72,298        $         176        $      72,474
                                                     =============================================================

</TABLE>


                       See accompanying notes to financial
                                  statements.


                  


<PAGE>




               PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C.
                     (A Delaware Limited Liability Company)
                            STATEMENTS OF CASH FLOWS

                        For the Years Ended December 31,
                            (in thousands of dollars)

<TABLE>
<CAPTION>

Operating activities:                                                       1997             1996             1995
                                                                      --------------------------------------------------
<S>                                                                     <C>              <C>              <C>         
Net loss                                                                $    (2,052)     $    (2,392)     $      (618)
Adjustments to reconcile net loss to net cash
      provided by (used in) operating activities:
  Depreciation and amortization                                              15,990            9,408            2,917
  Net gain on sale of equipment                                              (1,682)              --              (25)
  Equity in net (income) loss unconsolidated special
      purpose entities                                                       (1,270)             256              (69)
  Changes in operating assets and liabilities:
    Restricted cash                                                             223             (223)
    Accounts receivable, net                                                   (492)            (737)            (869)
    Prepaid expenses                                                            164              (89)            (417)
    Accounts payable and accrued expenses                                       164             (235)             664
    Due to affiliates                                                           106             (225)             387
    Lessee deposits and reserves for repairs                                    536              738              207
                                                                      --------------------------------------------------
          Net cash provided by operating activities                          11,687            6,501            2,177
                                                                      --------------------------------------------------

Investing activities:
Payments to affiliates for purchase of equipment                                 --               --          (29,707)
Payments for purchase of equipment                                          (19,344)         (34,193)          (6,464)
Deposit on equipment                                                           (920)              --               --
Investment in and equipment purchased and placed
      in unconsolidated special-purpose entities                             (5,783)         (16,067)         (14,677)
Distributions from unconsolidated special-purpose entities                    6,149            5,059              150
Proceeds from disposition of equipment                                       10,901               --               54
                                                                      --------------------------------------------------
      Net cash used in investing activities                                  (8,997)         (45,201)         (50,644)
                                                                      --------------------------------------------------

Financing activities:
Proceeds from note payable                                                   25,000               --            1,057
Proceeds from note payable - affiliates                                          --               --            3,956
Principal payments on notes payable                                              --               --           (1,057)
Principal payments on notes payable - affiliates                                 --               --           (3,956)
Increase due to affiliates                                                    1,736               --               --
Cash distributions to Class A members                                        (9,998)          (8,471)          (1,179)
Cash distributions to Class B member                                         (1,765)          (1,361)            (123)
Class A members capital contribution                                             --           43,364           56,628
Debt placement fees                                                            (176)              --               --
(Decrease) increase in subscriptions in escrow                                   --           (6,260)           6,260
Decrease (increase) in restricted cash from                                      --
      subscriptions in escrow, net                                               --            6,316           (6,315)
                                                                      --------------------------------------------------
      Net cash provided by financing activities                              14,797           33,588           55,271
                                                                      --------------------------------------------------

Net increase (decrease) in cash and cash equivalents                         17,487           (5,112)           6,804
Cash and cash equivalents at beginning of period                              1,692            6,804               --
Cash and cash equivalents at end of period                              $    19,179      $     1,692      $     6,804
                                                                      ==================================================

Supplemental information:
Cash items:
  Interest paid                                                         $     1,418      $         9      $       230
                                                                      ==================================================
Non cash items:
  Syndication and offering costs paid by Class B member                 $        --      $     5,069      $     9,536

                                                                      ==================================================

</TABLE>
                       See accompanying notes to financial
                                  statements.

                                      


<PAGE>



                   PROFESSIONAL LEASE MANAGEMENT INCOME FUND I
                         (A Limited Liability Company)
                         NOTES TO FINANCIAL STATEMENTS
                               December 31, 1997

1.   Basis of Presentation

     Organization

     Professional  Lease  Management  Income Fund I, L.L.C.,  a Delaware Limited
     Liability  Company  (Fund I or the Fund) was formed on August 22, 1994,  to
     purchase,  lease,  charter, or otherwise invest in, a diversified portfolio
     of long-lived,  low obsolescence capital equipment that is transportable by
     and among  prospective  users (the  Equipment).  The  securities  represent
     limited  liability company interests (the Class A Units) which were offered
     to the public.  The Fund's offering  became  effective on January 23, 1995.
     FSI is a  wholly-owned  subsidiary  of PLM  International,  Inc (PLM).  PLM
     Financial  Services,  Inc. (FSI). FSI is the Manager of the Fund and is the
     initial Class B member.

     On May 13, 1996,  the Fund ceased its  offering  for Class A Units  ($100.0
     million). As of December 31, 1997, there were 4,999,581 Units outstanding.

     As of December 31, 1997,  the Class B Member had capital  contributions  of
     $14.6  million   representing   the  cash  payments  for  organization  and
     syndication  costs.  Syndication  costs of $14.2  million are recorded as a
     reduction to Class B member's equity.

     The Manager  controls and manages the affairs of the Fund. The Manager paid
     out of its own corporate funds (as a capital  contribution to the Fund) all
     organization  and  syndication  expenses  incurred in  connection  with the
     offering;  therefore,  100% of the net cash  proceeds  received by the Fund
     from  the  sale of  Class A Units  are  initially  being  used to  purchase
     Equipment and establish any required cash reserves.  For its  contribution,
     the  Manager is  generally  entitled to a 1% interest in profits and losses
     and 15% interest in the Fund's cash  distributions  and earnings subject to
     certain   allocation   provisions.   After  the   investors   receive  cash
     distributions  equal to their original capital  contributions the Manager's
     interest in the cash distributions of the Fund will increase to 25%.

     Between the eighth and tenth years of operations  of the Fund,  the Manager
     intends to begin the liquidation of the Fund in an orderly fashion,  unless
     the Fund is  terminated  earlier  upon sale of all of the  equipment  or by
     certain other events. However, under certain circumstances, the term of the
     Fund may be extended.  In no event will the Fund extend beyond December 31,
     2010.

     These  financial  statements  have been  prepared on the  accrual  basis of
     accounting in accordance  with generally  accepted  accounting  principles.
     This requires  management to make estimates and assumptions that affect the
     reported  amounts of assets and  liabilities  and disclosures of contingent
     assets and  liabilities  at the date of the  financial  statements  and the
     reported  amounts of revenues and  expenses  during the  reporting  period.
     Actual results could differ from those estimates.

     Operations

     The equipment of the Fund is being managed,  under a management  agreement,
     by PLM Investment Management,  Inc. (IMI), a wholly-owned subsidiary of the
     Manager.  IMI receives a monthly  management fee from the Fund for managing
     the  equipment  (See Note 2). The Manager is also the General  Partner in a
     series of programs that own and lease transportation and related equipment.

                   


<PAGE>



                   PROFESSIONAL LEASE MANAGEMENT INCOME FUND I
                         (A Limited Liability Company)
                         NOTES TO FINANCIAL STATEMENTS
                               December 31, 1997

1.   Basis of Presentation (continued)

     Operations (continued)

     The   Manager,   in   conjunction   with  its   subsidiaries,   also  sells
     transportation  equipment  to these  programs  and  manages  transportation
     equipment under management agreements with the programs.

     Accounting for Leases

     The Fund's leasing operations  generally consist of operating leases. Under
     the operating  lease method of accounting,  the leased asset is recorded at
     cost and depreciated  over its estimated  useful life.  Rental payments are
     recorded  as  revenue  over the lease  term.  Lease  origination  costs are
     capitalized and amortized over the term of the lease.

     Depreciation and Amortization

     Depreciation  of  equipment  held for  operating  leases is computed on the
     double-declining  balance method taking a full month's  depreciation in the
     month of  acquisition,  based upon  estimated  useful lives of 12 years for
     trailers,  mobile offshore drilling units, and marine vessels, 15 years for
     railcars,  and 8 years, 6 years or 5 years for aircraft.  Certain  aircraft
     are depreciated under the double-declining balance depreciation method over
     the lease term.  Regardless of depreciable life, the depreciation method is
     changed  to  straight  line  when  annual  depreciation  expense  using the
     straight  line  method  exceeds  that  calculated  by the  double-declining
     balance  method.  Organization  costs  will be  amortized  over a 60  month
     period. Major expenditures which are expected to extend the useful lives or
     reduce future operating expenses of equipment are capitalized and amortized
     over the remaining estimated life of the equipment.

     Transportation Equipment

     In March 1995,  the  Financial  Accounting  Standards  Board (FASB)  issued
     statement No. 121,  "Accounting for the Impairment of Long-Lived Assets and
     for Long-Lived  Assets to Be Disposed Of" (SFAS 121)..  In accordance  with
     SFAS 121,  the Fund reviews the  carrying  value of its  equipment at least
     annually in relation to expected  future market  conditions for the purpose
     of  assessing  the  recoverability  of the recorded  amounts.  If projected
     undiscounted  cash flows (future  lease  revenue plus residual  values) are
     less than the carrying  value of the  equipment,  a loss on  revaluation is
     recorded. There were no write-downs required during 1997 or 1996.

     Investments in Unconsolidated Special-Purpose Entities (USPEs)

     The Fund has interests in unconsolidated  special-purpose  entities (USPEs)
     which own transportation equipment. These interests are accounted for using
     the equity method.

     The Fund's  equity  interest in the net income of USPEs is reflected net of
     management fees paid or payable to IMI.



                                       


<PAGE>



                   PROFESSIONAL LEASE MANAGEMENT INCOME FUND I
                         (A Limited Liability Company)
                         NOTES TO FINANCIAL STATEMENTS
                               December 31, 1997

1.   Basis of Presentation (continued)

     Repairs and Maintenance

     Maintenance costs are usually the obligation of the lessee. If they are not
     covered by the lessee, they are charged against operations as incurred.  To
     meet the maintenance obligations of certain aircraft airframes and engines,
     reserve accounts are prefunded by the lessee. Marine vessel drydocking is a
     periodic  required  maintenance  process that  generally  occurs every five
     years. The drydock  maintenance process generally lasts from 10 to 21 days.
     Estimated costs  associated with marine vessel  drydockings are accrued and
     charged to repair and maintenance  expense ratably over the period prior to
     such drydocking  because wear and tear occurs over that period. The reserve
     accounts are included in the balance  sheet as lessee  deposits and reserve
     for repairs.

     Net Income (Loss) and Distributions per Depositary Unit

     After  giving  effect to the  special  allocations  set  forth in  Sections
     3.08(b)  and 3.17 of the Fund's  operating  agreement,  net profits and net
     loss shall be  allocated  1% to the Class B Members  and 99% to the Class A
     Members.  During 1997, the Manager received a special  allocation of income
     of $1.8 million ($1.4 million in 1996).

     Cash  distributions are recorded when paid and totaled $11.8 million,  $9.8
     million  and $1.3  million for 1997,  1996,  and 1995,  respectively.  Cash
     distributions to Class A Unitholders in excess of net income are considered
     to represent a return of capital. Cash distributions to Class A Unitholders
     of $10.0  million,  $8.5 million and $1.2  million in 1997,  1996 and 1995,
     respectively, were deemed to be a return of capital.

     Cash  distributions  related to the fourth quarter  results of $0.6 million
     were paid or are payable  during January 1998 to the Class A Unitholders of
     record as of December 31,  1997,  for  unitholders  who elected for monthly
     distributions.  Quarterly cash  distributions of approximately $1.7 million
     were  declared on January  22,  1998 and were paid on February  15, 1998 to
     Class A unitholders who elected quarterly distributions.

     Cash and Cash Equivalents

     The Fund considers highly liquid  investments that are readily  convertible
     to known amounts of cash with  original  maturities of three months or less
     as cash equivalents.

     Restricted Cash

     There was no  restricted  cash at December 31, 1997.  At December 31, 1996,
     restricted cash includes lessee security deposits.

2.             Manager and Transactions with Affiliates

     An officer of PLM Securities Corp. (PLMS), a wholly-owned subsidiary of the
     Manager,  contributed  the  Fund's  initial  $100  of  capital.  Under  the
     equipment  management  agreement,  IMI, subject to certain  reductions,  is
     entitled to a monthly management fee attributable to either owned equipment
     or interests  in  equipment  owned by the  Unconsolidated  Special  Purpose
     Entities  (USPE) equal to the lesser of (i) the fees which would be charged
     by an independent  party for similar services for similar equipment or (ii)
     the sum of (A) for  that  Equipment  for  which  IMI  provides  only  Basic
     Equipment   Management   Services  (a)  2%  of  the  Gross  Lease  Revenues
     attributable to Equipment  which is subject to Full Payout Net Leases,  (b)
     5% of the Gross Lease Revenues  attributable  to Equipment which is subject
     to  Operating  Leases,  and (B) for that  Equipment  for which IMI provides
     supplemental  Equipment Management Services, 7% of the Gross Lease Revenues
     attributable to such  Equipment.  Fund management fees of $0.2 million were
     payable at December 31, 1997 and 1996, respectively.

                                  


<PAGE>




                   PROFESSIONAL LEASE MANAGEMENT INCOME FUND I
                         (A Limited Liability Company)
                         NOTES TO FINANCIAL STATEMENTS
                               December 31, 1997

2.             Manager Transactions with Affiliates (continued)

     The  Fund's  proportional  share  of the  USPE's  management  fees  of $0.2
     million,  $24,000,  and $0.1  million were payable as of December 31, 1997,
     1996 and 1995, respectively.  The Fund reimbursed FSI $0.9 million and $0.3
     million for data processing expenses and administrative  services performed
     on  behalf  of the Fund  during  1997 and 1996,  respectively.  The  Fund's
     proportional  share  of  the  USPE's  administrative  and  data  processing
     expenses was $0.1 million  during 1997 and 1996.  Transportation  Equipment
     Corporation (TEC) will also be entitled to receive an equipment liquidation
     fee equal to the lesser of (i) 3% of the sales price of  equipment  sold on
     behalf  of  the  Fund,  or  (ii)  50% of the  "Competitive  Equipment  Sale
     Commission,"  as  defined,   if  certain  conditions  are  met.  TEC  is  a
     wholly-owned  subsidiary  of the  Manager.  In certain  circumstances,  the
     Manager will be entitled to a monthly re-lease fee for re-leasing  services
     following  expiration of the initial  lease,  charter or other contract for
     certain  equipment  equal  to the  lesser  of (a) the fees  which  would be
     charged  by  an  independent  third  party  for  comparable   services  for
     comparable  equipment or (b) 2% of Gross Lease  Revenues  derived from such
     re-lease.  No  re-lease  fee,  however,  shall be payable if such fee would
     cause the combination of the equipment management fee paid to IMI (see Note
     1) or the re-lease  fees to exceed 7% Gross Lease  Revenues.  The Fund paid
     $24,000 in 1997 to  Transportation  Equipment  Indemnity Company Ltd. (TEI)
     which provides  marine  insurance  coverage and other  insurance  brokerage
     services  to the Fund.  The  Fund's  proportional  share of  USPE's  marine
     insurance coverage paid to TEI was $10,000 during 1997. TEI is an affiliate
     of the Manager.  A  substantial  portion of these amounts was paid to third
     party  reinsurance  underwriters  or placed in risk pools managed by TEI on
     behalf of  affiliated  partnerships  and PLM  International  which  provide
     threshold  coverages on marine  vessel loss of hire and hull and  machinery
     damage.  All  pooling  arrangement  funds  are  either  paid  out to  cover
     applicable losses or refunded pro rata by TEI.

     As of December 31, 1997, 33% of the Fund's  trailer  equipment was operated
     in rental yards owned and  maintained by PLM Rental,  Inc.,  the short-term
     trailer rental subsidiary of PLM  International.  Revenues  collected under
     short-term  rental agreements with the rental yards' customers are credited
     to the  owners  of the  related  equipment  as  received.  Direct  expenses
     assoicated  with  the  equipment  are  charged  directly  to the  Fund.  An
     allocation of indirect expenses of the rental yard operations is charged to
     the Fund monthly.

     The Fund has interests in certain  equipment for lease in conjunction  with
     affiliated  funds  that  are  included  in  unconsolidated  special-purpose
     entities.  In 1997,  this  equipment  included a 50% ownership in an entity
     that owns a marine vessel,  a 61% ownership in a mobile  offshore  drilling
     unit, a 33% ownership in two trusts that own three commercial aircraft, two
     aircraft engines,  a portfolio of aircraft  rotables,  a 25% ownership in a
     trust that owns four  commercial  aircraft,  and a 17%  interest in a trust
     that owns six  commercial  aircraft.  As of  December  31,  1997,  the Fund
     committed  to  purchase  a 50%  interest  in a trust  that would own one MD
     DC9-82 stage III aircraft. This transaction was completed in January 1998.

     The balance  due to  affiliates  as of December  31,  1997,  included  $0.2
     million due to FSI and its affiliates for management  fees and $1.8 million
     due to  affiliated  USPEs.  In January  1998,  $1.7 million was paid to the
     affiliates. The balance due to affiliates as of December 31, 1996, included
     $0.2 million due to FSI and its affiliates for management  fees.  There was
     no balance due to affiliated USPEs as of December 31, 1996.


               


<PAGE>



                   PROFESSIONAL LEASE MANAGEMENT INCOME FUND I
                         (A Limited Liability Company)
                         NOTES TO FINANCIAL STATEMENTS
                               December 31, 1997

3.   Equipment

     The components of equipment are as follows (in thousands of dollars):

<TABLE>
<CAPTION>

                                                   1997                 1996
                                            ----------------------------------------

<S>                                           <C>                 <C>            
Aircraft                                      $       24,605      $        24,605
Marine vessels                                        20,756               12,257
Rail equipment                                        18,958               18,876
Trailers                                              14,813               14,595
                                            ------------------------------------------
                                                      79,132               70,333
Less accumulated depreciation                        (26,749 )            (12,189)
                                            ----------------------------------------
  Net equipment                               $       52,383      $        58,144
                                            ========================================

</TABLE>

     Revenues are earned by placing the equipment under  operating  leases which
     are generally billed monthly or quarterly. One of the Fund's marine vessels
     is leased to an operator of  utilization-type  leasing  pools which include
     equipment  owned  by  unaffiliated  parties.  In such  instances,  revenues
     received  by  the  Fund  consist  of a  specified  percentage  of  revenues
     generated  by  leasing  the  equipment  in the  pool to  sublessees,  after
     deducting certain direct operating expenses of the pooled equipment.  Rents
     for railcars are based on mileage  traveled or a fixed rate;  rents for all
     other equipment are based on fixed rates.

     During  the year ended  December  31,  1997,  the Fund  purchased  a marine
     vessel, a mobile offshore  drilling unit and 25 trailers for $19.3 million.
     During the year ended  December 31, 1996,  the Fund purchased four 737-200A
     Stage II commercial  aircraft,  181 refrigerated  trailers and 113 railcars
     for $34.2 million.

     In 1997,  the Fund signed a  memorandum  of  agreement to purchase a marine
     vessel for $9.2  million.  The  purchase  of this  vessel is expected to be
     completed in March of 1998.

     As of December 31, 1997,  all equipment in the Fund portfolio was either on
     lease or operating in PLM-affiliate  short-term  trailer rental  facilities
     except for one railcar with a carrying value of $22,000. As of December 31,
     1996,  all equipment in the Fund portfolio was either on lease or operating
     in  PLM-affiliated  short-term  trailer  rental  facilities  except  for 14
     railcars with a carrying value of $0.3 million.

     All leases are being  accounted  for as operating  leases.  Future  minimum
     rents under  noncancelable  leases at December  31, 1997 during each of the
     next five years are  approximately  $16.7  million - 1998;  $13.8 million -
     1999; $8.5 million - 2000; $6.6 million - 2001; and $0.6 million - 2002 and
     $0.2 million thereafter.

     Periodically,  PLM will  purchase  groups of assets whose  ownership may be
     allocated among affiliated programs and PLM. Generally in these cases, only
     assets that are on lease will be purchased by the affiliated programs.  PLM
     will generally  assume the ownership and remarketing  risks associated with
     off-lease equipment. Allocation of the purchase price will be determined by
     a combination of third party industry sources,  and recent  transactions or
     published  fair market value  references.  During 1996,  PLM realized  $0.7
     million of gains on the sale of 69 off-lease  railcars  purchased by PLM as
     part of a group of assets in 1994 which had been allocated to PLM Equipment
     Growth  Funds IV, VI, VII,  Professional  Lease  Management  Income Fund I,
     L.L.C.  and PLM.  These  assets  were  included  in assets held for sale at
     December 31, 1995. During 1995, PLM realized $1.3 million in gains on sales
     of railcars  and  aircraft  purchased  by PLM in 1994 and 1995 as part of a
     group of assets which had been  allocated  to EGFs IV, V, VI, VII,  Fund I,
     and PLM.

     The  Fund   owns   certain   equipment   which  is  leased   and   operated
     internationally.   A  limited  number  of  the  Fund's   transactions   are
     denominated in a foreign  currency.  Gains or losses resulting from foreign
     currency transactions are included in the results of operations and are not
     material.

                            

<PAGE>




                   PROFESSIONAL LEASE MANAGEMENT INCOME FUND I
                         (A Limited Liability Company)
                         NOTES TO FINANCIAL STATEMENTS
                               December 31, 1997

3.       Equipment (continued)

The Fund leases its aircraft, railcars and trailers to lessees domiciled in four
geographic  regions:  United States,  Canada,  Europe,  and South  America.  The
vessels  are leased to  multiple  lessees in  different  regions who operate the
vessels worldwide.  The tables below set forth geographic  information about the
Fund's  equipment  and the Fund's  proportional  interest in equipment  owned by
special-purpose  entities.  The  Fund  accounts  for  proportional  interest  in
equipment  using the equity  method.  The  geographic  information is grouped by
domicile of the lessee as of and for the year ended December 31, 1997, 1996, and
1995 (in thousands of dollars):

<TABLE>
<CAPTION>

                               Owned Equipment                           Investments in USPEs

Region                1997             1996            1995            1997            1996            1995
                 ---------------------------------------------------------------------------------------------
-------------------
<S>                <C>              <C>             <C>            <C>              <C>             <C>      
Lease revenue:
  Various          $    5,274       $   2,669       $   1,493      $    3,215       $     926       $      --
  United States         6,296           4,573           2,082              --              --              --
  Canada                1,731           1,731             417           2,439           2,110              78
  Europe                   --              --              --           3,530           3,530           1,177
  South America         4,057             966              --              --              --              --
                 --------------------------------------------------------------------------------------------
Total revenues     $   17,358       $   9,939       $   3,992      $    9,184       $   6,566       $   1,255
                 =============================================================================================

</TABLE>

     The following table sets forth  Identifiable  income (loss)  information by
region (in thousands of dollars) :

<TABLE>
<CAPTION>

                                   Owned Equipment                           Investments in USPEs

Region                    1997           1996            1995            1997            1996            1995
                     ---------------------------------------------------------------------------------------------
-----------------------
<S>                    <C>            <C>             <C>             <C>             <C>             <C>      
Income (loss):
  Various              $   1,387      $    (774 )     $    (443 )     $    (525 )     $    (516)      $      --
  United States              214           (201 )           197              --              --              --
  Canada                     (28)           128              (3 )           142            (896)            (41)
  Europe                      --             --              --           1,653           1,156             110
  South America           (2,446)        (1,918 )            --              --              --              --
Total identifiable
    income (loss)           (873)        (2,765 )          (249 )         1,270            (256)             69
  Administrative
    and other             (2,449)           629            (439 )            --              --              --
Total net income
    (loss)             $  (3,322)     $  (2,136 )     $    (688 )     $   1,270       $    (256)      $      69
                     =============================================================================================

</TABLE>

     The  net  book  value  of  owned  assets  and  the  net  investment  in the
unconsolidated  special-purpose entities at December 31, 1997, 1996 and 1995 are
as follows (in thousands of dollars):

<TABLE>
<CAPTION>

                                   Owned Equipment                             Investments in USPEs

Region                    1997            1996             1995            1997             1996            1995
----------------------------------------------------------------------------------------------------------------------
<S>                    <C>             <C>              <C>             <C>              <C>             <C>       
Net book value:
  Various              $  15,358       $    9,221       $  11,065       $   12,452       $   9,917       $      378
  United States           24,901           26,401          16,365               --              --               --
  Canada                   2,102            4,664           5,840            4,614           6,665            4,109
  Europe                      --               --              --            5,180           8,767           10,109
  South America           10,022           17,858              --            4,006              --               --
Total net book
  value                $  52,383       $   58,144       $  33,270       $   26,252       $  25,349       $   14,596
                     =================================================================================================

</TABLE>

      


<PAGE>




                   PROFESSIONAL LEASE MANAGEMENT INCOME FUND I
                         (A Limited Liability Company)
                         NOTES TO FINANCIAL STATEMENTS
                               December 31, 1997

3.   Equipment (continued)

     For 1997, 1996 and 1995, one lessee, Air Portugal,  accounted for more than
     10% of the Fund's  revenues.  The total amount of revenue  accounted for by
     this lessee was $3.5 million or 13% of total revenues in 1997, $3.5 million
     or 21% of total revenues in 1996, and $1.2 million or 22% of total revenues
     in 1995.

4.   Investments in Unconsolidated Special Purpose Entities

     During 1997,  the Fund  purchased an additional  26% interest in a drilling
     marine  vessel for $5.1  million  bringing its  ownership  interest in this
     entity to 61%. In addition in December 1997 the Fund made a deposit of $0.7
     million for a 50% interest in a trust that will own one MD DC9-82 stage III
     aircraft. This aircraft was acquired in January 1998. During 1996, the Fund
     purchased a 25% interest in a trust which owns four Boeing 737-200 aircraft
     for $5.6  million,  and a 50%  interest  in an entity  which  owns a marine
     vessel for $3.4  million (a deposit of $0.4  million was lodged in December
     of 1995) and a 35%  interest  in an entity  which  owns a  drilling  marine
     vessel for $7.0 million.  The  remaining  interests are owned by affiliated
     partnerships.

     The Fund accounts for investments in USPEs using the equity method.

     The net investments in USPEs include the following  jointly-owned equipment
(and related assets and liabilities) (in thousands of dollars):

<TABLE>
<CAPTION>

                                                                         December 31,

                                                                      1997             1996
                                                                 -------------------------------

       <S>        <C>                                             <C>              <C>       
       61%        Drilling marine vessel                          $    9,766       $    6,906
       33%        Two trusts consisting of:
                    Three 737-200A Stage II
                       commercial aircraft
                    Two stage II JT8D aircraft engines
                    Portfolio of rotable components                    7,788            8,767
       25%        Trust consisting of four 737-200A
                    stage II commercial aircraft                       3,163            3,982
       50%        Cargo marine vessel                                  2,638            3,010
       17%        Trust consisting of six 737-200A
                    stage II commercial aircraft (see
                    note below)                                        2,215            2,684
       50%        Trust committed to purchase one
                   MD DC9-82 Stage III commercial aircraft               682               --
       14%        Trust consisting of seven 737-200A
                    Stage II commercial aircraft (see
                    note below)                                           --               --
                                                                 -------------------------------
                  Total investments                                $  26,252       $   25,349
                                                                 ===============================

</TABLE>

     The Fund has  beneficial  interest in two USPEs that own multiple  aircraft
     (the Trusts). These Trusts contain provisions, under certain circumstances,
     for allocating specific aircraft to the beneficial owners. During September
     1996, PLM Equipment Growth Fund V, an affiliated partnership which also has
     a beneficial  interest in one of the Trusts,  renegotiated  its senior loan
     agreement and was required,  for loan collateral purposes,  to withdraw the
     aircraft  designated  to it from the Trust.  The result was to restate  the
     percentage ownership of the remaining beneficial

          


<PAGE>



                   PROFESSIONAL LEASE MANAGEMENT INCOME FUND I
                         (A Limited Liability Company)
                         NOTES TO FINANCIAL STATEMENTS
                                December 31, 1997

Investments in Unconsolidated Special Purpose Entities (continued)

     owners of the Trusts  beginning  September  30,  1996.  This  change had no
     effect on the income or loss recognized in the year ended December 31, 1996
     or 1997.

     The following summarizes the financial  information for the special-purpose
entities and the Fund's interests therein as of and for the years ended December
31, 1997, 1996 and 1995 (in thousands of dollars):

<TABLE>
<CAPTION>

                                      Total USPE                            Net Interest of Fund

                          1997            1996             1995         1997            1996             1995
                     -----------------------------------------------------------------------------------------------

<S>                    <C>             <C>              <C>         <C>              <C>              <C>      
Net assets             $  77,397       $   80,846       $  59,389   $   26,252       $   25,349       $  14,596
Revenues                  27,758           24,676           4,777        9,184            6,566           1,255
Net Income (loss)         10,649           (3,071)         (1,021 )      1,270             (256)             69

</TABLE>

5.   Notes Payable

     In December  1996,  the Fund  entered  into an  agreement  to issue a $25.0
     million  long-term  note to one  institutional  investor.  The  note  bears
     interest  at a fixed  rate of 7.33% per annum and has a final  maturity  in
     2006.  Interest  on the note is  payable  semi-annually.  The note  will be
     repaid in five  principal  payments of $3.0  million on December  31, 2000,
     2001,  2002,  2003, and 2004 and two principal  payments of $5.0 million on
     December 31, 2005,  and 2006.  The agreement  requires the Fund to maintain
     certain financial  covenants related to fixed-charge  coverage The loan was
     funded in March 1997.  Proceeds from the sale of the note were used to fund
     additional equipment  acquisitions and interests in unconsolidated  special
     purpose  entities  in  1997.  The  Manager   estimates,   based  on  recent
     transactions,  that the fair value of the $25.0 million  fixed-rate note is
     $24.8 million.

     The Manager has entered into a joint $50.0  million  credit  facility  (the
     "Committed Bridge Facility") on behalf of the Manager, PLM Equipment Growth
     Fund V, PLM  Equipment  Growth Fund VI, and PLM  Equipment  Growth & Income
     Fund VII (all affiliated investment programs),  TEC Acquisub, Inc. (TECAI),
     an indirect  wholly-owned  subsidiary of the General Partner,  and American
     Finance  Group,  Inc.  (AFG),  a  subsidiary  of PLM,  which may be used to
     provide  interim  financing of up to (i) 70% of the aggregate book value or
     50% of the aggregate net fair market value of eligible  equipment  owned by
     the Partnership , plus (ii) 50% of unrestricted  cash held by the borrower.
     The Committed  Bridge Facility became available to the Fund on May 8, 1995,
     and was amended and restated on December 2, 1997,  to expire on November 2,
     1998.  The  Partnership,   TECAI,  Fund  I,  and  the  other   partnerships
     collectively  may  borrow  up to  $35.0  million  of the  Committed  Bridge
     Facility.  AFG may borrow up to to $50.0  million of the  Committed  Bridge
     Facility.  The Committed  Bridge  Facility also provides for a $5.0 million
     Letter  of  Credit  Facility  for  the  eligible   borrowers.   Outstanding
     borrowings by Fund I, TECAI,  AFG, or PLM Equipment  Growth Funds V through
     VII reduce the amount  available to each other under the  Committed  Bridge
     Facility.  Individual borrowings for the Partnership may be outstanding for
     no more than 179 days,  with all  advances  due no later than  November  2,
     1998.  The  Committed  Bridge  Facility   prohibits  the  Partnership  from
     incurring any additional indebtedness. Interest accrues at either the prime
     rate or adjusted LIBOR plus 1.625% at the borrowers  option,  and is set at
     the  time  of an  advance  of  funds.  Borrowings  by the  Partnership  are
     guaranteed by the General  Partner.  As of December 31, 1997, AFG had $23.0
     million in  outstanding  borrowings.  No other  eligible  borrower  had any
     outstanding  borrowings.  The Manager  believes it will renew the Committed
     Bridge  Facility  upon its  expiration  with similar  terms as those in the
     current Committed Bridge Facility.

6.   Income Taxes

     The Fund is not  subject to income  taxes as any income or loss is included
     in the tax returns of the individual members. Accordingly, no provision for
     income taxes has been made in the financial statements of the Fund.

<PAGE>

                   PROFESSIONAL LEASE MANAGEMENT INCOME FUND I
                         (A Limited Liability Company)
                         NOTES TO FINANCIAL STATEMENTS
                                December 31, 1997

6.   Income Taxes (continued)

     As of December 31, 1997, there were temporary  differences of approximately
     $13.2 million  between the financial  statement  carrying values of certain
     assets  and  liabilities  and the  income  tax  basis  of such  assets  and
     liabilities,  primarily  due to  differences  in  depreciation  methods and
     equipment reserves.

7.   Subsequent Events

     In January  1998,  the Fund paid $6.8 million to complete its purchase of a
     50% interest in an entity which owns a MD DC9-82  stage III  aircraft.  The
     Fund made a deposit of $0.7 million in 1997 on this investment.












                      (This space intentionally left blank)








                                   


<PAGE>


                  PROFESSIONAL LEASE MANAGEMENT INCOME FUND I

                                INDEX OF EXHIBITS


    Exhibit                                                             Page

    4.     Operating Agreement of Partnership.                             *

   10.1    Management Agreement between Fund and                           *
           PLM Investment Management, Inc.

   10.2    $25.0 Million Note Agreement, dated as of December 30, 1996.    *

   10.3    Third Amended and restated Warehousing Credit Agreement,  
           dated as of December 2, 1997, with First Union National 
           Bank of North Carolina and others                           41-120

   24.     Powers of Attorney.                                        121-123


--------
* Incorporated by reference.  See page 23 of this report.

                                                      -33-


<PAGE>