**UNITED
      STATES****SECURITIES
      AND EXCHANGE COMMISSION****Washington,
      D.C. 20549****____________________****FORM
      10-KSB****[X]
      Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
      Act of 1934****For
      the fiscal year ended December 31, 2004.****[
      ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934****For
      the transition period from to****Commission
      file number 0-28376****_______________________****PROFESSIONAL
      LEASE MANAGEMENT INCOME FUND I, L.L.C.****(Exact
      name of Registrant as specified in its
charter)****Delaware
      94-3209289****(State
      or other jurisdiction of (I.R.S. Employer****incorporation
      or organization) Identification No.)********200
      Nyala Farms Road****.********Westport,
      CT 06880****(Address
      of principal executive offices) (Zip code)********Registrant's
      telephone number, including area code: (203)
    341-0555****_______________________**Indicate
      by check mark whether the Registrant (1) has filed all reports required to
      be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
      during the preceding 12 months (or for such shorter period that the
      Registrant was required to file such reports) and (2) has been subject to
      such filing requirements for the past 90 days. Yes X NoTransitional
      Small Business Disclosure Format: Yes No XThe
      Registrant's revenues for the fiscal year ended December 31, 2004 was
      $23,737,000.Aggregate
      market value of voting stock: N/A
 
 
  
  **PART
I**
 
 
 ITEM 1.  BUSINESS
 
 (A)  Background
 
 In August
1994, PLM Financial Services, Inc. (FSI or the Manager), a wholly-owned
subsidiary of PLM International, Inc. (PLMI International or PLMI), filed a
Registration Statement on Form S-1 with the Securities and Exchange Commission
with respect to a proposed offering of 5,000,000 Class A units (the units) in
Professional Lease Management Income Fund I, L.L.C., a Delaware Limited
Liability Company (the Registrant, or the Fund). The Fund's offering became
effective on January 23, 1995.  The offering of units of the Fund closed on
May 13, 1996. As of December 31, 2004, there were 4,971,311 units outstanding.
The Manager contributed $100 for its Class B Member interest in 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 were used to purchase equipment and establish any required
cash reserves. The Fund engages in the business of investing in a diversified
equipment portfolio consisting primarily of used, long-lived, low-obsolescence
capital equipment that is easily transportable by and among prospective
users.
 
 The
Fund's primary objectives are:
 
 (1)  to
maintain a diversified portfolio of low-obsolescence equipment with long lives
and high residual values which were purchased with the net proceeds of the
initial Fund offering, supplemented by debt financing, and surplus operating
cash during the investment phase of the Fund;
 
 (2)  to
generate sufficient net operating cash flow from lease operations to meet
liquidity requirements and to generate cash distributions to the members until
such time as the Manager commences the orderly liquidation of the Fund's assets
or unless the Fund is terminated earlier upon sale of all Fund property or by
certain other events;
 
 (3)  to
selectively sell equipment when the Manager believes that, due to market
conditions, market prices for equipment exceed inherent equipment values or
expected future benefits from continued ownership of a particular asset.
Proceeds from these sales, together with excess net operating cash flows from
operations (net cash provided by operating activities plus distributions from
equity investments) are used to repay the Fund’s outstanding indebtedness and
for distributions to the members; and
 
 (4)  to
preserve and protect the value of the portfolio through quality management,
maintaining diversity, and constantly monitoring equipment markets.
 
 The Fund
will terminate on December 31, 2010, unless terminated earlier upon sale of all
equipment or by certain other events. The Fund may not reinvest cash flow
generated from operations after January 1, 2003 into additional equipment.
Excess cash, if any, less reasonable reserves, will be distributed to the
Members.
 
  Table 1,
below, lists the equipment and the original cost of equipment and capitalized
improvements in the Fund's portfolio, equipment on finance lease and the Fund's
proportional share of equipment in entities in which the Fund has an equity
investment as of December 31, 2004 (in thousands of dollars):
 
 **TABLE
1**
 
 Units
    Type
    Manufacturer
    CostOwned
      equipment held for operating leases:357
    Pressurized
      tank railcars
    Various
    $   
              18,98895
    Covered
      hopper railcars
    Various
    5,19185
    Non-pressurized
      tank railcars
    Various
    4,735245
    Box
      railcars
    Various
    4,95114,196
    Marine
      containers
    Various
    29,15081
    Refrigerated
      marine containers
    Various
    1,2641
    Double-hull
      product tanker
    Hyundai
    17,0002
    737-200A
      stage II commercial aircraft
    Boeing
    10,494Total
      owned equipment held for operating leases
    
    $          
       91,773
    1Owned
      equipment on a finance lease:431
    Intermodal
      trailers on direct finance lease
    Various
    $            
       6,485
    1Equipment
      owned by entities in which the Fund has an equity
    investment:0.5
    Trust
      owning an MD-82stage
      III commercial aircraft
    McDonnell
      Douglas
    $            
      7,775
    20.5
    Trust
      owning an MD-82stage
      III commercial aircraft
    McDonnell
      Douglas
    6,825
    2Total
      equity investments
    
    $         
       14,600
    1
 
 Equipment
is generally leased under operating leases for a term of one to six years except
for the marine vessel which is usually leased for less than one year. Some of
the Fund's marine containers are leased to operators 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 pooled equipment to sublessees, after deducting certain
direct operating expenses of the pooled equipment. The remaining Fund marine
container leases are based on a fixed rate. Rents for all other equipment are
based on fixed rates.
 
 (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 the Fund’s equipment.  The Fund's management agreement with
IMI is to 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 is entitled to a
monthly management fee.  (See Notes 1 and 2 to the financial
statements).
 
 
 
 1 .  Includes
equipment and investments purchased with the proceeds from capital
contributions, undistributed cash flow from operations, and Fund borrowings.
Includes costs capitalized subsequent to the date of purchase.
 2 .  Jointly
owned by the Fund and an affiliated program .
  
  (C)  Competition
 
 (1)  Operating
Leases Versus Full Payout Leases
 
 Generally,
the equipment owned by or invested in the Fund is leased out on an operating
lease basis wherein the rents received during the initial noncancelable term of
the lease are insufficient to recover the Fund’s 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 offer
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 that utilize full payout leases
on new equipment, i.e. leases that have terms equal to the expected economic
life of the equipment.  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 may write full payout
leases at considerably lower rates and for longer terms than the Fund offers, or
larger competitors with a lower cost of capital may offer operating leases at
lower rates, which may put the Fund at a competitive disadvantage.
 
 (2)  Manufacturers
and Equipment Lessors
 
 The Fund
competes with equipment manufacturers who offer operating leases and full payout
leases. Manufacturers may provide ancillary services that the Fund cannot offer,
such as specialized maintenance services (including possible substitution of
equipment), training, warranty services, and trade-in privileges.
 
 The Fund
also competes with many equipment lessors, including ACF Industries, Inc.
(Shippers Car Line Division), GATX Corporation, General Electric Railcar
Services Corporation, General Electric Capital Aviation Services Corporation,
and other investment programs that lease the same types of
equipment.
 
 (D)  Demand
 
 The Fund
currently operates in the following operating segments: railcar leasing, marine
container leasing, marine vessel leasing, commercial aircraft leasing, and
intermodal trailer leasing. Each equipment leasing segment engages in short-term
to mid-term operating leases to a variety of customers. The Fund’s equipment and
investments are primarily used to transport materials and commodities, except
for those aircraft leased to passenger air carriers.
 
 The
following section describes the international and national markets in which the
Fund’s capital equipment operates:
 
 (1)
Railcars
 
 (a)
Pressurized Tank Railcars
 
 Pressurized
tank railcars are used to transport liquefied petroleum gas (LPG) and anhydrous
ammonia (fertilizer). The North American markets for LPG include industrial
applications, residential use, electrical generation, commercial applications,
and transportation. Growth prospects over the long run are good, however, within
any given year, consumption is particularly influenced by the severity of winter
temperatures.
 
 Another
major commodity usage area for pressure railcars is anhydrous ammonia. Within
the fertilizer industry, demand is a function of several factors, including the
level of grain prices, status of government farm subsidy programs, amount of
farming acreage and mix of crops planted, weather patterns, farming practices,
and the value of the United States (US) dollar. Currently, given the domestic
price for natural gas, an increasing amount of anhydrous ammonia is imported
rather than produced locally. These changing distribution patterns offer an
opportunity for increased use of pressure railcars in new transportation
corridors.
 
 On an
industry-wide basis, North American railroad carloadings of the commodity group
that includes petroleum and chemicals posted growth well in excess of the 2-3%
year over year increase anticipated at the beginning of the year. In fact, the
percentage growth above 5% was on a par with 1999; the strongest of the last
decade. Normal growth since the early 90’s is 2%. Demand for tank cars of all
types is growing and lease rates are starting to recover from the historic lows
experienced two years earlier.
 
 Nationwide,
the age of the US and Canadian pressure railcar fleet is advancing. The Fund
owns pressure tank railcars that are among this fleet. Approximately 10% of the
industry fleet has reached the maximum age allowed by regulation (40 years), or
will do so in the next two years. The desirability of some of the railcars in
the Fund is negatively affected by the relatively high age of the fleet.
However, those railcars which do not need to be scrapped and newer acquired cars
should see high levels of utilization as strong commodity growth driven demand
is being served by a declining industry fleet size.
 
 Of the
total fleet of 357 pressurized tank railcars, 7 railcars are in the process of
being scrapped due to its age and cost to repair. At December 31, 2004,
utilization of the Fund’s pressurized tank railcars was 346 out of the remaining
350 cars or 99%. The average age of the fleet is 13 years.
 
 (b)
Covered Hopper (Grain) Railcars
 
 The US
agribusiness industry serves a domestic market that is relatively mature, the
future growth of which is expected to be consistent but modest. Most domestic
grain rail traffic moves to food processors, poultry breeders, and feedlots. The
year 2004 saw dramatic increases in wheat and corn harvests and some increased
demand for rail shipments. The fourth quarter of this year however was expected
to produce a bumper harvest but instead saw a 13% decline in carloadings. The
industry consensus forecast is now for a steady state level of carloadings for
the foreseeable future.
 
 Railcar
utilization has recovered slowly from a significant oversupply of idle railcars
to be absorbed. A large number of new railcars were built in the late 1990s and
the fleet has become more efficiently utilized by the railroads. This year did
see some small improvements in lease rates compared to the extremely low rates
of the last few years.
 
 Although
the Fund’s covered hopper railcars are smaller and thus less desirable than
those currently being built, the Manager has been able place all 95 of these
railcars on lease. The average age of the fleet is 9 years.
 
 (c)  General-Purpose
(Non-pressurized) Tank Railcars
 
 General
purpose tank railcars are used to transport bulk liquid commodities and
chemicals not requiring pressurization, such as certain petroleum products,
liquefied asphalt, lubricating oils, molten sulfur, vegetable oils, and corn
syrup. The overall health of the market for non-food types of commodities is
closely tied to overall manufacturing activity and thus both the US and global
economies. The manufacturing, automobile, and housing sectors are the largest
consumers of chemicals. Also, the increased use of ethanol as a fuel additive
has increased demand for this subset of general purpose railcars.
 
 On an
industry-wide basis, North American railroad carloadings of the commodity group
that includes petroleum and chemicals posted growth well in excess of the 2-3%
year over year increase anticipated at the beginning of the year. In fact, the
percentage growth above 5% was on a par with 1999; the strongest of the last
decade. Normal growth since the early 90’s is 2%. Demand for tank cars of all
types is growing and lease rates are starting to recover from the historic lows
experienced two years earlier.
 
 The Fund
owns 85 general purpose tank railcars all of which are currently on lease. The
average age of these railcars is 2 years.
 
 (d) Box
Railcars
 
 Box
railcars are primarily used to transport paper and paper products, auto parts,
and manufactured goods. Last year a competitor expanded into the box railcar
market significantly increasing competition to traditional lessors. Extremely
attractive prices on new equipment have negatively affected demand for older
railcars.
 
 The
Fund’s boxcars are used for the transportation of paper and have a smaller load
capacity than those currently in demand for this type of service. At present, 50
out of the fleet of 245 boxcars are in process of being scrapped since the
railcars particular configuration dictates that the scrap value of these
railcars exceeds their economic value. All of the remaining 195 railcars which
are of a better design are on lease. The fleet has an average age of 28
years.
 
 (2)
Marine Containers
 
 Marine
containers are used to transport a variety of types of cargo. They typically
travel on marine vessels but may also travel on railroads loaded on certain
types of railcars and highways loaded on a trailer.
 
 Demand
for marine containers is primarily influenced by global economic
conditions.
 
 The Fund
owns a total of 14,277 standard dry and refrigerated cargo marine containers
acquired from 1998 to 2001. Utilization on these containers is expected to
continue to be very strong in the 90-95% range through at least the first half
of 2005. Lease rates on new containers have increased significantly over the
last year due to the increase in price of new containers caused primarily by the
increase in the cost of steel. Lease rates on older containers, however, such as
those owned by the Fund, have just begun to increase. This is due to the large
amount of containers that leasing companies had off-lease. Lease rates on Fund’s
containers are expected to increase slightly in 2005.
 
 Approximately
5,800 or 41% of the Fund’s containers are currently on a fixed lease that will
convert to utilization based lease in 2005. As the market for marine containers
is considerably softer than the period during which they were placed on the
fixed leases, lease revenue on these containers is expected to decrease up to
20% when the original leases expire.
 
 (3)
Marine Vessel
 
 The Fund
has an investment in a double-hull product tanker constructed in 1986, which
operates in international markets carrying a variety of clean commodity-type
cargoes. Demand for commodity-based shipping is closely tied to worldwide
economic growth patterns, which can affect demand by causing changes in specific
grade volume on trade routes. The Manager operates the Funds product tanker in
the spot charter markets, carrying mostly gasoline, jet fuel, gas oils and
similar petroleum distillates or simple chemicals or vegetable oils, an approach
that provides the flexibility to adapt to changes in market conditions.
 
 The
Fund’s product tanker has continued to operate with very little idle time
between charters. Freight rates for marine vessels improved and in the fourth
quarter 2004 reached an all time record high, all due to the demand for sea
transportation resulting from improving economies worldwide. The demand is
expected to continue until additional new marine vessels start coming on line in
2005. Cold weather and demand for refined products worldwide and home heating
oil on US east coast should keep the charter rates at or near 2004 highs going
into 2005, with charter rates starting to show signs of decline during the
spring and summer months.
 
 The
marine vessel owned by the Fund is nearing 20 years old which may limit its
future marketability. Marine vessels 20 years of age typically earn a lower
lease rate than newer marine vessels and may have increased off-hire
time.
 
 (4)  Commercial
Aircraft
 
 The
Manager believes that the commercial aviation industry is recovering from
several years of reduced travel; however, the Manager views the recovery with
caution as 2004 saw major increases in the cost of fuel and continued weakening
of yields. The Manager believes that stabilization of fuel prices will be
critical for the recovery in the airline industry to continue. The recovery has
so far been most noticeable among ‘new technology’ and fuel efficient
aircraft.
 
 The US
market continues to suffer from overcapacity and low yields, with the US network
carriers trying to cut costs while reformatting their pricing strategies. With
United Airlines, US Airways, American Trans Air and other US airlines in
bankruptcy, 2005 might see one of them fail completely. The US market probably
needs consolidation, but airlines may limp on in slimmed-down form, with the
low-cost carriers taking an increased market share. Such a scenario is likely to
lead to another year of losses for the global airline industry as the US market
has a large impact on global basis.
 
 In Europe
the expansion by low cost carriers continued during 2004. The year saw several
startups (and charter carriers switching to scheduled) but also some failures,
showing that low cost operations are no guarantee for success.
 
 The Asian
market led the recovery during 2004 with strong traffic growth during the year
although the tsunami catastrophe in the Indian Ocean occurring at year end will
likely have some negative effects on tourism in Thailand, Indonesia, Sri Lanka
and southern India.
 
 The
Fund’s aircraft is considered ‘old technology’ (including but not limited to not
meeting current noise regulations in the US, Europe and several other
countries). The Manager continues to actively liquidate its positions in old
technology aircraft.
 
 The Fund
owns 100% of two Boeing 737-200A Stage II commercial aircraft which are on lease
to a South American carrier through December 2006. The operators are financially
weak and should a default occur, the Fund would, due to the weak market for
B737-200A Stage II aircraft, suffer a significant reduction of the lease rentals
or possibly be forced to sell the aircraft for parts. The Fund also owns 50% of
two MD-82 Stage III commercial aircraft, which are on lease through the fourth
quarter of 2008 to a major US carrier at above market rates.
 
 The
decrease in value of the Fund’s commercial aircraft has had and will continue to
have a negative impact on the ability of the Fund to achieve its original
objectives as lower values will also result in significantly lower revenues than
the Fund has been able to achieve for these assets in the past.
 
 (5)
Intermodal Trailers
 
 Intermodal
trailers are used to transport a variety of dry goods by rail on flatcars,
usually for distances of over 400 miles. Over the past ten years, intermodal
trailers have continued to be rapidly displaced by domestic containers as the
preferred method of transport for such goods. This displacement occurs because
railroads offer approximately 20% lower wholesale freight rates on domestic
containers compared to intermodal trailers. During 2004, demand for intermodal
trailers increased moderately from very depressed levels during the past two
years. Low demand occurred over the first half of the year (similar to 2002 and
2003) due to comparatively low rail freight rates for 53-foot domestic
containers. Average utilization of the entire US intermodal trailer pool fleet
rebounded from a record low of 49% in 2003 to approximately 57% in 2004. The
Fund's 431 intermodal trailers are on a direct finance lease with a single
lessee through 2006.
 
 (E)  Government
Regulations
 
 The use,
maintenance, and ownership of equipment are regulated by federal, state, local,
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,
governmental, 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 its 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 new
maritime and port security laws as passed by the United States Congress and
other International Maritime Organizations came into full effect in July 2004.
US Coastguard and members of Homeland Security are patrolling ports and boarding
vessels to insure regulations are being followed. The Fund's marine vessel meets
the new code and is in compliance with the necessary reporting procedures and
precautions for pre-entry into US waters and ports. Similarly, the Fund's marine
vessel meets port entry security regulations of foreign countries as mandated by
international law.
 
 No new US
or International Regulations are scheduled to come into effect during 2005 which
would have a significant impact on the Fund's owned marine vessel;
 
 (2)  Under US
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
aircraft has been shown to comply with Stage III noise levels. The Fund has two
Stage II aircraft that do not meet Stage III requirements. The cost to install a
hushkit to meet quieter Stage III requirements is approximately $1.0 million,
depending on the type of aircraft. Currently, the Fund’s Stage II aircraft are
being leased in a country that does not have these regulations;
 
 (3)  The US
Department of Transportation Hazardous Material Regulations regulates the
classification and packaging requirements of hazardous materials, which apply,
particularly to the Fund's tank railcars. Per those regulations several mandated
inspections and or repairs are required to be performed annually. The average
cost of re-qualification for jacketed tank railcars is approximately $1,900 and
$1,100 on non-jacketed railcars. The Fund is required to re-qualify 13 jacketed
owned railcars and no non-jacketed owned railcars in 2005; and
 
 (4)  The tank
railcar industry faces several possible  regulatory
events in the near future. The Manager expects a ruling for some of these issues
during 2005 including but not limited to: the Minot North Dakota accident and
non-normalized steel, constant contact side bearing retrofit and the addition of
a reflector strip to railcars. At this point the Manager cannot estimate the
cost or outcome of any of these proposed programs.
 
 As of
December 31, 2004, the Fund was 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
or interests in entities which own equipment for leasing purposes. As of
December 31, 2004, the Fund owned a portfolio of transportation and related
equipment and equipment owned by entities in which the Fund has an equity
investment, as described in Item I, Table 1. The Fund acquired equipment with
the proceeds of the Fund offering of $100.0 million, proceeds of debt financing
of $25.0 million, and by reinvesting a portion of its operating cash flow in
additional equipment. The Fund does not own any real property.
 
 The Fund
maintains its principal office at 200 Nyala Farms Road, Westport, CT
06880.
 
 ITEM 3.  LEGAL
PROCEEDINGS
 
 The Fund
is involved as plaintiff or defendant in various legal actions incidental to its
business. Management does not believe that any of these actions will be material
to the financial condition or results of operations of the Fund.
 
 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, 2004.
 
 **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. The Manager
will be specially allocated (i) 100% of the Fund’s organizational and offering
cost amortization expenses and (ii) income equal to the excess of cash
distribution over the Manager's 1% share of net profits. The effect on the Class
A Members of this special income allocation will be to increase the net loss or
decrease the net profits allocable to the Class A Members by an equal amount.
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.  The
remaining interests in the profits and losses and distributions of the Fund are
owned as of December 31, 2004, by the 5,073 holders of Units in the
Fund.
 
 There are
several secondary markets in which Class A units trade. Secondary markets are
characterized as having few buyers for Class A units and, therefore, are
generally viewed as inefficient vehicles for the sale of units. Presently, there
is no public market for the units and none is likely to develop. To prevent the
units from being considered publicly traded and thereby to avoid taxation of the
Fund as an association treated as a corporation under the Internal Revenue Code,
the units will not be transferable without the consent of the Manager, which may
be withheld in its absolute discretion. The Manager intends to monitor transfers
of units in an effort to ensure that they do not exceed the percentage or number
permitted by certain safe harbors promulgated by the Internal Revenue Service. A
transfer may be prohibited if the intended transferee is not an US citizen or if
the transfer would cause any portion of the units of a “Qualified Plan” as
defined by the Employee Retirement Income Security Act of 1974 and Individual
Retirement Accounts to exceed the allowable limit.
 
 The Fund
may redeem a certain number of units each year under the terms of the Fund’s
operating agreement. 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 value of a Class A Unit. As of December 31, 2004, the
Fund has purchased a cumulative total of 28,270 Class A units for a cost of $0.4
million. No Class A units were purchased during 2004. The Manager does not
anticipate additional units being purchased under this plan in the
future.
 
 ITEM
      6.
    MANAGEMENT'S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS
 
 The
Fund's consolidated financial statements contained in the 2004 annual report
have been prepared in accordance with the requirements for a Small Business
Issuer as prescribed by Regulation S-B under the Securities Exchange Act of
1934. Generally, a Small Business Issuer cannot file under Regulation S-B if its
annual revenues or public float exceed $25.0 million for two consecutive years.
The Fund qualifies as a Regulation S-B filer since both its 2004 and 2003 annual
revenues were less than $25.0 million and its public float has not exceeded
$25.0 million. The Fund
will continue to qualify as an S-B filer through at least 2006, as its revenues
for the year ended December 31, 2004 are less than $25.0 million.
 
 (A)  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 segments in which it
operates and its effect on the Fund's overall financial condition.
 
 (B)  Results
of Operations -- Factors Affecting Performance
 
 (1)  Re-leasing
Activity and Re-pricing Exposure to Current Economic Conditions
 
 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 the Fund's equipment include, but are not limited to, supply and demand for
similar or comparable types of transport capacity, desirability of the equipment
in the leasing market, market conditions for the particular industry segment in
which the equipment is to be leased, overall economic conditions, and various
regulations concerning the use of the equipment. Equipment that is idle or out
of service between the expiration of one lease and the assumption of a
subsequent lease can result in a reduction of operating cash flow to the Fund.
The Fund experienced re-leasing or re-pricing activity in 2004 for its trailer,
marine container, marine vessel, and railcar portfolios.
 
 (a)  Trailers:
During 2004 the Manager restructured the lease with the existing carrier to
grant a purchase option for the trailers at the end of 2006. Accordingly, the
Fund will no longer earn operating lease revenue from trailers.
 
 (b)  Marine
containers: Some of the Fund’s marine containers are leased to operators of
utilization-type leasing pools and, as such, are highly exposed to re-pricing
activity. Starting in 2005 and continuing through 2006, a significant number of
the Fund’s marine containers currently on a fixed rate lease will be switching
to a lease based on utilization. PLM Financial Services, Inc. (FSI or the
Manager) anticipates that this will result in a significant decrease in lease
revenue as lease rates are significantly lower today than when the fixed rate
lease was entered into several years ago.
 
 (c)  Marine
vessel: The Fund’s owned marine vessel operated in the short-term leasing market
throughout 2004. As a result of this, the Fund's marine vessel was remarketed
several times during 2004 exposing it to re-leasing and re-pricing activity. The
marine vessel is expected to be operated in the short-term leasing market
through 2005.
 
 (d)  Railcars:
This equipment experienced significant re-leasing activity. Lease rates in this
market are showing signs of improvement and this will lead to higher
contribution to the Fund as existing leases expire and renewal leases are
negotiated.
 
 (2)  Equipment
Liquidations
 
 Liquidation
of Fund owned equipment and equipment owned by entities in which the Fund has an
equity investment, represents a reduction in the size of the equipment portfolio
and may result in a reduction of future operating cash flow to the
Fund.
 
 During
2004, the Fund disposed of owned equipment that included a commercial aircraft,
marine containers, railcars and a trailer for total proceeds of $2.5 million.
 
 (3)  Nonperforming
Lessees
 
 Lessees
not performing under the terms of their leases, either by not paying rent, not
maintaining or operating the equipment in accordance with the conditions of the
leases, or other possible departures from the leases, can result not only in
reductions in contribution, but also may require the Fund to assume additional
costs to protect its interests under the leases, such as repossession or legal
fees.
 
 At
December 31, 2004, an $0.9 million other receivable was due from a former
aircraft lessee for past due lease payments and in settlement for returning
aircraft not in accordance with the lease agreement. The other receivable is
scheduled to be fully paid by April 2005. Interest accrues at a rate of 5% on
the outstanding other receivable balance.
 
 (4)  Equipment
Valuation
 
 The Fund
evaluates long-lived assets for impairment whenever events or circumstances
indicate that the carrying values of such assets may not be recoverable. Losses
for impairment are recognized when the undiscounted cash flows estimated to be
realized from a long-lived asset are determined to be less than the carrying
value of the asset and the carrying amount of long-lived assets exceed its fair
value. The determination of fair value for a given investment requires several
considerations, including but not limited to, income expected to be earned from
the asset, estimated sales proceeds, and holding costs excluding interest.
 
 (C)  Financial
Condition -- Capital Resources, Liquidity, and Unit Redemption Plan
 
 The
Manager purchased the Fund’s equipment portfolio with capital raised from its
initial equity offering of $100.0 million and permanent debt financing of $25.0
million. No further capital contributions from Class A Members are permitted
under the terms of the Fund’s operating agreement.
 
 The Fund
relies on operating cash flow to meet its operating obligations and make cash
distributions to Members.
 
 For the
year ended December 31, 2004, the Fund generated cash from operations of $11.5
million to fund its ongoing operating obligations, pay debt and interest
payments and maintain working capital reserves.
 
 During
2004, the Fund disposed of owned equipment for proceeds of $2.5
million.
 
 Restricted
cash decreased $0.1 million during 2004 resulting from the withdrawal of the
Fund from the warehouse debt facility that required this deposit.
 
 Accounts
and other receivable increased $0.3 million during 2004. The Fund collected
outstanding receivables previously reserved for as a bad debt of $1.4 million,
which is included as a recovery of bad debts on the accompanying statements of
income. This increase was partially offset by a decrease of $0.9 million caused
by the collection from the other receivable and a decrease of $0.2 million was
due to the timing of lease receipts.
 
 Equity
investments in affiliated entities decreased $0.5 million during 2004 due to
cash distributions of $1.1 million from the equity investments to the Fund being
partially offset by income of $0.6 million that was recorded by the Fund for its
equity interests in the equity investments.
 
 Other
assets decreased $0.2 million during 2004. A decrease of $0.5 million was due to
the return of an asset to a lessee that was being held as a security deposit, a
decrease of $0.1 million was due to a refund to the Fund and a decrease of $0.1
million was due to the decrease in prepaid insurance during 2004. These
decreases were partially offset by an increase of $0.5 million due to the
transfer of all of the Fund's owned trailers with a net book value of $0.8
million from equipment held for operating lease to finance lease receivable less
payments of $0.3 million.
 
 Accounts
payable decreased $0.4 million during 2004 due to the timing of payments to
vendors.
 
 Reserve
for repairs decreased $0.8 million during 2004 due the sale of an commercial
aircraft and the unused engine reserves for this aircraft totaling $0.9 million
being reclassified as additional gain on disposition offset in part by the
increase of $0.1 million resulting from additional accruals for scheduled marine
vessel maintenance.
 
 Lessee's
deposits decreased $0.7 million during 2004 due to a $0.5 million lessee
security deposit being returned to the lessee and a decrease of $0.2 million due
to the timing of prepaid lease payments being received from lessees compared to
2003.
 
 The Fund
was a participant in a $10.0 million warehouse facility. On March 17, 2004, the
facility was amended and restated and the Fund was removed as a
participant.
 
 The Fund
made the required annual debt payment of $3.0 million to the lender of the note
payable during 2004.
 
 The Fund
had a remaining outstanding balance of $10.0 million on the note payable. The
note bore interest at a fixed rate of 7.33% per annum and had a final maturity
in 2006. Interest on the note was payable semi-annually. The remainder of the
note payable was due in two principal payments of $5.0 million on December 31,
2005, and 2006. The agreement required the Fund to maintain certain financial
covenants. In January 2005, the Fund prepaid the remaining balance outstanding
under the notes payable.
 
 Commitments
as of December 31, 2004 are as follows (in thousands of dollars):
 
 Less
      than
    
    1-3Current
      Obligations
    
    Total
    
    1
      Year
    
    YearsNotes
      payable
    
    $
    10,000
    
    $
    5,000
    
    $
    5,000
 
 The
Manager has not planned any expenditures, nor is it aware of any commitments
that would cause it to require any additional capital over that mentioned
above.
 
 (D)  Critical
Accounting Policies and Estimates
 
 The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires the Manager to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. On a regular basis, the Manager reviews these
estimates, including those related to asset lives and depreciation methods,
impairment of long-lived assets, allowance for doubtful accounts, reserves
related to legally mandated equipment repairs ** and
contingencies and litigation. These estimates are based on the Manager's
historical experience and on various other assumptions believed to be reasonable
under the circumstances. Actual results may differ from these estimates under
different assumptions or conditions. The Manager believes, however, that the
estimates, including those for the above-listed items, are reasonable and that
actual results will not vary significantly from the estimated
amounts.
 
 The
Manager believes the following critical accounting policies affect the more
significant judgments and estimates used in the preparation of the Fund's
financial statements:
 
 Revenue
recognition: Revenues are generally earned by placing the equipment under
operating leases. A portion of the Fund's marine containers are leased to
operators of utilization-type leasing pools that include equipment owned by
unaffiliated parties. In such instances, revenues earned by the Fund consist of
a specified percentage of the total revenues generated by leasing the pooled
equipment to sublessees after deducting certain direct operating expenses of the
pooled equipment. The Fund’s marine vessel is operating on short-term leases
which usually have a duration of less than one year. Rents for the remaining
equipment are based on fixed rates.
 
 The Fund
has owned trailers that were transferred into a direct finance lease during
2004. The revenues from the direct finance lease are primarily interest income
and are based on a monthly amortization schedule.
 
 Asset
lives and depreciation methods: The Fund’s primary business involves the
purchase and subsequent lease of long-lived transportation and related
equipment. The Manager has chosen asset lives that it believes correspond to the
economic life of the related asset. Depreciation is computed using the
double-declining balance method, taking a full month's depreciation in the month
of acquisition based upon estimated useful lives of 15 years for railcars and 12
years for all other equipment. The depreciation method changes to straight line
when annual depreciation expense using the straight-line method exceeds that
calculated by the double-declining balance method. The Manager has chosen a
deprecation method that it believes matches the benefit to the Fund from the
asset with the associated costs. These judgments have been made based on the
Manager’s expertise in each equipment segment that the Fund operates. If the
asset life and depreciation method chosen does not reduce the book value of the
asset to at least the potential future cash flows from the asset to the Fund,
the Fund would be required to record an impairment loss. Likewise, if the net
book value of the asset was less than the economic value, the Fund may record a
gain on sale upon final disposition of the asset.
 
 Impairment
of long-lived assets: Whenever there is an indicator that an impairment may
exist such as when cash-flows decrease, there are unexpected maintenance issues
or when economic conditions deteriorate in the market the equipment operates,
the Manager reviews the carrying value of its equipment and equity investments
in affiliated entities to determine if the carrying value of the assets may not
be recoverable in consideration of the current economic conditions. This
requires the Manager to make estimates related to future cash flows from each
asset as well as the determination if the deterioration is temporary or
permanent. If these estimates or the related assumptions change in the future,
the Fund may be required to record additional impairment charges.
 
 Allowance
for doubtful accounts: The Fund maintains allowances for doubtful accounts for
estimated losses resulting from the inability of the lessees to make the lease
payments. These estimates are primarily based on the amount of time that has
lapsed since the related payments were due as well as specific knowledge related
to the ability of the lessees to make the required payments. If the financial
condition of the Fund’s lessees were to deteriorate, additional allowances could
be required that would reduce income. Conversely, if the financial condition of
the lessees were to improve or if legal remedies to collect past due amounts
were successful, the allowance for doubtful accounts may need to be reduced and
income would be increased.
 
 Reserves
for repairs: The Fund accrues for legally required repairs to equipment such as
dry docking for marine vessels and engine overhauls to aircraft engines over the
period prior to the required repairs. The amount that is reserved is based on
the Manager’s expertise in each equipment segment, the past history of such
costs for that specific piece of equipment and discussions with independent,
third party equipment brokers. If the amount reserved is not adequate to cover
the cost of such repairs or if the repairs must be performed earlier than the
Manager estimated, the Fund would incur additional repair and maintenance or
equipment operating expenses.
 
 Contingencies
and litigation: The Fund is subject to legal proceedings involving ordinary and
routine claims related to its business. The ultimate legal and financial
liability with respect to such matters cannot be estimated with certainty and
requires the use of estimates in recording liabilities for potential litigation
settlements. Estimates for losses from litigation are disclosed if considered
possible and accrued if considered probable after consultation with outside
counsel. If estimates of potential losses increase or the related facts and
circumstances change in the future, the Fund may be required to record
additional litigation expense.
 
 (E)  Recent
Accounting Pronouncements
 
 On
December 24, 2003, Financial Accounting Standards Board (FASB) issued
Interpretation No. 46(R), “Consolidation of Variable Interest Entities” (FIN
46(R)). FIN 46(R) is effective for the Fund beginning on January 1, 2004 and it
requires the Fund to evaluate all existing equity investments to identify
situations where the Fund has a “variable interest,” commonly evidenced by a
guarantee arrangement or other commitment to provide financial support, in a
“variable interest entity,” commonly a thinly capitalized entity, and further
determine when such variable interest requires the Fund to consolidate the
variable interest entities’ financial statements with its own.  The Manager
has determined that none of its equity investments qualify as variable interest
entities. Adoption of FIN 46(R) did not have a material effect on financial
position or results of operations.
 
 In March
2004, FASB's Emerging Issues Task Force (EITF) released Issue No. 03-1, “The
Meaning of Other-Than-Temporary Impairment and Its Application to Certain
Investments" (EITF 03-1). EITF 03-1 provides guidance for determining whether
impairment for certain debt and equity investments is other-than-temporary and
the measurement of an impaired loss. Certain disclosure requirements of EITF
03-1 were adopted in 2003 and the Fund has complied with the new disclosure
requirements in its consolidated financial statements. The recognition and
measurement requirements of EITF 03-1 were initially effective for reporting
periods beginning after June 15, 2004. In September 2004, the FASB Staff issued
FASB Staff Position (FSP) EITF 03-1-1 that delayed the effective date for
certain measurement and recognition guidance contained in EITF 03-1.  The
FSP requires that entities continue to apply previously existing
“other-than-temporary” guidance until a final consensus is reached. The Manager
does not anticipate that issuance of a final consensus will materially impact
the Fund’s financial condition or results of operations.
 
 In
December 2004, FASB issued Statement 153, "Exchanges of Non-monetary Assets"
(Statement 153), an amendment of Accounting Principles Board Opinion No. 29.
Statement 153 is effective for non-monetary asset exchanges occurring in fiscal
periods beginning after June 15, 2005. Statement 153 eliminates the exception to
fair value for exchanges of similar productive assets and replaces it with a
general exception for exchange transactions that do not have commercial
substance - that is, transactions that are not expected to result in significant
changes in the cash flows of the reporting entity.  The Manager does not
believe that the adoption of Statement 153 will have a significant effect on its
financial statements.
 
 (F)  Results
of Operations -- Year to Year Detail Comparison
 
 Comparison
of the Fund's Operating Results for the Years Ended December 31, 2004 and
2003
 
 (a)  Owned
Equipment Operations
 
 Lease
revenues less direct expenses (defined as repairs and maintenance, equipment
operating, and asset-specific insurance expenses) on owned equipment increased
during the year ended December 31, 2004, compared to 2003. Gains or losses from
the sale of equipment, interest and other income and certain expenses such as
management fees to affiliate, depreciation, interest expense, general and
administrative expenses, impairment loss on equipment, and recovery of bad debts
relating to the operating segments (see Note 5 to the financial statements), are
not included in the owned equipment operation discussion because they are
indirect in nature and not a result of operations but the result of owning a
portfolio of equipment. The following table presents lease revenues less direct
expenses by segment (in thousands of dollars):
 
 For
      the Years EndedDecember
      31,2004
    
    2003Marine
      containers
    $
    4,714
    
    
    $
    5,126Marine
      vessel
    
    4,652
    
    
    
    1,869Railcars
    
    2,540
    
    
    
    3,012Aircraft
    
    1,053
    
    
    
    861Trailers
    
    (3
    )
    
    
    635
 
 Marine
containers:  Marine
container lease revenues and direct expenses were $4.8 million and $0.1 million,
respectively, for the year ended December 31, 2004, compared to $5.2 million and
$0.1 million, respectively, during 2003. The decrease in lease revenues of $0.4
million during the year ended December 31, 2004 compared to 2003 was due to a
group of marine containers switching from a fixed rate lease to one based on
utilization. A significant number of the Fund’s marine containers currently on a
fixed rate lease will be switching to a lease based on utilization over the next
two years. The Manager anticipates that this will result in a significant
decrease in lease revenues.
 
 Marine
vessel:  Marine
vessel lease revenues and direct expenses were $10.7 million and $6.0 million,
respectively, for the year ended December 31, 2004, compared to $7.4 million and
$5.5 million, respectively, during 2003. Lease revenues increased $3.3 million
in the year ended December 31, 2004 due to a higher lease rate earned on the
Fund’s marine vessel. Direct operating expenses increased $0.5 million during
the year ended December 31, 2004 due to higher voyage expenses compared to 2003.
 
 Railcars:  Railcar
lease revenues and direct expenses were $3.8 million and $1.3 million,
respectively, for the year ended December 31, 2004, compared to $3.9 million and
$0.9 million, respectively, during the same period of 2003. Lease revenues
decreased $0.1 million due to the sale of railcars in 2004 and 2003. The
increase in railcar direct expenses of $0.4 million was primarily due to higher
repairs and maintenance costs required by new governmental regulations.
 
 Aircraft:  Aircraft
lease revenues and direct expenses were $1.1 million and $34,000, respectively,
for the year ended December 31, 2004, compared to $0.9 million and $44,000,
respectively, during 2003. An increase in lease revenues of $0.4 million was due
to one of the Fund’s owned aircraft being on-lease during the year ended
December 31, 2004 compared to 2003, during which this aircraft was off-lease for
six months. In addition, an increase in lease revenues of $0.1 million was due
to an increase in the lease rate on two of the Fund's owned aircraft compared to
2003. These increases were partially offset by a decrease of $0.3 million caused
by the sale on an aircraft during the year ended December 31, 2004 that was on
lease during 2003.
 
 Trailers:
Trailer lease revenues and direct expenses were $27,000 and $30,000,
respectively, for the year ended December 31, 2004, compared to $1.0 million and
$0.4 million, respectively, during 2003. Trailer operating lease revenues and
direct expenses decreased in 2004 due to all of the Fund's trailers being placed
on a direct finance lease in the first quarter of 2004.
 
 (b)  Interest
and Other Income
 
 Interest
and other income increased $0.5 million in the year ended December 31, 2004
compared to 2003. During 2004, a former aircraft lessee agreed to pay $0.6
million in consideration for not returning the aircraft in the condition
required by the lease agreement. A similar event did not occur during 2003. This
increase was partially offset by a decrease of $0.1 million in interest income
caused by lower outstanding principal balance on the other receivable compared
to 2003.
 
 (c)  Indirect
Expenses Related to Owned Equipment Operations
 
 Total
indirect expenses of $9.2 million for the year ended December 31, 2004 decreased
from $10.8 million in 2003. Significant variances are explained as
follows:
 
 (i)  A $1.3
million decrease in depreciation and amortization expenses from 2003 levels
reflects a decrease of $0.8 million caused by the double-declining balance
method of depreciation which results in greater depreciation in the first years
an asset is owned, a decrease of $0.1 million caused by equipment dispositions
during 2004 and 2003 and a decrease of $0.4 million caused by the Fund's trailer
portfolio being placed in a direct finance lease in the first quarter of 2004;
 
 (ii)  A $0.7
million decrease in the impairment loss on equipment resulted from the Fund
reducing the carrying value of the owned railcars $0.3 million and owned
trailers $0.4 million to their estimated fair value during the year ended
December 31, 2003. No impairment of equipment was required during
2004;
 
 (iii)  A $0.2
million decrease in interest expense was due to lower average borrowings
outstanding during the year ended December 31, 2004 compared to 2003. Interest
expense is expected to decrease in the future as the existing note payable is
repaid;
 
 (iv)  Recovery
of bad debts decreased $0.4 million in 2004 compared to the same period of 2003.
During 2004 and 2003, recovery of bad debts of $1.4 million and $1.9 million,
respectively, was due to the collection of bad debts primarily from one former
aircraft lessee that had been previously written off;
 
 (v)  A $0.1
million increase in general and administrative expenses during the year ended
December 31, 2004 was due to increased professional services; and
 
 (vi)  A $0.1
million increase in management fees to affiliate was due to higher lease
revenues earned during the year ended December 31, 2004 compared to
2003.
 
 (d)  Net Gain
on Disposition of Owned Equipment
 
 Net gain
on disposition of owned equipment for the year ended December 31, 2004 totaled
$2.5 million which resulted from the disposition of a commercial aircraft,
marine containers, railcars, and a trailer with a net book value of $0.9 million
for proceeds of $2.5 million and the recognition of $0.9 million of unused
engine reserves. Net gain on disposition of owned equipment for the year ended
December 31, 2003 totaled $0.2 million which resulted from the disposition of
marine containers, trailers and railcars with a net book value of $0.3 million
for proceeds of $0.5 million.
 
 (e)  Equity in
Net Income of Equity Investments
 
 Equity in
net income of equity investments represents the Fund's share of the net income
generated from the operation of jointly owned entities accounted for under the
equity method of accounting. These entities are single purpose and have no debt
or other financial encumbrances.
 
 The
following equity investments discussion is based on the Fund's proportional
share of revenues, depreciation expense, direct expenses, and administrative
expenses in the equity investments:
 
 As of
December 31, 2004 and 2003, the Fund owned interests in two trusts that each own
a commercial aircraft and an interest in an entity owning other aircraft related
assets. During the years ended December 31, 2004 and 2003, lease revenues of
$1.2 million from the two trusts that each own a commercial aircraft were
partially offset by depreciation expense, direct expenses, and administrative
expenses of $0.7 million. During the year ended December 31, 2004, contribution
from an entity owning other assets increased $42,000 compared to
2003.
 
 (f)  Net
Income
 
 As a
result of the foregoing, the Fund had a net income of $7.6 million for the year
ended December 31, 2004, compared to net income of $1.7 million during 2003. The
Fund's ability to operate and liquidate assets, secure leases, and re-lease
those assets whose leases expire is subject to many factors. Therefore, the
Fund's performance in the year ended December 31, 2004 is not necessarily
indicative of future periods.
 
 (G)  Geographic
Information
 
 Certain
of the Fund’s equipment operates in 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. Currency risks are at a minimum because all
invoicing, with the exception of a small number of railcars operating in Canada,
is conducted in United States (US) dollars. Political risks are minimized by
avoiding 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 US 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 6 to the financial statements for information on
the lease revenues, net income (loss), and net book value of equipment in
various geographic regions.
 
 Revenues
and net operating income or loss 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, and net book value of
equipment are expected to change significantly in the future, as assets come off
lease and decisions are made to either redeploy the assets in the most
advantageous geographic location or sell the assets.
 
 The
Fund's owned and partially owned equipment on lease to US-domiciled lessees
consists of trailers, railcars, and interests in entities that own aircraft.
During 2004, US lease revenues accounted for 17% of the total lease revenues
from wholly and jointly owned equipment. This region reported a net loss of $0.1
million.
 
 The
Fund's owned equipment on lease to South American-domiciled lessees consists of
two aircraft. During 2004, South American lease revenues accounted for 5% of the
total lease revenues from wholly and jointly owned equipment, while this region
reported a net income of $4.4 million. Net income from this region resulted
primarily from the collection of $1.5 million that had been previously reserved
for as a bad debt and $1.7 million from the gain on sale of an owned
aircraft.
 
 The
Fund's equipment on lease to Canadian-domiciled lessees consists of railcars.
Lease revenues in Canada accounted for 6% of total lease revenues from wholly
and jointly-owned equipment, while this region reported a net loss of $0.2
million.
 
 The
Fund's owned equipment on lease to lessees in the rest of the world consists of
marine vessels and marine containers. During 2004, lease revenues from these
operations accounted for 72% of the total lease revenues of wholly and
jointly-owned owned equipment, while this region reported a net income of $5.2
million.
 
 (H)  Inflation
 
 Inflation
had no significant impact on the Fund's operations during 2004 or
2003.
  (I)  Forward-Looking
Information
 
 Except
for historical information contained herein, the discussion in this Form 10-KSB
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-KSB should be read as being
applicable to all related forward-looking statements wherever they appear in
this Form 10-KSB. The Fund's actual results could differ materially from those
discussed here.
 
 (J)  Outlook
for the Future
 
 The
Fund's operation of a diversified equipment portfolio in a broad base of markets
is intended to reduce its exposure to volatility in individual equipment
sectors.
 
 The
ability of the Fund to realize acceptable lease rates on its equipment in the
different equipment markets is contingent on many factors, such as specific
market conditions and economic activity, technological obsolescence, and
government or other regulations. The unpredictability of these factors makes it
difficult for the Manager to clearly define trends or influences that may impact
the performance of the Fund's equipment. The Manager continually monitors both
the equipment markets and the performance of the Fund's equipment in these
markets. The Manager may make an evaluation to reduce the Fund's exposure to
those equipment markets in which it determines that it cannot operate equipment
and achieve acceptable rates of return.
 
 The
Manager intends to use future cash from operations to satisfy its operating
requirements and make cash distributions to its members. The Fund may no longer
use cash generated from operations to purchase equipment.
 
 Factors
that may affect the Fund’s contribution in 2005 and beyond include:
 
 (i)  Demand
for marine containers is closely tied to worldwide economic conditions. The
market for the Fund's marine containers is expected to remain strong during 2005
with utilization in the 90 - 95% range with lease rates increasing slightly.
Approximately 5,800 or 41% of the Fund’s marine containers are currently on a
fixed lease that will convert to utilization based lease over the next two
years. As the market for marine containers is considerably softer than the
period during which they were placed on the fixed leases, lease revenue on these
marine containers is expected to decrease up to 20% when the originals leases
expire;
 
 (ii)  Economic
recovery in the railcar segment continues to be strong. Overall railcar loadings
are forecast to grow approximately 6% in 2005. Railcar manufacturers now have
full production schedules until the summer of 2005 for tank railcars.
 
 The
Fund's railcar fleet is largely used by a broadly defined chemical sector.
Chemical and petroleum railcar loadings are projected to grow at a substantially
higher rate this year than the 3% per year long run average. The continuation of
high steel prices have resulted in increases in the price of a new tank railcars
and lease rates have now increased in response this price increase. While this
improves returns for railcar lessors in the short run, reduced railcar
availability and higher lease costs along with railroad operating inefficiencies
may cause the chemical industry growth to slow and perhaps cause chemical
producers to shift to other forms of transportation. Also, there are a number of
potential new railroad operating requirements and regulations which, if adopted,
could increase the cost of railcar ownership. At present, the Fund's tank
railcar fleet is highly utilized and appears to be in a position to remain so
for the foreseeable future.
 
 The
Manager believes that the market for the Fund's railcars will remain strong for
several years. The Manager has engaged an investment banking firm to explore
strategic alternatives with respect to its railcar operations which could
include the sale of the Fund's owned railcars;
 
 (iii)  The
Fund’s product tanker marine ** vessel
is designated as a Clean Product Carrier and as such transports and trades on
voyage and term charters with Clean Petroleum Products such as gasoline, jet
fuel, clean diesel oil, condensate, etc. and on occasion clean chemicals in
liquid form, an
approach that provides the flexibility to adapt to changes in market
conditions *.* Demand
for commodity-based shipping is closely tied to worldwide economic growth
patterns, which can affect demand by causing changes in specific grade volume on
trade routes.
 
 The
Fund’s product tanker has continued to operate with very little idle time
between charters. During 2004 freight rates for marine vessels progressively
improved and in the fourth quarter 2004 reached an all time record high, all due
to the demand for sea transportation resulting from improving economies
worldwide. The demand is expected to continue until additional new tonnage
starts coming on line in 2005. Cold weather and demand for refined products
worldwide and home heating oil on US east coast should keep the charter rates at
or near 2004 highs going into 2005. Charter rates are expected to begin to show
sign of decreasing during the spring and summer months of 2005.
 
 The
marine vessel in which the Fund owns is scheduled to undergo major maintenance
during November 2005. The Manager expects that this marine vessel will be
off-hire for approximately one month.
 
 The
marine vessel owned by the Fund is nearing 20 years old which may limit its
future marketability. Marine vessels 20 years of age typically earn a lower
lease rate than newer marine vessels and may have increased off-hire time;
 
 (iv)  The
Fund's trailer portfolio is on lease through the end of 2006. The lessee of this
equipment has indicated it may exercise its option to prepay the remaining rent
and purchase some of this equipment in 2005;
 
 (v)  Market
demand for new and used aircraft has been severely impacted by the poor
financial condition of the airline industry. The Manager believes that there is
a significant oversupply of commercial aircraft available that has caused a
decrease in aircraft fair market value which will continue for the foreseeable
future for the type of aircraft owned by the Fund.
 
 In March
2005, the lessee of the Fund’s two Boeing 737-200 aircraft declared bankruptcy.
At this point, the Manger is reviewing it options, which include repossessing
the aircraft. Given that the aircraft are in excess of 25 years old and that the
aircraft leasing market is weak, if the Fund takes possession of the aircraft,
it may take a considerable period of time to release or sell them; and
 
 (vi)  The Fund
is expected to have increased general and administrative costs as the Manager
liquidates other investment programs that currently share certain general and
administrative expenses.
 
 Several
other factors may affect the Fund's operating performance in 2005 and beyond,
including changes in the markets for the Fund's equipment and changes in the
regulatory environment in which that equipment operates.
 
 (1)  Re-pricing
Risk
 
 Certain
of the Fund's marine vessel, railcars, and marine containers will be remarketed
in 2005 as existing leases expire, exposing the Fund to re-pricing
risk/opportunity.
 
 (2)  Equipment
Liquidations
 
 The
Manager may elect to sell certain under-performing equipment or equipment whose
continued operation may become prohibitively expensive. 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.
 
 (3)  Impact of
Government Regulations on Future Operations
 
 Ongoing
changes in the regulatory environment, both in the US and internationally,
cannot be predicted with accuracy, and preclude the Manager from determining the
impact of such changes on Fund operations or sale of equipment.
 
 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.
 
 (K)  Distribution
Levels and Additional Capital Resources
 
 The
Fund's initial contributed capital was composed of the proceeds from its initial
offering of $100.0 million, supplemented by permanent debt in the amount of
$25.0 million. The Fund may no longer purchase equipment with cash flow from
operations. 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. The Fund intends to rely on operating cash flow to meet its
operating obligations, make cash distributions to members, and make debt and
interest payments.
 
 The Fund
had scheduled debt payments of $5.0 million on December 31, 2005 and 2006. This
debt was prepaid in the first quarter of 2005.
 
 The
Manager is currently in the process of reviewing its cash distribution policy to
determine if there may be a cash distribution declared in 2005. Cash
distributions when paid to the members generally consist of both a return of and
a return on capital. Cash distributions do not represent and are not indicative
of yield on investment. Actual yield on investment cannot be determined with any
certainty until conclusion of the Fund and will be dependent upon the collection
of all future contracted rent, the generation of renewal and/or re-lease rents
and the residual value realized for each asset at its disposal.
 
 ITEM
7.  FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
 
 The
financial statements for the Fund are listed on the Index to Financial
Statements included in Item 13(a) of this Annual Report on Form
10-KSB.
 
 
 ITEM
      8.
    CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE
 
 (A)
    Disagreements
      with Accountants on Accounting and Financial
Disclosures
 
 None.
 
 (B)
    Changes
      in Accountants
 
 In
November 2004 the Manager announced that Ernst & Young LLP had declined to stand
for reelection as the Fund’s independent auditor . Ernst
& Young LLP issued
an unqualified opinion on the Fund's 2003 financial statements. During 2003 and
the subsequent interim periods preceding the announcement that Ernst
& Young LLP would not stand as the Fund’s independent auditor , there
were no disagreements with Ernst
& Young LLP on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure. In December 2004, the Manager announced that the
Fund had engaged Grant Thornton LLP as the Fund’s independent
auditor.
 
 ITEM
8A.  CONTROLS
AND PROCEDURES
 
 (A)  Limitations
on the Effectiveness of Controls
 
 The
Manager’s management, including it’s President and Chief Financial Officer
(CFO), does not expect that our internal controls or disclosure control will
prevent all errors and all fraud. A control system, no matter how well conceived
and operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met. Further, the design of a control
system must reflect the fact that there are resource constraints, and the
benefits of controls must be considered relative to their costs.
 
 Because
of the inherent limitations in all control systems, no evaluation of control can
provide absolute assurance that all control issues and instances of fraud, if
any, within the Fund have been detected. These inherent limitations include the
realities that judgments in decision-making can be faulty and that breakdowns
can occur because of a simple error or mistake. Additionally, controls can be
circumvented by the individual acts of some persons, collusion of two or more
people, or by management override of the control. The design of any system of
controls also is based partly on certain assumptions about the likelihood of
future events, and there can be no assurance that any design will succeed in
achieving its stated goals under all potential future conditions.
 
 Notwithstanding
the forgoing limitations, we believe that our internal controls and disclosure
controls provide reasonable assurances that the objectives of our control system
are met.
 
 (B)  Quarterly
Evaluation of the Fund’s Disclosure Controls and Internal Controls
 
 (1)  Within
the 90-day period prior to the filing of this report, the Manager carried out an
evaluation, under the supervision and with the participation of the Manager’s
management, including it’s President and CFO, of the effectiveness of the design
and operation of the Fund’s disclosure controls and procedures pursuant to Rule
13a-14 under the Securities Exchange Act of 1934 (the “Exchange Act”). Based
upon that evaluation, the President and CFO concluded that the Fund’s disclosure
controls and procedures are effective in timely alerting them to material
information relating to the Fund’s required to be included in the Fund’s
exchange act filings.
 
 (2)  There
have been no significant changes in the Fund’s internal controls or in other
factors which could significantly affect internal controls subsequent to the
date the Manager carried out its evaluations.
 
 **PART
III**
 
 ITEM
      9.
    DIRECTORS
      AND EXECUTIVE OFFICERS OF PLM FINANCIAL SERVICES, INC.
 
 As of the
date of this annual report, the directors and executive officers of PLM
Financial Services, Inc. (and key executive officers of its subsidiaries) are as
follows:
 
 Name
    Age
    PositionGary
      D. Engle
    56
    Director,
      PLM Financial Services, Inc., PLM Investment Management, Inc., and PLM
      Transportation Equipment Corp.James
      A. Coyne
    44
    Director,
      Secretary and President, PLM Financial Services, Inc. and PLM Investment
      Management, Inc., Director and Secretary, PLM Transportation Equipment
      Corp.Richard
      K Brock
    42
    Chief
      Financial Officer, PLM Financial Services, Inc., PLM Investment
      Management, Inc. and PLM Transportation Equipment
Corp.
 
 Gary D.
Engle was appointed a Director of PLM Financial Services, Inc. in January 2002.
He was appointed a director of PLM International, Inc. in February 2001. He is a
director and President of MILPI Holdings, LLC (MILPI). Since November 1997, Mr.
Engle has been Chairman and Chief Executive Officer of Semele Group Inc.
(“Semele”). Mr. Engle is President and Chief Executive Officer of Equis
Financial Group (“EFG”), which he joined in 1990 as Executive Vice President.
Mr. Engle purchased a controlling interest in EFG in December 1994. He is also
President of AFG Realty, Inc.
 
 James A.
Coyne was appointed President of PLM Financial Services, Inc. in August 2002. He
was appointed a Director and Secretary of PLM Financial Services, Inc. in April
2001. He was appointed a director of PLM International, Inc. in February 2001.
He is a director, Vice President and Secretary of MILPI. Mr. Coyne has been a
director, President and Chief Operating Officer of Semele since 1997. Mr. Coyne
is Executive Vice President of Equis Corporation, the general partner of EFG.
Mr. Coyne joined EFG in 1989, remained until 1993, and rejoined in November
1994.
 
 Richard K
Brock was appointed Chief Financial Officer of PLM Financial Services, Inc. in
August 2002. From June 2001 through August 2002, Mr. Brock was a consultant to
various leasing companies including PLM Financial Services, Inc. From October
2000 through June 2001, Mr. Brock was a Director of PLM Financial Services, Inc.
Mr. Brock was appointed Vice President and Chief Financial Officer of PLM
International, Inc. and PLM Financial Services, Inc. in January 2000, having
served as Acting Chief Financial Officer since June 1999 and as Vice President
and Corporate Controller of PLM International, Inc. and PLM Financial Services,
Inc. since June 1997. Prior to June 1997, Mr. Brock served as an Director of
Planning and General Accounting beginning in February 1994.
 
 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., PLM
Transportation Equipment Corp., or PLM Investment Management, Inc.
 
 CODE
OF ETHICS
 
 The Board
of Directors of PLM Financial Services Inc, (“FSI”) the Manager, has adopted a
written Code of Ethics that is applicable to the Board, executive officers and
employees of PLM Financial Services Inc. FSI’s Code of Ethics is designed to
deter wrongdoing and to promote:
 
 -
    the
      integrity and values of FSI, including the ethical handling of actual or
      apparent conflicts of interest between personal and professional
      relationships;-
    compliance
      with applicable governmental laws, rules and
  regulations;-
    internal
      reporting of violations of the Code of Ethics to any member of FSI’s Board
      of Directors; and-
    accountability
      for adherence to the Code of Ethics.
 
 ITEM
10.  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,
2004.
 
 ITEM
11.  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 of
income 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, 2004, 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 owned any units of the Fund as of December 31,
2004.
 
 ITEM
12.  CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
 
 Transactions
with Management and Others
 
 During
2004, the Fund paid or accrued the following fees to FSI or its affiliates:
management fees - $1.2 million; and administrative and data processing services
performed on behalf of the Fund - $0.5 million.
 
 During
2004, the equity investments paid or accrued the following fees to FSI or its
affiliates (based on the Fund’s proportional share of ownership): management
fees - $0.1 million; and administrative and data processing services - $6,000.
 
 The
balance due to affiliates as of December 31, 2004, included $0.3 million due to
FSI and its affiliates for management fees.
 
 
 ITEM
13.  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-KSB.
 
 (B)  Financial
Statement Schedule
 
 None.
 
 (C)  Reports
on Form 8-K
 
 1.
    Form
      8-K dated October 1, 2004 announcing that Ernst & Young LLP would not
      stand for reelection as the Fund's independent auditors for the year ended
      December 31, 2004.
 
 2.
    Form
      8-K/A dated October 14, 2004 announcing that Ernst & Young LLP would
      not stand for reelection as the Fund's independent auditors for the year
      ended December 31, 2004.
 
 3.
    Form
      8-K dated December 22, 2004 announcing the engagement of Grant Thornton
      LLP as the Fund's independent auditor for the year ended December 31,
      2004.
 
 (D)  Exhibits
 
 4
    Operating
      Agreement of Fund, 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,
      1993.10.1
    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, incorporated by
      reference to the Fund’s 1996 Annual Report on Form 10-K filed with the
      Securities and Exchange Commission on March 14, 1997.10.3
    Settlement
      Agreement between PLM Worldwide Leasing Corp. and Varig S.A. dated October
      11, 2002, incorporated by reference to the Fund’s Form 10-Q dated
      September 30, 2002 filed with the Securities and Exchange Commission on
      November 14, 2002.10.4
    Modification
      of Settlement Agreement between PLM Worldwide Leasing Corp. and Varig S.A.
      dated September 24, 2004.14
    PLM
      Financial Services Inc. Code of Ethics incorporated by reference to the
      Fund’s Form 10-KSB dated December 31, 2003 filed with the Securities and
      Exchange Commission on March 29, 2004.31.1
    Certificate
      of President of the Manager pursuant to Section 302 of Sarbanes - Oxley
      Act.31.2
    Certificate
      of Chief Financial Officer of the Manager pursuant to Section 302 of
      Sarbanes - Oxley Act.32.1
    Certificate
      of President of the Manager Partner pursuant to Section 906 of Sarbanes -
      Oxley Act.32.2
    Certificate
      of Chief Financial Officer of the Manager pursuant to Section 906 of
      Sarbanes - Oxley Act.
 
 ITEM
      14.
    PRINCIPAL
      ACCOUNTANT FEES AND SERVICES
 
 The table
below list principal accountant fees and services (in thousands of
dollars):
 
 Audit
    
    Audit
    
    Tax
    
    All
      OtherFees
    
    Related
      Fees
    
    Fees
    
    Fees
 
 Year
      Ended December 31, 2004
    $
    70
    
    $
    --
    
    $
    --
    
    $
    --Year
      Ended December 31, 2003
    $
    50
    
    $
    --
    
    $
    --
    
    $
    --
 
 It is the
policy of the Board of Managers that its Board of Director's pre-approves all of
the services described above in this Item 14.
 
  
  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 FUND I, L.L.C.
 Date:
March 29, 2004
 
 By:  PLM
Financial Services, Inc.
 Manager
 
 
 
 By:  /s/
James A. Coyne
 James A.
Coyne
 President
 
 
 
 By:  /s/
Richard K Brock
 Richard K
Brock
 Chief
Financial Officer
 
 CERTIFICATION
 
 The
undersigned hereby certifies, in their capacity as an officer of the Manager of
Professional Lease Management Income Fund I, L.L.C. (the Fund), that the Annual
Report of the Fund on Form 10-KSB for the year ended December 31, 2004, fully
complies with the requirements of Section 13(a) of the Securities Exchange Act
of 1934 and that the information contained in such report fairly presents, in
all material respects, the financial condition of the Fund at the end of such
period and the results of operations of the Fund for such period.
 
 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
 
 
 
 
 /s/
Gary D. Engle
 Gary D.
Engle  Director
- FSI  March 29,
2005
 
 
 
 
 /s/
James A. Coyne
 James A.
Coyne  Director
- FSI  March 29,
2005
 
  
  
 **PROFESSIONAL
LEASE MANAGEMENT INCOME FUND I**
 **(A
Limited Liability Company)**
 **INDEX
TO FINANCIAL STATEMENTS**
 
 (Item
13(a))
 
 PageReports
      of independent registered public accounting firms
    25-26Balance
      sheets as of December 31, 2004 and 2003
    27Statements
      of income for the years endedDecember
      31, 2004 and 2003
    28Statement
      of changes in members' equity for the years endedDecember
      31, 2004 and 2003
    29Statements
      of cash flows for the years endedDecember
      31, 2004 and 2003
    30Notes
      to financial statements
    31-43
 
  
   **REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
 
 
 
 The
Members
 Professional
Lease Management Income Fund I, L.L.C.:
 
 
 We have
audited the accompanying balance sheet of Professional Lease Management Income
Fund I, L.L.C., a Delaware Limited Liability Company (the Fund), as of December
31, 2004, and the related statements of income, changes in members' equity, and
cash flows for the year then ended. 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 audit.
 
 We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Fund is not required to have,
nor were we engaged to perform an audit of its internal control over financial
reporting. Our audit included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides 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. at December 31, 2004 and the results of its operations and
its cash flows for the year then ended in conformity with accounting principles
generally accepted in the United States of America.
 
 
 
 
 
 /s/ Grant
Thornton LLP
 
 New York,
New York
 March 24,
2005
 
 
 
 
 
  
   **REPORT
OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTANTS**
 
 
 
 The
Members
 Professional
Lease Management Income Fund I, L.L.C.:
 
 
 We have
audited the accompanying balance sheet of Professional Lease Management Income
Fund I, L.L.C., a Delaware Limited Liability Company, as of December 31, 2003,
and the related statements of income, changes in members' equity, and cash flows
for the year then ended. 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 audit.
 
 We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). 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 audit provides 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. at December 31, 2003 and the results of its operations and
its cash flows for the year then ended in conformity with U.S. generally
accepted accounting principles.
 
 
 
 
 
 /s/ Ernst
& Young LLP
 
 Tampa,
Florida
 March 26,
2004
 
 
 
  
  
 **PROFESSIONAL
      LEASE MANAGEMENT INCOME FUND I, L.L.C.****(A
      Delaware Limited Liability Company)****BALANCE
      SHEETS****December
      31,**(in
      thousands of dollars, except unit amounts)
 
 
 2004
    
    2003**Assets**Equipment
      held for operating leases, at cost
    
    $
    91,773
    
    $
    108,625Less
      accumulated depreciation
    
    
    (55,143
    )
    
    (63,735
    )Net
      equipment
    
    
    36,630
    
    
    44,890Cash
      and cash equivalents
    
    
    15,646
    
    
    4,238Restricted
      cash
    
    
    --
    
    
    60Accounts
      and other receivable, less of allowance for doubtful
    accountsof
      $73 in 2004 and $1,518 in 2003
    
    
    3,575
    
    
    3,253Equity
      investments in affiliated entities
    
    
    904
    
    
    1,428Other
      assets, net of accumulated amortization of$141
      in 2004 and $123 in 2003
    
    
    1,175
    
    
    1,398Total
      assets
    
    $
    57,930
    
    $
    55,267**Liabilities
      and members' equity**LiabilitiesAccounts
      payable and accrued expenses
    
    $
    445
    
    $
    857Due
      to affiliates
    
    
    284
    
    
    312Reserve
      for repairs
    
    
    1,756
    
    
    2,572Lessee
      deposits and prepaid revenues
    
    
    952
    
    
    1,641Note
      payable
    
    
    10,000
    
    
    13,000Total
      liabilities
    
    
    13,437
    
    
    18,382Commitments
      and contingenciesMembers'
      equityClass
      A members (4,971,311 units)
    
    
    44,493
    
    
    36,885Class
      B member
    
    
    --
    
    
    --Total
      members' equity
    
    
    44,493
    
    
    36,885Total
      liabilities and members' equity
    
    $
    57,930
    
    $
    55,267
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 See
accompanying notes to financial statements.
  
  
 
 **PROFESSIONAL
      LEASE MANAGEMENT INCOME FUND I, L.L.C.****(A
      Delaware Limited Liability Company)****STATEMENTS
      OF INCOME****For
      the Years Ended December 31,**(in
      thousands of dollars, except weighted-average Class A unit
      amounts)
 
 2004
    
    2003**Revenues**Lease
      revenue
    
    $
    20,398
    
    $
    18,354Interest
      and other income
    
    
    804
    
    
    316Gain
      on disposition of equipment
    
    
    2,537
    
    
    198Loss
      on disposition of equipment
    
    
    (2
    )
    
    --Total
      revenues
    
    
    23,737
    
    
    18,868**Expenses**Depreciation
    
    
    6,550
    
    
    7,821Repairs
      and maintenance
    
    
    1,629
    
    
    1,740Equipment
      operating expenses
    
    
    5,333
    
    
    4,614Insurance
      expense
    
    
    607
    
    
    596Management
      fees to affiliate
    
    
    1,206
    
    
    1,108Interest
      expense
    
    
    973
    
    
    1,198General
      and administrative expenses to affiliates
    
    
    491
    
    
    297Other
      general and administrative expenses
    
    
    1,373
    
    
    1,453Impairment
      loss on equipment
    
    
    --
    
    
    731Recovery
      of bad debts
    
    
    (1,431
    )
    
    (1,869
    )Total
      expenses
    
    
    16,731
    
    
    17,689Equity
      in net income of equity investments
    
    
    602
    
    
    531Net
      income
    
    $
    7,608
    
    $
    1,710**Members'
      share of net income**Class
      A members
    
    $
    7,608
    
    $
    1,052Class
      B member
    
    
    --
    
    
    658Total
    
    $
    7,608
    
    $
    1,710Net
      income per weighted-averageClass
      A unit
    
    $
    1.53
    
    $
    0.21
 
 
 
 
 
 
 
 
 
 
 
 
 
 See
accompanying notes to financial statements.
  
  
 **PROFESSIONAL
      LEASE MANAGEMENT INCOME FUND I, L.L.C.****(A
      Delaware Limited Liability Company)****STATEMENT
      OF CHANGES IN MEMBERS' EQUITY****For
      the Years Ended December 31, 2004 and 2003**(in
      thousands of dollars)
 
 
 
 
 Class
      A
    
    Class
      B
    
    TotalMembers'
      equity as of December 31, 2002
    $
    38,943
    
    
    $
    --
    
    
    $
    38,943Net
      income
    
    1,052
    
    
    
    658
    
    
    
    1,710Cash
      distributions
    
    (3,110
    )
    
    
    (658
    )
    
    
    (3,768
    )Members'
      equity as of December 31, 2003
    
    36,885
    
    
    
    --
    
    
    
    36,885Net
      income
    
    7,608
    
    
    
    --
    
    
    
    7,608Members'
      equity as of December 31, 2004
    $
    44,493
    
    
    $
    --
    
    
    $
    44,493
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 See
accompanying notes to financial statements.
  
  
 **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)
 
 **Operating
      activities**
    
    2004
    
    2003Net
      income
    
    $
    7,608
    
    $
    1,710Adjustments
      to reconcile net income to net cashprovided
      by (used in) operating activities:Depreciation
    
    
    6,550
    
    
    7,821Amortization
      of debt placement costs
    
    
    18
    
    
    18Recovery
      of bad debts
    
    
    (1,431
    )
    
    (1,869
    )Impairment
      loss on equipment
    
    
    --
    
    
    731Net
      gain on disposition of equipment
    
    
    (2,535
    )
    
    (198
    )Equity
      in net income of equity investments
    
    
    (602
    )
    
    (531
    )Distributions
      from equity investment
    
    
    1,126
    
    
    1,147Changes
      in operating assets and liabilities:Accounts
      and other receivable
    
    
    1,109
    
    
    119Other
      assets
    
    
    743
    
    
    444Accounts
      payable and accrued expenses
    
    
    (412
    )
    
    235Due
      to affiliates
    
    
    (28
    )
    
    121Reserve
      for repairs
    
    
    84
    
    
    (154
    )Lessee
      deposits
    
    
    (689
    )
    
    450Net
      cash provided by operating activities
    
    
    11,541
    
    
    10,044**Investing
      activities**Payments
      for capitalized repairs and purchase of equipment
    
    
    (18
    )
    
    (19,853
    )Decrease
      in cash held in escrow accounts
    
    
    --
    
    
    19,792Decrease
      in restricted cash
    
    
    60
    
    
    --Payments
      on finance lease receivable
    
    
    305
    
    
    --Proceeds
      from disposition of equipment
    
    
    2,520
    
    
    463Net
      cash provided by investing activities
    
    
    2,867
    
    
    402**Financing
      activities**Payments
      on note payable
    
    
    (3,000
    )
    
    (3,000
    )Cash
      distributions to Class A members
    
    
    --
    
    
    (3,110
    )Cash
      distributions to Class B member
    
    
    --
    
    
    (658
    )Net
      cash used in financing activities
    
    
    (3,000
    )
    
    (6,768
    )Net
      increase in cash and cash equivalents
    
    
    11,408
    
    
    3,678Cash
      and cash equivalents at beginning of year
    
    
    4,238
    
    
    560Cash
      and cash equivalents at end of year
    
    $
    15,646
    
    $
    4,238**Supplemental
      information**Interest
      paid
    
    $
    956
    
    $
    1,181Non-cash
      transfer of equipment at net book value fromequipment
      held for operating leases to other assets
    
    $
    843
    
    $
    --
 
 
 
 
 
 
 
 See
accompanying notes to financial statements.
  
  **PROFESSIONAL
LEASE MANAGEMENT INCOME FUND I, L.L.C.**
 **(A
Delaware Limited Liability Company)**
 **NOTES
TO FINANCIAL STATEMENTS**
 
 1.   Basis
of Presentation
 
 Organization
 
 Professional
Lease Management Income Fund I, L.L.C., a Delaware Limited Liability Company
(the Fund), was formed on August 22, 1994, to engage in the business of owning,
leasing, or otherwise investing in predominantly used transportation and related
equipment. PLM Financial Services, Inc. (FSI) is the Manager of the Fund. FSI is
a wholly-owned subsidiary of PLM International, Inc. (PLMI).
 
 The
Manager (Class B Member) 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 were 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
subject to certain special allocation provisions (see Net Income and
Distributions Per Unit, below). 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 Fund
will terminate on December 31, 2010, unless terminated earlier upon sale of all
equipment or by certain other events. The Fund may not reinvest cash flow
generated from operations after January 1, 2003 into additional equipment.
Excess cash, if any, less reasonable reserves, will be distributed to the
Members.
 
 The
operating agreement includes a redemption provision. Upon the conclusion of the
30-month period immediately following the termination of the offering, which was
in November 1998, the Fund may, at the Manager's sole discretion, redeem up to
2% of the outstanding units 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 value of a Class A Unit. No
units were purchased under this plan during 2004 or 2003. The Manager does not
anticipate that any units will be purchased under this plan in the future.
 
 Estimates
 
 These
financial statements have been prepared on the accrual basis of accounting in
accordance with accounting principles generally accepted in the United States of
America. This requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, 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.
 
 Accounting
for Leases
 
 The
Fund's leasing operations generally consist of operating leases. Under the
operating lease method of accounting, the lessor records the leased asset at
cost and depreciates the leased asset over its estimated useful life. Rental
payments are recorded as revenue on a straight-line basis over the lease term as
earned. Lease origination costs are capitalized and amortized over the term of
the lease. Periodically, the Fund leases equipment with lease terms that qualify
for direct finance lease classification, as required by Statement of Financial
Accounting Standards No. 13, “Accounting for Leases” (SFAS 13).
 
  
  **PROFESSIONAL
LEASE MANAGEMENT INCOME FUND I, L.L.C.**
 **(A
Delaware Limited Liability Company)**
 **NOTES
TO FINANCIAL STATEMENTS**
 
 1.   Basis
of Presentation (continued)
 
 Revenue
Recognition
 
 Revenues
are generally earned by placing the equipment under operating leases. A portion
of the Fund's marine containers are leased to operators of utilization-type
leasing pools that include equipment owned by unaffiliated parties. In such
instances, revenues earned by the Fund consist of a specified percentage of the
total revenues generated by leasing the pooled equipment to sublessees after
deducting certain direct operating expenses of the pooled equipment. The Fund’s
marine vessel is operating on short-term leases which usually have a duration of
less than one year. Rents for the remaining equipment are based on fixed
rates.
 
 Depreciation
and Amortization
 
 Depreciation
of transportation equipment held for operating leases is generally computed on
the double-declining balance method taking a full month's depreciation in the
month of acquisition, based upon estimated useful lives of 15 years for railcars
and 12 years for other types of equipment unless the economic life of the
equipment is less. Certain aircraft are depreciated under the double-declining
balance method over the lease term which approximates their economic life. The
depreciation method changes to straight line when the annual depreciation
expense using the straight-line method exceeds that calculated by the
double-declining balance method. Major expenditures that are expected to extend
the useful lives or reduce future operating expenses of equipment are
capitalized and amortized over the estimated remaining life of the equipment.
Debt placement fees are amortized over the term of the related loan using the
straight-line method that approximates the effective interest method and are
included in interest expense in the accompanying statements of income.
 
 Equipment
 
 Equipment
held for operating leases is recorded at cost and depreciated over its useful
life.
 
 The Fund
evaluates long-lived assets for impairment whenever events or circumstances such
as when cash-flows decrease, there are unexpected maintenance issues or when
economic conditions in which the equipment operate deteriorates indicate that
the carrying values of such assets may not be recoverable. Losses for impairment
are recognized when the undiscounted cash flows estimated to be realized from a
long-lived asset are determined to be less than the carrying value of the asset
and the carrying amount of long-lived assets exceeds their fair values. The
determination of fair value for a given investment requires several
considerations, including but not limited to, income expected to be earned from
the asset, estimated sales proceeds, and holding costs excluding interest.
 
 The
estimate of the fair value of the Fund’s owned and partially owned equipment is
based on the opinion of the Fund’s equipment managers using data, reasoning and
analysis of prevailing market conditions of similar equipment, data from recent
purchases, independent third party valuations and discounted cash flows.
 
 Equity
Investments in Affiliated Entities
 
 The Fund
has interests in equity investments that own transportation equipment and other
transportation related assets. These entities do not have any debt or other
financial encumbrances and are accounted for using the equity method.
 
 The
Fund’s interests in equity investments are managed by PLM Investment Management,
Inc. (IMI), a wholly owned subsidiary of FSI. The Fund’s equity interest in the
net income (loss) of equity investments is reflected net of management fees paid
or payable to IMI.
  
  **PROFESSIONAL
LEASE MANAGEMENT INCOME FUND I, L.L.C.**
 **(A
Delaware Limited Liability Company)**
 **NOTES
TO FINANCIAL STATEMENTS**
 
 1.   Basis
of Presentation (continued)
 
 Repairs
and Maintenance
 
 Repairs
and maintenance costs related to marine vessels, railcars, and trailers are
usually the obligation of the Fund and are charged against operations as
incurred. Costs associated with marine vessel dry-docking are estimated and
accrued ratably over the period prior to such dry-docking. If a marine vessel is
sold and there is a balance in the dry-docking reserve account for that marine
vessel, the balance in the reserve account is included as additional gain on
disposition. Maintenance costs of aircraft and marine containers are the
obligation of the lessee. To meet the maintenance requirements of aircraft
airframes and engines, reserve accounts are prefunded by certain lessees over
the period of the lease based on the number of hours this equipment is used,
times the estimated rate to repair this equipment. If repairs exceed the amount
prefunded by the lessee, the Fund has the obligation to fund and accrue the
difference. In certain instances, if the aircraft is sold and there is a balance
in the reserve account for repairs to that aircraft, the balance in the reserve
account is reclassified as additional gain on disposition. The aircraft reserve
accounts and marine vessel dry-docking reserve accounts are included in the
accompanying balance sheets as reserve for repairs.
 
 Net
Income and Distributions
 
 The net
profits and losses of the Fund are generally allocated 1% to the Class B Member
and 99% to the Class A Members. The Class B Member or Manager will be specially
allocated (i) 100% of the Fund’s organizational and offering cost amortization
expenses and (ii) income equal to the excess of cash distribution over the
Manager‘s 1% share of net profits. The effect on the Class A Members of this
special income allocation will be to increase the net loss or decrease the net
profits allocable to the Class A Members by an equal amount. During 2004, the
Manager received a special allocation of loss of $0.1 million (in 2003, a
special allocation of income of $0.6 million was allocated to the Manager) in
excess of its prorata ownership share. Cash distributions of the Fund are
generally allocated 85% to the Class A Members and 15% to the Manager and may
include amounts in excess of net income. 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 Class A
Members' net income (loss) is allocated among the Class A Members based on the
number of Class A units owned by each member and on the number of days of the
year each member is in the Fund.
 
 Cash
distributions are recorded when declared. Cash distributions are generally paid
in the same quarter they are declared. Monthly unitholders receive a cash
distribution 15 days after the close of the previous month’s business and
quarterly unitholders receive a cash distribution 45 days after the close of the
quarter.
 
 No cash
distributions were declared or paid during 2004. For the year ended December 31,
2003, cash distribution totaled $3.8 million or $0.63 per weighted-average Class
A unit. Cash distributions to the Class A Unitholders of $2.1 million were
deemed to be a return of capital.
 
 Cash
distributions related to the fourth quarter of 2002 of $0.8 million were
declared and paid during the first quarter of 2003.
 
 Net
Income Per Weighted-Average Class A Unit
 
 Net
income per weighted-average Class A unit was computed by dividing net income
attributable to Class A Members by the weighted-average number of Class A units
deemed outstanding during the period. The weighted-average number of Class A
unit s deemed outstanding during the years ended December 31, 2004 and 2003 was 4,971,311 .
 
  
  **PROFESSIONAL
LEASE MANAGEMENT INCOME FUND I, L.L.C.**
 **(A
Delaware Limited Liability Company)**
 **NOTES
TO FINANCIAL STATEMENTS**
 
 1.   Basis
of Presentation (continued)
 
 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. The carrying amount of cash equivalents approximates fair value due
to the short-term nature of the investments.
 
 Restricted
Cash
 
 At
December 31, 2003, the Fund had a security deposit of $0.1 million with the
warehouse facility lender (see Note 9 to the financial statements) that is
reported as restricted cash.
 
 Accounts
Receivable
 
 The Fund
generally invoices its lessees monthly for the lease of its equipment. Payment
generally is due on the first day of each month in advance. The Fund reserves as
bad debts any unpaid account receivable that is past due over 90 days. The Fund
will also reserve any unpaid receivable as a bad debt when circumstances
indicate that it will not be paid, such as when the lessee goes into bankruptcy.
Unpaid receivables are written-off only when all collection efforts have been
exhausted.
 
 Fair
Value of Financial Instruments
 
 The
Fund's financial instruments consist of cash, accounts receivable, accounts
payable and note payable. The fair value of cash, accounts receivable and
accounts payable approximate book value due to their short-term nature. The fair
value of the Fund's note payable approximates its book value as the fixed rate
on the debt approximates the current market rate for similar debt (see Note 9 to
the financial statements).
 
 Other
Assets
 
 At
December 31, 2003, other assets included an investment in a United States
security from a marine container lessee of $0.5 million that has a maturity date
greater than three months.
 
 Comprehensive
Income
 
 The
Fund’s comprehensive income is equal to net income for the years ended December
31, 2004 and 2003.
 
 New
Accounting Standards
 
 On
December 24, 2003, Financial Accounting Standards Board (FASB) issued
Interpretation No. 46(R), “Consolidation of Variable Interest Entities” (FIN
46(R)). FIN 46(R) is effective for the Fund beginning on January 1, 2004 and it
requires the Fund to evaluate all existing equity investments to identify
situations where the Fund has a “variable interest,” commonly evidenced by a
guarantee arrangement or other commitment to provide financial support, in a
“variable interest entity,” commonly a thinly capitalized entity, and further
determine when such variable interest requires the Fund to consolidate the
variable interest entities’ financial statements with its own.  The Manager
has determined that none of its equity investments qualify as variable interest
entities. Adoption of FIN 46(R) did not have a material effect on financial
position or results of operations.
 
 In March
2004, FASB's Emerging Issues Task Force (EITF) released Issue No. 03-1, “The
Meaning of Other-Than-Temporary Impairment and Its Application to Certain
Investments" (EITF 03-1). EITF 03-1 provides guidance for determining whether
impairment for certain debt and equity investments is other-than-temporary and
the measurement of an impaired loss. Certain disclosure requirements of EITF
03-1 were adopted in 2003 and the Fund has complied with the new disclosure
requirements in its consolidated financial statements. The recognition and
measurement requirements of EITF 03-1 were
  
  **PROFESSIONAL
LEASE MANAGEMENT INCOME FUND I, L.L.C.**
 **(A
Delaware Limited Liability Company)**
 **NOTES
TO FINANCIAL STATEMENTS**
 
 1.   Basis
of Presentation (continued)
 
 New
Accounting Standards (continued)
 
 initially
effective for reporting periods beginning after June 15, 2004. In September
2004, the FASB Staff issued FASB Staff Position (FSP) EITF 03-1-1 that delayed
the effective date for certain measurement and recognition guidance contained in
EITF 03-1.  The FSP requires that entities continue to apply previously
existing “other-than-temporary” guidance until a final consensus is reached. The
Manager does not anticipate that issuance of a final consensus will materially
impact the Fund’s financial condition or results of operations.
 
 In
December 2004, FASB issued Statement 153, "Exchanges of Non-monetary Assets"
(Statement 153), an amendment of Accounting Principles Board Opinion No. 29.
Statement 153 is effective for non-monetary asset exchanges occurring in fiscal
periods beginning after June 15, 2005. Statement 153 eliminates the exception to
fair value for exchanges of similar productive assets and replaces it with a
general exception for exchange transactions that do not have commercial
substance - that is, transactions that are not expected to result in significant
changes in the cash flows of the reporting entity.  The Manager does not
believe that the adoption of Statement 153 will have a significant effect on its
financial statements.
 
 Reclassifications
 
 Certain
amounts in the 2003 financial statements have been reclassified to conform to
the 2004 presentations. These reclassifications did not have any effect on total
assets, total liabilities, members’ capital, or net income.
 
 2.  Transactions
with Manager and Affiliates
 
 The
Fund's owned equipment and interests in equity investments are managed by PLM
Investment Management, Inc. (IMI), a wholly-owned subsidiary of FSI, under a
continuing management agreement. IMI receives a monthly management fee from the
Fund for managing the equipment.
 
 The
equipment management agreement, subject to certain reductions, requires the
payment of a monthly management fee attributable to either owned equipment or
interests in equipment owned by the equity investments to be paid to IMI in an
amount equal to the lesser of (i) the fees that would be charged by an
independent third 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 that 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 equipment for which IMI
provides both management and additional services.
 
 In
certain circumstances, the Manager will be entitled to a monthly re-lease fee
for re-leasing services following the 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, provided, however; that no re-lease fee shall be payable if such fee
would cause the combination of the equipment management fee paid to IMI and the
re-lease fees with respect to such transactions to exceed 7% of gross lease
revenues.
 
 During
the liquidation phase of the Fund, PLM Transportation Equipment Corp. (TEC), a
wholly-owned subsidiary of the Manager, will 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 in the agreement, if certain conditions are met. The
Manager does not anticipate that the conditions to earn this fee will be met.
  
  **PROFESSIONAL
LEASE MANAGEMENT INCOME FUND I, L.L.C.**
 **(A
Delaware Limited Liability Company)**
 **NOTES
TO FINANCIAL STATEMENTS**
 
 2.  Transactions
with Manager and Affiliates (continued)
 
 During
the year ended December 31, 2004 and 2003, FSI or its affiliates were paid or
accrued management fees and reimbursed FSI or its affiliates for data processing
and administrative expenses. The components of these expenses paid or accrued to
FSI or its affiliates were as follows (in thousands of dollars):
 
 Owned
      Equipment
    
    Equity
      Investments2004
    
    2003
    
    2004
    
    2003Management
      fees
    
    $
    1,206
    
    $
    1,108
    
    $
    62
    
    $
    61Data
      processing and administrativeexpenses
    
    
    491
    
    
    297
    
    
    6
    
    
    3
 
 The Fund
had equity investments in affiliated entities that own equipment and other
assets during 2004 and 2003 (see Note 4 to the financial
statements).
 
 The
balance due to affiliates as of December 31, 2004 and 2003, included $0.3
million due to FSI and its affiliates for management fees.
 
 3.  Equipment
 
 The
components of owned equipment as of December 31 are as follows (in thousands of
dollars):
 
 Equipment
      Held for Operating Leases
    
    2004
    
    
    
    2003Railcars
    $
    33,865
    
    
    $
    38,942Marine
      containers
    
    30,414
    
    
    
    30,825Marine
      vessel
    
    17,000
    
    
    
    17,000Aircraft
    
    10,494
    
    
    
    15,358Trailers
    
    --
    
    
    
    6,50091,773
    
    
    
    108,625Less
      accumulated depreciation
    
    (55,143
    )
    
    
    (63,735
    )Net
      equipment
    $
    36,630
    
    
    $
    44,890
 
 Equipment
held for operating leases is stated at cost less depreciation and any reductions
due to impairment of the asset value. During 2003, the Fund recorded an
impairment of $0.3 million to certain owned railcars and $0.4 million to certain
owned trailers. During 2003, the Fund learned of a problem with the seal weld on
certain owned tank railcars and this indicated to the Manager that an impairment
may exist. The Manager determined that certain of these railcars should be
scrapped. The Fund recorded an impairment of $0.3 million to 107 owned railcars
with cracks in the seal weld. The fair value of the railcars with this defect
was determined by using industry expertise. The Fund also recorded an impairment
of $0.4 million to owned trailers based on recent sales and marketability for
the type trailers owned by the Fund. The fair value of the trailers was
determined by independent third party expertise. No reductions were required to
the carrying value of wholly owned equipment during 2004.
 
 In 2004,
the Fund amended its lease for the trailer portfolio with an equipment original
cost of $6.5 million and a net book value of $0.8 million which resulted in a
change in classification of the lease from an operating lease to a direct
financing lease. As of December 31, 2004, the Fund no longer records this
equipment as equipment held for operating lease, but rather as a finance lease
receivable which is included in other assets, net, on the accompanying balance
sheet (see Note 8 to the financial statements).
 
 As of
December 31, 2004, all owned equipment in the Fund's portfolio was on lease
except for 64 railcars with a net book value of $0.4 million. As of December 31,
2003, all owned equipment in the Fund's portfolio was on lease except for 289
railcars with a net book value of $1.9 million.
 
  
  **PROFESSIONAL
LEASE MANAGEMENT INCOME FUND I, L.L.C.**
 **(A
Delaware Limited Liability Company)**
 **NOTES
TO FINANCIAL STATEMENTS**
 
 3.  Equipment (continued)
 
 During
2004, the Fund made capitalized improvements to equipment of $19,000. During
2003, the Fund purchased railcars for $19.7 million that it had entered into
legally binding agreements to purchase in 2002 and made capitalized improvements
to equipment of $0.2 million.
 
 During
the year ended December 31, 2004, the Fund disposed of a commercial aircraft,
marine containers, railcars and a trailer with a net book value of $0.9 million
for proceeds of $2.5 million and the recognition of $0.9 million of the related
unused engine reserves. During the year ended December 31, 2003, the Fund
disposed of marine containers, trailers and railcars with a net book value of
$0.3 million for proceeds of $0.5 million.
 
 Future
minimum rent under noncancelable operating leases as of December 31, 2004 for
the owned equipment during each of the next five years and thereafter is
approximately $5.0 million in 2005; $3.3 million in 2006; $2.0 million in 2007;
$1.9 million in 2008; $1.7 million in 2009 and $5.0 million thereafter. Per diem
and short-term rentals consisting of utilization rate lease payments included in
revenues amounted to approximately $11.3 million, and $12.1 million in 2004 and
2003, respectively.
 
 4.  Equity
Investments in Affiliated Entities
 
 The Fund
owns equipment and other assets jointly with affiliated programs. These are
single purpose entities that do not have any debt or other financial
encumbrances.
 
 Ownership
interest is based on the Fund’s contribution towards the cost of the assets in
the equity investments. The Fund’s proportional share of equity and income
(loss) in each entity is not necessarily the same as its ownership interest. The
primary reason for this is that certain fees such as management and acquisition
and lease negotiation fees vary among the owners of the equity investments. The
Fund’s equity interest in the net income (loss) of equity investments is
reflected net of management fees paid or payable.
 
 The
tables below set forth 100% of the assets, liabilities, and equity of the
entities in which the Fund has an interest and the Fund’s proportional share of
equity in each entity as of December 31, 2004 and 2003 (in thousands of
dollars):
 
 TWA
    
    TWA
    
    PLMS/N
      49183
    
    MD-82
    
    WorldwideAs
      of December 31, 2004
    
    Trust1
    
    Trust2
    
    Leasing3
    
    Total
 
 AssetsEquipment
      less accumulated depreciation
    $
    --
    
    $
    1,677
    
    $
    --Cash
      and cash equivalents
    
    --
    
    
    --
    
    
    140Accounts
      and other receivables
    
    50
    
    
    49
    
    
    2,228Due
      from affiliate
    
    --
    
    
    --
    
    
    4Total
      assets
    $
    50
    
    $
    1,726
    
    $
    2,372LiabilitiesAccounts
      payable
    $
    --
    
    $
    --
    
    $
    2,205Due
      to affiliates
    
    8
    
    
    8
    
    
    --Total
      liabilities
    
    8
    
    
    8
    
    
    2,205Equity
    
    42
    
    
    1,718
    
    
    167Total
      liabilities and equity
    $
    50
    
    $
    1,726
    
    $
    2,372Fund’s
      share of equity
    $
    21
    
    $
    841
    
    $
    42
    
    $
    904
 
 
 
 1
    The
      Fund owns a 50% interest in the TWA S/N 49183 Trust that owns an MD-82
      stage III commercial aircraft.
 2  The Fund
owns a 50% interest in the TWA MD-82 Trust that owns an MD-82 stage III
commercial aircraft.
 3 .  The Fund
owns a 25% interest in PLM Worldwide Leasing Corp.
  
  **PROFESSIONAL
LEASE MANAGEMENT INCOME FUND I, L.L.C.**
 **(A
Delaware Limited Liability Company)**
 **NOTES
TO FINANCIAL STATEMENTS**
 
 4.  Equity
Investments in Affiliated Entities (continued)
 
 TWA
    TWAS/N
      49183
    MD-82As
      of December 31, 2003
    Trust1
    Trust2
    TotalAssetsEquipment
      less accumulated depreciation
    $                                                               -
    $                     
       2,935Total
      assets
    $         
                                                         
       -
    $                      
      2,935LiabilitiesAccounts
      payable
    $                                                            
       3
    $                             
       -Due
      to affiliates
    5
    5Total
      liabilities
    8
    5Equity
    (8)
    2,930Total
      liabilities and equity
    $                                                            
       -
    $                      
       2,935Funds
      share of equity
    $                                                            
       -
    $                      
       1,428
    $                           
      1,428
 
 The
tables below set forth 100% of the revenues, depreciation and amortization
expense, direct and indirect expenses, and net income (loss) of the entities in
which the Fund has an interest, and the Fund‘s proportional share of income
(loss) in each entity for the years ended December 31, 2004 and 2003 (in
thousands of dollars):
 
 TWA
    
    TWA
    
    PLMFor
      the year ended
    
    S/N
      49183
    
    MD-82
    
    WorldwideDecember
      31, 2004
    
    Trust1
    
    Trust2
    
    Leasing3
    
    Total
 
 Lease
      revenues and other income
    $
    1,250
    
    $
    1,249Less:
      Depreciation and amortization expense
    
    --
    
    
    1,258Indirect
      expenses
    
    74
    
    
    74Net
      income (loss)
    $
    1,176
    
    $
    (83
    )Fund’s
      share of net income (loss)
    $
    588
    
    $
    (28
    )
    $
    42
    
    $
    602
 
 
 TWA
    
    TWAFor
      the year ended
    
    S/N
      49183
    
    MD-82December
      31, 2003
    
    Trust1
    
    Trust2
    
    TotalLease
      revenues and other income
    $
    1,225
    
    $
    1,225Less:
      Depreciation and amortization expense
    
    --
    
    
    1,258Direct
      expenses
    
    (1
    )
    
    (1
    )Indirect
      expenses
    
    83
    
    
    77Net
      income (loss)
    $
    1,143
    
    $
    (109
    )Fund’s
      share of net income (loss)
    $
    571
    
    $
    (40
    )
    
    $
    531
 
 As of
December 31, 2004 and 2003, all jointly-owned equipment in the Fund’s equity
investment portfolio was on lease.
 
 All
jointly owned equipment on lease is being accounted for as operating leases. The
Fund’s proportionate share of future minimum rent under noncancelable leases as
of December 31, 2004 for the jointly owned equipment during each of the next
five years and thereafter is approximately $1.2 million in 2005; $1.2 million in
2006; $1.2 million in 2007; $1.0 million in 2008; and $-0- thereafter.
 
 
 
 
 
 1
    The
      Fund owns a 50% interest in the TWA S/N 49183 Trust that owns an MD-82
      stage III commercial aircraft.
 2  The Fund
owns a 50% interest in the TWA MD-82 Trust that owns an MD-82 stage III
commercial aircraft.
 3 .  The Fund
owns a 25% interest in PLM Worldwide Leasing Corp.
  
  **PROFESSIONAL
LEASE MANAGEMENT INCOME FUND I, L.L.C.**
 **(A
Delaware Limited Liability Company)**
 **NOTES
TO FINANCIAL STATEMENTS**
 
 5.  Operating
Segments
 
 The Fund
operates in five primary operating segments: marine container leasing, aircraft
leasing, railcar leasing, marine vessel leasing, and trailer leasing. Each
equipment leasing segment engages in short-term to mid-term operating leases to
a variety of customers.
 
 The
Manager evaluates the performance of each segment based on profit or loss from
operations before interest expense and certain general and administrative and
operations support expenses. The segments are managed separately due to
different business strategies for each operation. The accounting policies of the
Fund’s operating segments are the same as described in Note 1, Basis of
Presentation. There were no intersegment revenues for the years ended December
31, 2004 and 2003.
 
 The
following tables present a summary of the operating segments (in thousands of
dollars):
 
 Marine
    
    
    
    
    
    MarineFor
      the year ended
    
    Container
    
    Aircraft
    
    Railcar
    
    Vessel
    
    TrailerDecember
      31, 2004
    
    Leasing
    
    Leasing
    
    Leasing
    
    Leasing
    
    Leasing
    
    Other1
    
    Total
 
 **Revenues**Lease
      revenue
    $
    4,795
    
    $
    1,087
    
    $
    3,791
    
    $
    10,698
    
    $
    27
    
    $
    --
    
    $
    20,398Interest
      and other income
    
    --
    
    
    656
    
    
    6
    
    
    --
    
    
    --
    
    
    142
    
    
    804Gain
      (loss) on disposition of equipment
    
    213
    
    
    1,660
    
    
    664
    
    
    --
    
    
    (2
    )
    
    --
    
    
    2,535Total
      revenues
    
    5,008
    
    
    3,403
    
    
    4,461
    
    
    10,698
    
    
    25
    
    
    142
    
    
    23,737**Expenses**Depreciation
    
    2,510
    
    
    --
    
    
    3,012
    
    
    1,028
    
    
    --
    
    
    --
    
    
    6,550Operations
      support
    
    81
    
    
    34
    
    
    1,251
    
    
    6,046
    
    
    30
    
    
    127
    
    
    7,569Management
      fees to affiliate
    
    240
    
    
    124
    
    
    253
    
    
    535
    
    
    54
    
    
    --
    
    
    1,206Interest
      expense
    
    --
    
    
    --
    
    
    --
    
    
    --
    
    
    --
    
    
    973
    
    
    973General
      and administrative expenses
    
    --
    
    
    324
    
    
    671
    
    
    75
    
    
    37
    
    
    757
    
    
    1,864(Recovery
      of) provision for bad debts
    
    --
    
    
    (1,482
    )
    
    52
    
    
    --
    
    
    (1
    )
    
    --
    
    
    (1,431
    )Total
      expenses
    
    2,831
    
    
    (1,000
    )
    
    5,239
    
    
    7,684
    
    
    120
    
    
    1,857
    
    
    16,731Equity
      in net income of equityinvestments
    
    --
    
    
    602
    
    
    --
    
    
    --
    
    
    --
    
    
    --
    
    
    602Net
      income (loss)
    $
    2,177
    
    $
    5,005
    
    $
    (778
    )
    $
    3,014
    
    $
    (95
    )
    $
    (1,715
    )
    $
    7,608Equipment
      purchases andcapitalized
      improvements
    $
    --
    
    $
    --
    
    $
    18
    
    $
    --
    
    $
    --
    
    $
    --
    
    $
    18Total
      assets as of December 31, 2004
    $
    13,933
    
    $
    1,907
    
    $
    19,356
    
    $
    6,358
    
    $
    605
    
    $
    15,771
    
    $
    57,930
 
  
 
 1
    Includes
      certain assets not identifiable to a specific segment such as cash and
      certain other assets.Also
      includes interest income and costs not identifiable to a particular
      segment, such as interest expense, and certain general and administrative,
      and operations support expenses.
  
  **PROFESSIONAL
LEASE MANAGEMENT INCOME FUND I, L.L.C.**
 **(A
Delaware Limited Liability Company)**
 **NOTES
TO FINANCIAL STATEMENTS**
 
 5.  Operating
Segments (continued)
 
 Marine
    
    
    
    
    
    MarineFor
      the year ended
    
    Container
    
    Aircraft
    
    Railcar
    
    Vessel
    
    TrailerDecember
      31, 2003
    
    Leasing
    
    Leasing
    
    Leasing
    
    Leasing
    
    Leasing
    
    Other1
    
    Total**Revenues**Lease
      revenue
    
    $
    5,189
    
    $
    905
    
    $
    3,876
    
    $
    7,378
    
    $
    1,006
    
    $
    -
    
    $
    18,354Interest
      and other income
    
    
    -
    
    
    134
    
    
    37
    
    
    40
    
    
    -
    
    
    105
    
    
    316Gain
      on disposition of equipment
    
    
    129
    
    
    --
    
    
    60
    
    
    -
    
    
    9
    
    
    -
    
    
    198Total
      revenues
    
    
    5,318
    
    
    1,039
    
    
    3,973
    
    
    7,418
    
    
    1,015
    
    
    105
    
    
    18,868**Expenses**Depreciation
    
    
    3,040
    
    
    -
    
    
    3,183
    
    
    1,234
    
    
    364
    
    
    -
    
    
    7,821Operations
      support
    
    
    63
    
    
    44
    
    
    864
    
    
    5,509
    
    
    371
    
    
    99
    
    
    6,950Management
      fees to affiliate
    
    
    259
    
    
    165
    
    
    262
    
    
    369
    
    
    53
    
    
    -
    
    
    1,108Interest
      expense
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    1,198
    
    
    1,198General
      and administrative expenses
    
    
    1
    
    
    207
    
    
    469
    
    
    71
    
    
    199
    
    
    803
    
    
    1,750Impairment
      loss
    
    
    -
    
    
    -
    
    
    338
    
    
    -
    
    
    393
    
    
    -
    
    
    731(Recovery
      of) provision for bad debts
    
    
    -
    
    
    (1,900
    )
    
    31
    
    
    -
    
    
    -
    
    
    -
    
    
    (1,869
    )Total
      expenses
    
    
    3,363
    
    
    (1,484
    )
    
    5,147
    
    
    7,183
    
    
    1,380
    
    
    2,100
    
    
    17,689Equity
      in net income of equityinvestments
    
    
    -
    
    
    531
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    531Net
      income (loss)
    
    $
    1,955
    
    $
    3,054
    
    $
    (1,174
    )
    $
    235
    
    $
    (365
    )
    $
    (1,995
    )
    $
    1,710Equipment
      purchases andcapitalized
      improvements
    
    $
    -
    
    $
    -
    
    $
    19,853
    
    $
    -
    
    $
    -
    
    $
    -
    
    $
    19,853Total
      assets as of December 31, 2003
    
    $
    17,067
    
    $
    2,214
    
    $
    22,903
    
    $
    7,194
    
    $
    1,131
    
    $
    4,758
    
    $
    55,267
 
 6.  Geographic
Information
 
 The Fund
owns equipment that 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.
 
 The Fund
leases aircraft, railcars and trailers to lessees domiciled in three geographic
regions: United States, South America, and Canada. The marine vessels and marine
containers were leased to multiple lessees in different regions who operated the
equipment worldwide.
 
 The
following table sets forth lease revenue information by region for the owned
equipment grouped by domicile of the lessees, as of and for the years ended
December 31, (in thousands of dollars):
 
 Owned
      Equipment
 
 Region
    
    
    2004
    
    
    2003United
      States
    
    $
    2,520
    
    $
    3,595South
      America
    
    
    1,087
    
    
    905Canada
    
    
    1,298
    
    
    1,287Rest
      of the world
    
    
    15,493
    
    
    12,567Lease
      revenues
    
    $
    20,398
    
    $
    18,354
 
 
 
 
 
 
 1
    Includes
      certain assets not identifiable to a specific segment such as cash and
      certain other assets.Also
      includes interest income and costs not identifiable to a particular
      segment, such as interest expense, and certain general and administrative,
      and operations support expenses.
  
  **PROFESSIONAL
LEASE MANAGEMENT INCOME FUND I, L.L.C.**
 **(A
Delaware Limited Liability Company)**
 **NOTES
TO FINANCIAL STATEMENTS**
 
 6.  Geographic
Information (continued)
 
 The
following table sets forth income (loss) information by region for owned
equipment and equity investments in affiliated entities for the years ended
December 31, are as follows (in thousands of dollars):
 
 Owned
      EquipmentEquity
      Investments
 
 Region
    
    
    
    2004
    
    2003
    
    2004
    
    2003United
      States
    
    
    
    
    $
    (684
    )
    $
    (1,284
    )
    $
    602
    
    $
    531South
      America
    
    
    
    
    
    4,404
    
    
    2,522
    
    
    --
    
    
    --Canada
    
    
    
    
    
    (189
    )
    
    (253
    )
    
    --
    
    
    --Rest
      of the world
    
    
    
    
    
    5,191
    
    
    2,189
    
    
    --
    
    
    --Regional
      income
    
    
    
    
    
    8,722
    
    
    3,174
    
    
    602
    
    
    531Administrative
      and other
    
    
    
    
    
    (1,716
    )
    
    (1,995
    )
    
    --
    
    
    --Net
      income
    
    
    
    
    $
    7,006
    
    $
    1,179
    
    $
    602
    
    $
    531
 
 The net
book value of owned equipment and equity investments in affiliated entities at
December 31, are as follows (in thousands of dollars):
 
 Owned
      EquipmentEquity
      Investments
 
 Region
    
    
    
    2004
    
    2003
    
    2004
    
    2003United
      States
    
    
    
    
    $
    12,573
    
    $
    17,442
    
    $
    904
    
    $
    1,428Canada
    
    
    
    
    
    6,477
    
    
    6,159
    
    
    --
    
    
    --Rest
      of the world
    
    
    
    
    
    17,580
    
    
    21,289
    
    
    --
    
    
    --Net
      book value
    
    
    
    
    $
    36,630
    
    $
    44,890
    
    $
    904
    
    $
    1,428
 
 7.  Accounts
and Other Receivable
 
 Accounts
and other receivable represent balances due from current or former lessees for
unpaid balances incurred from leasing Fund owned equipment. The components of
accounts and other receivable as of December 31 were as follows (in thousands of
dollars):
 
 2004
    
    2003Trade
      accounts receivable
    
    $
    2,786
    
    $
    2,996Other
      receivable
    
    
    862
    
    
    1,775Allowance
      for doubtful accounts
    
    
    (73
    )
    
    (1,518
    )$
    3,575
    
    $
    3,253
 
 At
December 31, 2004, the balance in other receivable was due from a former
aircraft lessee for past due lease payments and in settlement for returning
aircraft not in accordance with the lease agreement. The other receivable is
scheduled to be fully paid by April 2005. Interest accrues at a rate of 5% on
the outstanding other receivable balance. During 2004, the former aircraft
lessee made its monthly payments to the Fund. During 2004, the Manager, based on
the prior performance of this lessee and based on the Manager's evaluation on
the ultimate collection of the this receivable, reversed any remaining reserve
for this lessee.
 
 At
December 31, 2003 the balance in other receivable of $1.8 million was due from
the same former aircraft lessee. Unpaid outstanding balances accrued interest at
a rate of 5%. Due to the uncertainty of ultimate collection of this receivable,
the Manager determined to fully reserve the unpaid outstanding balance less any
security deposits and any payments received through March 29, 2004. The other
receivable was fully paid in the fourth quarter of 2004.
  
  
 **PROFESSIONAL
LEASE MANAGEMENT INCOME FUND I, L.L.C.**
 **(A
Delaware Limited Liability Company)**
 **NOTES
TO FINANCIAL STATEMENTS**
 
 8.  Other
Assets
 
 The
components of the other assets, net, as of December 31 are as follows (in
thousands of dollars):
 
 2004
    
    
    2003Finance
      lease receivable
    $
    538
    
    $
    --Prepaid
      expenses and US treasury deposits
    
    343
    
    
    1,317Inventory
    
    253
    
    
    22Debt
      placement fees, net
    
    36
    
    
    54Other
      assets
    
    5
    
    
    5$
    1,175
    
    $
    1,398
 
 Future
minimum rentals receivable under the direct finance lease at December 31, 2004,
for the next two years are approximately $0.3 million in 2005, $0.3 million in
2006, and $-0- thereafter.
 
 9.  Debt
 
 In
December 1996, the Fund entered into an agreement to issue a $25.0 million
long-term note to an institutional investor. The loan was funded in March 1997.
The note bears interest at a fixed rate of 7.33% per annum and has a maturity in
2006. Interest on the note is payable semi-annually. The remaining note balance
of $10.0 million is due in two principal payments of $5.0 million on December
31, 2005 and 2006. The Fund may prepay this note without penalty beginning on
January 1, 2005 (see Note 13 to the financial statements). The Fund’s wholly and
jointly owned equipment is used as collateral to the note. The Fund has made all
the regularly scheduled principal payments and semiannual interest payments to
the lender of the note when due.
 
 The debt
contains certain financial covenants which require the Fund to maintain a
certain fixed charge coverage ratio and limits the Fund's
indebtedness.
 
 The
Manager estimates, based on recent transactions, that the fair value of the
$10.0 million fixed-rate note is $10.0 million.
 
 The Fund
was a participant in a $10.0 million warehouse credit facility. The warehouse
facility was shared by the Fund, PLM Equipment Growth Fund V, PLM Equipment
Growth Fund VI, PLM Equipment Growth & Income Fund VII, and MILPI Holdings
LLC (MILPI), all of which are related parties. The facility provided for
financing up to 100% of the cost of the equipment. Any borrowings by the Fund
would have been collateralized by equipment purchased with the proceeds of the
loan. Outstanding borrowings by one borrower reduced the amount available to
each of the other borrowers under the facility. Individual borrowings may be
outstanding for no more than 270 days. Interest accrued either at the prime rate
or LIBOR plus 2.0% at the borrower’s option and is set at the time of an advance
of funds. Borrowings by the Fund would have been guaranteed by FSI, PLM
International, Inc. and MILPI, the parent companies of the Manager. The Fund was
not liable for the advances made to the other borrowers
 
 In the
first quarter of 2004, the $10.0 million warehouse credit facility which the
Fund shared with several affiliated entities, was amended and restated and the
Fund was removed from the facility.
 
  
  
 **PROFESSIONAL
LEASE MANAGEMENT INCOME FUND I, L.L.C.**
 **(A
Delaware Limited Liability Company)**
 **NOTES
TO FINANCIAL STATEMENTS**
 
 10.  Concentrations
of Credit Risk
 
 For the
years ended December 31, 2004 and 2003, the Fund’s customer that accounted for
10% or more of the total revenues for the owned equipment and jointly owned
equipment was Capital Leasing (18% in 2003).
 
 For the
year ended December 31, 2004 and 2003, the Fund’s customers that accounted for
10% or more of the total accounts receivable for the owned equipment and jointly
owned equipment were Capital Leasing (28% in 2004 and 32% in 2003), Stena Bulk
LLC (27% in 2004 and 18% in 2003), Varig South America (21% in 2004) and Cronos
Group (10% in 2004 and 12% in 2003).
 
 As of
December 31, 2004 and 2003, the Manager believed the Fund had no other
significant concentrations of credit risk that could have a material adverse
effect on the Fund.
 
 11.   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.
 
 As of
December 31, 2004 and 2003, the financial statement carrying amount of assets
and liabilities was approximately $5.5 million and $14.5 million, respectively,
lower than the federal income tax basis of such assets and liabilities and the
Fund's income was approximately $8.5 million and $5.1 million, respectively,
higher than the federal income tax basis. These differences are primarily due to
the tax treatment of depreciation, equipment reserves, provisions for bad debts,
lessees’ prepaid deposits, and of underwriting commissions and syndication
costs.
 
 12.  Contingencies
 
 The Fund
is involved as plaintiff or defendant in various legal actions incidental to its
business. Management does not believe that any of these actions will be material
to the financial condition or results of operations of the Fund.
 
 13.  Subsequent
Events
 
 During
January 2005, the Fund prepaid its outstanding note payable plus accrued
interest. There was no pre-payment penalty associated with the payment of the
note payable. In January 2005, the Fund wrote-off $36,000 in debt placement fees
related to this debt.
 
 In March
2005, the lessee of the Fund’s two Boeing 737-200 aircraft declared bankruptcy.
At this point, the Manger is reviewing it options, which include repossessing
the aircraft.  Given that the aircraft are in excess of 25 years old and
that the aircraft leasing market is weak, if the Fund takes possession of the
aircraft, it may take a considerable period of time to release or sell
them.
 
  
  **PROFESSIONAL
LEASE MANAGEMENT INCOME FUND I, L.L.C.**
 
 **INDEX
OF EXHIBITS**
 
 
 Exhibit
    
    Page4.
    
    Operating
      Agreement of Fund.
    *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
    Settlement
      Agreement between PLM Worldwide Leasing Corp. and VarigS.A.
      dated October 11, 2002.
    *10.
    4
    Modification
      of Settlement Agreement between PLM Worldwide Leasing Corp. and Varig S.A.
      dated September 24, 2004.
    49-5514.
    
    PLM
      Financial Services Inc. Code of Ethics.
    *31.
    1
    Certificate
      of President of the Manager pursuant to Section 302 of Sarbanes - Oxley
      Act.
    4531.
    2
    Certificate
      of Chief Financial Officer of the Manager pursuant to Section 302 of
      Sarbanes - Oxley Act.
    4632.
    1
    Certificate
      of President of the Manager pursuant to Section 906 of Sarbanes - Oxley
      Act.
    4732.
    2
    Certificate
      of Chief Financial Officer of the Manager pursuant to Section 906 of
      Sarbanes - Oxley Act.
    48
 
 
 *Incorporated
by reference. See page 21 of this report