MD-82 Trust S/N 49183
(A Trust)





Financial Statements


































INDEPENDENT AUDITORS' REPORT




















The Owners


MD-82 Trust S/N 49183





We have audited the accompanying balance sheet of the MD-82 Trust S/N 49183 (the "Trust") as of December 31, 2002, and the related statements of operations, changes in owners' equity (deficiency), and cash flows for the year then ended. These financial statements are the responsibility of the Trusts management. Our responsibility is to express an opinion on these financial statements based on our audit.





We conducted our audit in accordance with auditing standards generally accepted in the United States of America. 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, such financial statements present fairly, in all material respects, the financial position of the Trust as of December 31, 2002, 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/ Deloitte & Touche LLP


Certified Public Accountants





Tampa, Florida


March 7, 2003












MD-82 TRUST S/N 49183
(A Trust)BALANCE SHEETS
December 31,(in thousands of dollars)





2003



2002Assets

(unaudited)





Aircraft equipment held for lease, at cost
$
13,957


$
13,957Less accumulated depreciation

(13,957
)


(13,957
)Net equipment

--



--Total assets
$
--


$
--





Liabilities and owners deficiencyLiabilities:Accounts payable and accrued expenses
$
3


$
1Due to affiliates

5



5Total liabilities

8



6Owners deficiency

(8
)


(6
)Total liabilities and owners deficiency
$
--


$
--




































































See accompanying notes to financial statements.





MD-82 TRUST S/N 49183
(A Trust)STATEMENTS OF OPERATIONSFor the Years Ended December 31,(in thousands of dollars)














2003


2002


2001(unaudited)





(unaudited
)





RevenuesLease revenue

$
1,225

$
1,260

$
1,468Interest income


--


--


9Total revenues


1,225


1,260


1,477ExpensesDepreciation and amortization expense


--


--


1,762Equipment operating expenses


(1
)

(1
)

7Management fees to affiliate


61


63


73Insurance expense


--


--


19Administrative expenses to affiliates


9


12


44Administrative expenses


13


3


9Total expenses


82


77


1,914Net income (loss)

$
1,143

$
1,183

$
(437
)
















































































See accompanying notes to financial statements.





MD-82 TRUST S/N 49183
(A Trust)STATEMENTS OF CHANGES IN OWNERS EQUITY (DEFICIENCY)For the Years Ended December 31, 2003, 2002 and 2001(in thousands of dollars)








Owners equity at December 31, 2000 (unaudited)
$
1,943Net loss (unaudited)

(437
)Distributions paid (unaudited)

(1,518
)Owners deficiency at December 31, 2001 (unaudited)

(12
)Net income

1,183Distributions paid

(1,177
)Owners deficiency at December 31, 2002

(6
)Net income (unaudited)

1,143Distributions paid (unaudited)

(1,145
)Owners deficiency at December 31, 2003 (unaudited)
$
(8
)













































































See accompanying notes to financial statements.





MD-82 TRUST S/N 49183
(A Trust)STATEMENTS OF CASH FLOWSFor the Years Ended December 31,(in thousands of dollars)





2003


2002


2001(unaudited)





(unaudited
)





Operating activitiesNet income (loss)

$
1,143

$
1,183

$
(437
)Adjustments to reconcile net income (loss) to net cashprovided by (used in) operating activities:Depreciation and amortization


--


--


1,762Changes in operating assets and liabilities:Accounts receivable


--


--


200Prepaid expenses


--


--


1Accounts payable and accrued expenses


2


(6
)

7Due to affiliates


--


--


(15
)Net cash provided by operating activities


1,145


1,177


1,518Financing activitiesDistributions paid


(1,145
)

(1,177
)

(1,518
)Net cash used in financing activities


(1,145
)

(1,177
)

(1,518
)Net change in cash and cash equivalents


--


--


--Cash and cash equivalents at beginning of year


--


--


--Cash and cash equivalents at end of year

$
--

$
--

$
--




































































See accompanying notes to financial statements.





MD-82 TRUST S/N 49183
(A Trust)


NOTES TO FINANCIAL STATEMENTS





1.  Summary of Significant Accounting Policies





Organization





In January 1998, PLM Equipment Growth & Income Fund VII (EGF VII), a California limited partnership, and Professional Lease Management Income Fund I (Fund I), a Delaware Limited Liability Company (the Owners), and MD-82 Trust S/N 49183 (the "Trust") entered into a Trust Agreement under which PLM Transportation Equipment Corp. (TEC), a wholly-owned subsidiary of PLM International, Inc., acts as trustee for the benefit of the Owners as equal co-beneficiaries. The Trust was established for the purpose of purchasing an MD-82 stage III commercial aircraft. The Trust has no employees or operations other than the operation of the MD-82 stage III commercial aircraft. The Trust estate is owned 50% by EGF VII and 50% by Fund I.





PLM Financial Services, Inc., (FSI) is the General Partner of EGF VII and the Manager of Fund I. FSI is a wholly-owned subsidiary of PLM International, Inc.





The aircraft was purchased in January 1998 for $13.7 million. EGF VII paid acquisition fees of $0.3 million and lease negotiation fees of $0.1 million during 1998 to FSI. No fees were paid by Fund I.





The aircraft in the Trust is leased for $0.1 million a month through October 2008.





Estimates





These accompanying 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.





Operations





The aircraft in the Trust is managed under a continuing management agreement by PLM Investment Management, Inc. (IMI), a wholly-owned subsidiary of FSI. The Trust pays a monthly management fee to IMI for managing the aircraft (Note 2). FSI, in conjunction with its subsidiaries, sells transportation equipment to investor programs and third parties, manages pools of transportation equipment under agreements with the investor programs, and is a general partner in limited partnerships.





Cash and Cash Equivalents





All cash generated from operations is distributed to the owners; accordingly, the Trust has no cash balance at December 31, 2003 and 2002.





Accounting for Leases





The aircraft under the Trust is leased under an operating lease with fixed monthly payments. Under the operating lease method of accounting, the leased asset is recorded at cost and depreciated over its estimated useful life. Rental payments are recorded as revenue over the lease term in accordance with Financial Accounting Standards Board Statement No. 13 "Accounting for Leases". Lease origination costs are amortized over the related lease period.









MD-82 TRUST S/N 49183
(A Trust)


NOTES TO FINANCIAL STATEMENTS





1.  Summary of Significant Accounting Policies (continued)





Depreciation and Amortization





Depreciation of aircraft equipment was computed using the double-declining balance method, taking a full month's depreciation in the month of acquisition. Since this aircraft was manufactured in 1983, it was fifteen years old when the Trust purchased it in January 1998, nearing the end of its economic life. The decision was to depreciate this aircraft based upon an estimated useful life of 4 years, the term of the original lease. The depreciation method changed to straight-line when the annual depreciation expense using the straight-line method exceeded that calculated by the double-declining balance method. Acquisition fees of $0.3 million, which were paid to FSI, were capitalized as part of the cost of the equipment and depreciated over the life of the aircraft. Lease negotiation fees of $0.1 million were amortized based on the term of the initial lease.





Aircraft





Aircraft equipment held for operating leases is stated at cost.





In accordance with Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" (SFAS No. 121), FSI reviewed the carrying value of the Trust's aircraft at least quarterly and whenever circumstances indicated that the carrying value of the aircraft would not be recoverable due to expected future market conditions. If the projected undiscounted cash flows and the fair value of the aircraft had been less than the carrying value of the aircraft, an impairment loss would have been recorded.





In October 2001, the Financial Accounting Standards Board issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", (SFAS No. 144) which replaced SFAS No. 121. In accordance with SFAS No. 144, the Trust 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 exceeds 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. The Trust applied the new rules on accounting for the impairment or disposal of long-lived assets beginning January 1, 2002.





The estimate of the fair value of the Trusts aircraft is based on the opinion of the Trusts aircraft managers using data, reasoning and analysis of prevailing market conditions of similar aircraft, data from recent purchases, independent third party valuations and discounted cash flows. The events of September 11, 2001, along with the change in general economic conditions in the United States, have continued to adversely affect the market demand for both new and used commercial aircraft and weakened the financial position of several airlines. Aircraft condition, age, passenger capacity, distance capability, fuel efficiency, and other factors influence market demand and market values for passenger jet aircraft.





No impairments to the aircraft were required in 2003, 2002, or 2001.





Repairs and Maintenance





Repairs and maintenance for the aircraft are the obligation of the lessee.









MD-82 TRUST S/N 49183
(A Trust)


NOTES TO FINANCIAL STATEMENTS





1.  Summary of Significant Accounting Policies (continued)





Net Income (Loss) and Cash Distributions to Owners





The net income (loss) and cash distributions of the Trust are allocated to the Owners. The net income or loss is generally allocated to the Owners based on their percentage of ownership in the Trust. Certain depreciable and amortizable amounts are allocated specifically to each of the Owners, such as depreciation on acquisition fees and amortization on lease negotiation fees. Cash distributions are allocated 50% to EGF VII and 50% to Fund I.





Comprehensive Income (Loss)





The Trusts comprehensive income (loss) is equal to net income (loss) for the years ended December 31, 2003, 2002 and 2001.





2.  Transactions with Affiliates





The equipment management agreement provides for the Trust to pay IMI a monthly management fee 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) 5% of the gross lease revenues attributable to equipment that is subject to operating leases. The Trusts management fees will be reduced 12.5% for the period January 1, 2005 through June 30, 2006 as part of the settlement of litigation filed against the General Partner and its affiliated in a prior year on behalf of one of the owners of the Trust. The Trusts management fee expense to affiliate was $0.1 million during 2003, 2002, and 2001, respectively.





The Trust reimbursed FSI and its affiliates $9,000, $12,000, and $44,000 during 2003, 2002, and 2001, respectively, for data processing and administrative expenses directly attributable to the Trust.





The balance due to affiliates of $5,000 as of December 31, 2003 and 2002 was payable to IMI for management fees.





3.  Equipment





Lease revenues are earned by placing the aircraft on an operating lease. In April 2001, a fixed rate lease expiring in 2008 was signed with American Airlines.





On April 15, 2003 the lease agreement was amended to decrease rent from $105,000 per month to $100,000 per month for the period beginning June 1, 2003 through December 30, 2005.





The aircraft in the Trust is used as collateral against the senior loan of the Owners.





The aircraft lease is accounted for as an operating lease. Future minimum rentals under noncancelable operating leases, as of December 31, 2003, during each of the next five years are: $1.2 million in 2004, $1.2 million in 2005, $1.3 million in 2006, $1.3 million in 2007 and $0.9 million in 2008.





4.  Geographic Information





As of December 31, 2003, 2002 and 2001, the aircraft in the Trust was on lease to a lessee domiciled in the United States.





The net book value of the aircraft was $-0- as of December 31, 2003 and 2002.









MD-82 TRUST S/N 49183
(A Trust)


NOTES TO FINANCIAL STATEMENTS





5.  Income Taxes





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





As of December 31, 2003, the financial statement carrying amount of assets and liabilities was approximately $2.4 million lower than the federal income tax basis of such assets and liabilities, primarily due to differences in depreciation methods.





6.  Concentrations of Credit Risk





For the years ended December 31, 2003, 2002, and 2001, the Trusts lessees that accounted for more than 10% of revenues were American Airlines (100% in 2003 and 2002, and 59% in 2001) and Trans World Airlines (41% in 2001).





As of December 31, 2003, the Trust had no other significant concentrations of credit risk that could have a material adverse effect on the Trust.