UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549 

____________________ 

FORM 10-Q 

[X]    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 

For the fiscal quarter ended September 30, 2003 

[ ]    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.)

235 3 ^rd Street South, Suite 200
St. Petersburg, FL		33701
(Address of principal executive offices)		(Zip code)

Registrant's telephone number, including area code (727) 803-1800 

_______________________ 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No 

PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C. 

(A Delaware Limited Liability Company) 

CONDENSED BALANCE SHEETS 

(in thousands of dollars, except unit amounts) 

(unaudited) 

	September 30,			December 31,
		2003			2002

Assets

Equipment held for operating leases	$	108,882		$	89,472
Less accumulated depreciation		(61,547	)		(55,619	)

Net equipment		47,335			33,853

Cash and cash equivalents		5,822			560
Restricted cash		573			568
Cash held in escrow accounts		--			19,792
Accounts and note receivable, less allowance for doubtful
accounts of $2,091 in 2003 and $3,532 in 2002		2,750			2,342
Investment in unconsolidated special-purpose entities		1,582			2,044
Debt placement fees, less accumulated amortization
of $118 in 2003 and $105 in 2002		58			71
Prepaid expenses and other assets		282			443


Total assets	$	58,402		$	59,673


Liabilities and members’ equity

Liabilities:
Accounts payable and accrued expenses	$	731		$	622
Due to affiliates		246			191
Lessee deposits and reserves for repairs		3,972			3,917
Note payable		16,000			16,000
Total liabilities		20,949			20,730


Commitments and contingencies

Members' equity:
Class A members (4,971,311 units)		37,453			38,943
Class B member		--			--

Total members' equity		37,453			38,943


Total liabilities and members' equity	$	58,402		$	59,673

See accompanying notes to unaudited condensed financial statements. 

PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C. 

(A Delaware Limited Liability Company) 

CONDENSED STATEMENTS OF OPERATIONS 

(in thousands of dollars, except weighted-average unit amounts) 

(unaudited) 

	For the Three Months						For the Nine Months
	Ended September 30,						Ended September 30,
		2003			2002			2003			2002

Revenues

Lease revenue	$	4,488		$	4,243		$	13,529		$	13,774
Interest and other income		87			105			244			294
Gain on disposition of equipment		38			154			156			161
Loss on disposition of equipment		(5	)		(5	)		--			(4	)
Total revenues		4,608			4,497			13,929			14,225


Expenses

Depreciation		2,015			1,640			5,864			5,055
Repairs and maintenance		344			576			1,196			1,446
Equipment operating expenses		1,054			1,095			3,456			3,189
Insurance expense		137			101			444			307
Management fees to affiliate		281			188			793			616
Interest expense		304			348			907			1,056
General and administrative expenses
to affiliates		35			26			124			237
Other general and administrative expenses		348			550			1,041			1,094
Loss on impairment of equipment		309			--			315			--
(Recovery of) provision for bad debts		(475	)		658			(1,298	)		2,206

Total expenses		4,352			5,182			12,842			15,206


Equity in net income of unconsolidated
special-purpose entities		126			92			402			340


Net income (loss)	$	382		$	(593	)	$	1,489		$	(641	)


Members' share of net income (loss)

Class A members	$	163		$	(812	)	$	996		$	(1,299	)
Class B member		219			219			493			658


Total	$	382		$	(593	)	$	1,489		$	(641	)


Class A members’ net income (loss) per
weighted-average unit	$	0.03		$	(0.16	)	$	0.20		$	(0.26	)

See accompanying notes to unaudited condensed financial statements. 

- -

PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C. 

(A Delaware Limited Liability Company) 

CONDENSED STATEMENTS OF CHANGES IN MEMBERS' EQUITY 

For the period from December 31, 2002 to September 30, 2003 

(in thousands of dollars) 

(unaudited) 

	Class A			Class B			Total


Members' equity as of December 31, 2002	$	38,943		$	--		$	38,943

Net income		996			493			1,489

Cash distribution		(2,486	)		(493	)		(2,979	)


Members' equity as of September 30, 2003	$	37,453		$	--		$	37,453

See accompanying notes to unaudited condensed financial statements. 

PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C.
(A Delaware Limited Liability Company)
CONDENSED STATEMENTS OF CASH FLOWS
(in thousands of dollars)
(unaudited)

	For the Nine Months
	Ended September 30,
		2003			2002

Operating activities

Net income (loss)		$	1,489		$	(641	)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation			5,864			5,055
Amortization of debt placements fees			13			12
(Recovery of) provision for bad debts			(1,298	)		2,206
Net gain on disposition of equipment			(156	)		(157	)
Loss on impairment of equipment			315			--
Equity in net income of unconsolidated
special-purpose entities			(402	)		(340	)
Changes in operating assets and liabilities:
Accounts and note receivable			890			(2,069	)
Prepaid expenses and other assets			161			(89	)
Accounts payable and accrued expenses			109			745
Due to affiliates			55			(77	)
Lessee deposits and reserves for repairs			55			227

Net cash provided by operating activities			7,095			4,872


Investing activities

Payments for purchase of equipment and capitalized
improvements			(19,853	)		(9	)
Distributions from unconsolidated special-purpose
entities			864			862
Decrease in cash held in escrow accounts			19,792			--
Proceeds from disposition of equipment			348			311
Net cash provided by investing activities			1,151			1,164


Financing activities

Increase in restricted cash			(5	)		(653	)
Cash distributions to Class A members			(2,486	)		(3,737	)
Cash distributions to Class B member			(493	)		(658	)
Net cash used in financing activities			(2,984	)		(5,048	)


Net increase in cash and cash equivalents			5,262			988
Cash and cash equivalents at beginning of period			560			21,837

Cash and cash equivalents at end of period		$	5,822		$	22,825

See accompanying notes to unaudited condensed financial statements. 

PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C. 

(A Delaware Limited Liability Company) 

NOTES TO CONDENSED FINANCIAL STATEMENTS 

(unaudited) 

1.    Opinion of Management 

The accompanying unaudited condensed financial statements contain all adjustments necessary, consisting primarily of normal recurring accruals, to present fairly the unaudited condensed financial position of Professional Lease Management Income Fund I, L.L.C. (the Fund) as of September 30, 2003 and December 31, 2002, the unaudited condensed statements of operations for the three and nine months ended September 30, 2003 and 2002, the unaudited condensed statements of changes in members’ equity for the period from December 31, 2002 to September 30, 2003, and the unaudited condensed statements of cash flows for the nine months ended September 30, 2003 and 2002. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted from the accompanying condensed financial statements. For further information, reference should be made to the financial statements and notes thereto included in the Fund’s Annual Report on Form 10-K for the year ended December 31, 2002, on file at the Securities and Exchange Commission. 

2.    Schedule of Fund Phases 

Cash generated from operations after January 1, 2003 cannot be used to purchase additional equipment. Cash generated from operations prior to December 31, 2002, for which PLM Financial Services, Inc. (FSI or the Manager) had entered into legally binding commitments prior to December 31, 2002, may be used to purchase additional equipment after January 1, 2003. 

The Fund will terminate on December 31, 2010, unless terminated earlier upon sale of all equipment or by certain other events. 

3.    Reclassifications 

Certain amounts in the 2002 financial statements have been reclassified to conform to the 2003 presentations. These reclassifications did not have any effect on total assets, total liabilities, members’ equity, or net income (loss). 

4.    Cash Distributions 

Cash distributions are recorded when declared. Cash distributions are generally paid in the same quarter they are declared and may include amounts in excess of net income that are considered a return of capital. For the nine months ended September 30, 2003 and 2002, cash distributions totaled $3.0 million and $4.4 million, respectively, or $0.50 and $0.75 per weighted-average Class A unit, respectively. Cash distributions to the Class A unitholders of $1.5 million and $3.7 million for the nine months ended September 30, 2003 and 2002, respectively, was deemed to be a return of capital. 

5.    Cash Held in Escrow Accounts 

At December 31, 2002, the Fund held $19.8 million in escrow accounts to be used to purchase equipment that it had been legally committed to purchase. During the nine months ended September 30, 2003, the Fund used the cash held in escrow accounts to fund railcar purchases. 

6.    Transactions with Manager and Affiliates 

The balance due to affiliates as of September 30, 2003 and December 31, 2002 represented $0.2 million due to the Manager and its affiliates for management fees. 

PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C. 

(A Delaware Limited Liability Company) 

NOTES TO CONDENSED FINANCIAL STATEMENTS 

(unaudited) 

6.    Transactions with Manager and Affiliates (continued) 

The Fund’s proportional share of the affiliated expenses incurred by the unconsolidated special-purpose entities (USPEs) during 2003 and 2002 is listed in the following table (in thousands of dollars): 

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
		2003		2002			2003		2002


Management fees	$	15	$	16		$	46	$	47
Data processing and administrative
expenses		1		2			3		12

These affiliate expenses reduced the Fund's proportional share of the equity interest in the income of USPEs. 

7.    Equipment 

Owned equipment held for operating leases is stated at cost. The components of owned equipment were as follows (in thousands of dollars): 

	September 30,			December 31,
		2003			2002


Railcars	$	39,098		$	19,463
Marine containers		30,926			31,121
Marine vessel		17,000			17,000
Aircraft		15,358			15,358
Trailers		6,500			6,530
		108,882			89,472
Less accumulated depreciation		(61,547	)		(55,619	)

Net equipment	$	47,335		$	33,853

As of September 30, 2003, all owned equipment in the Fund’s portfolio was on lease except for 233 railcars with a net book value of $2.2 million. As of December 31, 2002, all owned equipment in the Fund portfolio was on lease except for one commercial aircraft and 172 railcars with a net book value of $0.9 million. 

During the nine months ended September 30, 2003, the Fund purchased railcars for $19.7 million that it had entered into legally binding agreements to purchase in 2002. The Fund also made capitalized improvements to equipment of $0.2 million during the nine months ended September 30, 2003. 

During the nine months ended September 30, 2003, the Fund disposed of marine containers, trailers and railcars with a net book value of $0.2 million for proceeds of $0.3 million. During the nine months ended September 30, 2002, the Fund disposed of marine containers and a railcar with a net book value of $0.2 million for proceeds of $0.3 million. 

Equipment held for operating leases is stated at cost less any reductions to the carrying value as required by Financial Accounting Standards Board (FASB) No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets". During the nine months ended September 30, 2003, the Fund recorded an impairment of $0.3 million to owned railcars. 

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 78 owned railcars with 

PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C. 

(A Delaware Limited Liability Company) 

NOTES TO CONDENSED FINANCIAL STATEMENTS 

(unaudited) 

7.    Equipment (continued 

cracks in the seal weld. The fair value of the railcars with this defect was determined by using industry expertise. 

No reductions were required to the carrying value of the owned equipment during the nine months ended September 30, 2002. 

8.    Investments in Unconsolidated Special-Purpose Entities 

The Fund owns equipment jointly with affiliated programs. These are single purpose entities that do not have any debt or other financial encumbrances. Ownership interest is based on the Fund’s contribution towards the cost of the equipment in the USPEs. The Fund’s proportional share of equity and income (loss) in each entity is not necessarily the same as its ownership interest. The primary reason for this difference has to do with certain fees such as management and acquisition and lease negotiation fees varying among the owners of the USPEs. 

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 September 30, 2003 and December 31, 2002 (in thousands of dollars): 

	TWA	TWA
	S/N 49183	MD-82
As of September 30, 2003	Trust 1	Trust 2	Total

Assets
Equipment less accumulated depreciation	$	--		$	3,249
Total assets	$	--		$	3,249

Liabilities
Accounts payable	$	4		$	--
Due to affiliates		5			5
Total liabilities		9			5


Equity		(9	)		3,424

Total liabilities and equity	$	--		$	3,429


Fund’s share of equity	$	--		$	1,582	$	1,582

	TWA	TWA
	S/N 49183	MD-82
As of December 31, 2002	Trust 1	Trust 2	Total

Assets
Equipment less accumulated depreciation	$	--		$	4,192
Total assets	$	--		$	4,192

Liabilities
Accounts payable	$	1		$	1
Due to affiliates		5			5
Total liabilities		6			6


Equity		(6	)		4,186

Total liabilities and equity	$	--		$	4,192


Fund’s share of equity	$	--		$	2,044	$	2,044

1     The Fund owns a 50% interest in the TWA S/N 49183 Trust that owns an MD-82 stage III commercial aircraft. 

2      The Fund owns a 50% interest in the TWA MD-82 Trust that owns an MD-82 stage III commercial aircraft. 

PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C. 

(A Delaware Limited Liability Company) 

NOTES TO CONDENSED FINANCIAL STATEMENTS 

(unaudited) 

8.    Investments in Unconsolidated Special-Purpose Entities (continued) 

The tables below set forth 100% of the revenues, direct and indirect expenses, and net income (loss) of the entities in which the Fund has an interest, and the Fund‘s proportional share of income (loss) in each entity for the three and nine months ended September 30, 2003 and 2002 (in thousands of dollars): 

	TWA	TWA
For the three months ended	S/N 49183	MD-82
September 30, 2003	Trust 1	Trust 2	Total

Revenues	$	300	$	300
Less: Indirect expenses		22		332
Net income (loss)	$	278	$	(32	)


Fund’s share of net income (loss)	$	138	$	(12	)	$	126

	TWA	TWA
For the three months ended	S/N 49183	MD-82
September 30, 2002	Trust 1	Trust 2	Other	Total

Revenues	$	315	$	315		$	--
Less: Direct expenses		--		--			(7	)
Indirect expenses		18		368			--

Net income (loss)	$	297	$	(53	)	$	7


Fund’s share of net income (loss)	$	110	$	(21	)	$	3		$	92

	TWA	TWA
For the nine months ended	S/N 49183	MD-82
September 30, 2003	Trust 1	Trust 2	Total

Revenues	$	925		$	925
Less:Direct expenses		(1	)		(1	)
Indirect expenses		65			1,003
Net income (loss)	$	861		$	(77	)


Fund’s share of net income (loss)	$	430		$	(28	)	$	402

	TWA	TWA
For the nine months ended	S/N 49183	MD-82	Spear
September 30, 2002	Trust 1	Trust 2	Partnership 3	Total

Revenues	$	945		$	945		$	--
Less: Direct expenses		(1	)		--			(7	)
Indirect expenses		60			1,111			1

Net income (loss)	$	886		$	(166	)	$	6


Fund’s share of net income (loss)	$	405		$	(68	)	$	3		$	340

	TWA	TWA
For the nine months ended	S/N 49183	MD-82	Spear
September 30, 2002	Trust 1	Trust 2	Partnership 3	Total

Revenues	$	945		$	945		$	--
Less: Direct expenses		(1	)		--			(7	)
Indirect expenses		60			1,111			1

Net income (loss)	$	886		$	(166	)	$	6


Fund’s share of net income (loss)	$	405		$	(68	)	$	3		$	340

As of September 30, 2003 and December 31, 2002, all jointly-owned equipment in the Fund’s USPE portfolio was on lease. 

1     The Fund owns a 50% interest in the TWA S/N 49183 Trust that owns an MD-82 stage III commercial aircraft. 

2        The Fund owns a 50% interest in the TWA MD-82 Trust that owns an MD-82 stage III commercial aircraft. 

3    The Fund owned a 50% interest in the Spear Partnership that owned a container feeder vessel. 

PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C. 

(A Delaware Limited Liability Company) 

NOTES TO CONDENSED FINANCIAL STATEMENTS 

(unaudited) 

9.    Operating Segments 

The Fund operates in five different segments: marine vessel leasing, aircraft leasing, railcar leasing, trailer leasing and marine container leasing. Each equipment leasing segment engages in short-term to mid-term operating leases to a variety of customers. 

The following tables present a summary of the operating segments (in thousands of dollars): 

Marine 

Marine 

For the three months ended 

Vessel 

Aircraft 

Railcar 

Trailer 

Container 

September 30, 2003 

Leasing 

Leasing 

Leasing 

Leasing 

Leasing 

Other 1 

Total 

Revenues
Lease revenue	$	1,687	$	267		$	1,026		$	239	$	1,269	$	--		$	4,488
Interest income and other income		--		33			--			--		--		54			87
Gain (loss) on disposition of equipment		--		--			(5	)		9		29		--			33

Total revenues		1,687		300			1,021			248		1,298		54			4,608


Expenses
Operations support		1,258		7			152			80		19		19			1,535
Depreciation		308		--			875			91		741		--			2,015
Interest expense		--		--			--			--		--		304			304
Management fees to affiliate		84		65			57			11		64		--			281
General and administrative expenses		18		63			119			59		--		124			383
Loss on impairment of equipment		--		--			309			--		--		--			309
Provision for (recovery of) bad debts		1		(512	)		36			--		--		--			(475	)
Total expenses		1,669		(377	)		1,548			241		824		447			4,352
Equity in net income of USPEs		--		126			--			--		--		--			126

Net income (loss)	$	18	$	803		$	(527	)	$	7	$	474	$	(393	)	$	382

Equipment purchases and
capitalized improvements	$	--	$	--		$	786		$	--	$	--	$	--		$	786

Total assets as of September 30, 2003	$	7,102	$	2,111		$	23,814		$	1,580	$	17,578	$	6,217		$	58,402

Marine 

Marine 

For the three months ended 

Vessel 

Aircraft 

Railcar 

Trailer 

Container 

September 30, 2002 

Leasing 

Leasing 

Leasing 

Leasing 

Leasing 

Other 2 

Total 

Revenues
Lease revenue	$	1,251		$	757		$	733		$	239		$	1,263	$	--		$	4,243
Interest income and other income		7			--			--			--			--		98			105
Gain (loss) on disposition of equipment		--			--			(5	)		13			141		--			149

Total revenues		1,258			757			728			252			1,404		98			4,497


Expenses
Operations support		1,324			7			190			219			14		15			1,769
Depreciation		370			--			280			92			896		5			1,643
Interest expense		--			--			--			--			--		348			348
Management fees to affiliate		62			--			49			13			64		--			188
General and administrative expenses		15			(37	)		51			50			--		497			576
Provision for (recovery of) bad debts		--			663			(5	)		--			--		--			658
Total expenses		1,771			633			565			374			974		865			5,182
Equity in net income of USPEs		3			89			--			--			--		--			92

Net income (loss)	$	(510	)	$	213		$	163		$	(122	)	$	430	$	(767	)	$	(593	)


Equipment capitalized improvements	$	--		$	--		$	6		$	--		$	--	$	--		$	6

1    Includes certain assets not identifiable to a specific segment such as cash, certain restricted cash, deferred charges and certain prepaid expenses and other assets. Also includes certain interest income and costs not identifiable to a particular segment, such as interest expense, and certain general and administrative and operations support expenses. 

2    Includes interest income and costs not identifiable to a particular segment, such as interest expense, and certain general and administrative and operations support expenses. 

PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C. 

(A Delaware Limited Liability Company) 

NOTES TO CONDENSED FINANCIAL STATEMENTS 

(unaudited) 

9.    Operating Segments (continued) 

Marine 

Marine 

For the nine months ended 

Vessel 

Aircraft 

Railcar 

Trailer 

Container 

September 30, 2003 

Leasing 

Leasing 

Leasing 

Leasing 

Leasing 

Other 1 

Total 

Revenues
Lease revenue	$	5,505	$	594		$	2,897		$	639		$	3,894	$	--		$	13,529
Interest income and other income		42		107			25			--			--		70			244
Gain on disposition of equipment		--		--			57			9			90		--			156

Total revenues		5,547		701			2,979			648			3,984		70			13,929


Expenses
Operations support		4,135		41			513			302			49		56			5,096
Depreciation		925		--			2,331			273			2,335		--			5,864
Interest expense		--		--			--			--			--		907			907
Management fees to affiliate		275		123			168			32			195		--			793
General and administrative expenses		53		93			268			154			--		597			1,165
Loss on impairment of equipment		--		--			315			--			--		--			315
Provision for (recovery of ) bad debts		4		(1,351	)		49			--			--		--			(1,298	)
Total expenses		5,392		(1,094	)		3,644			761			2,579		1,560			12,842
Equity in net income of USPEs		--		402			--			--			--		--			402

Net income (loss)	$	155	$	2,197		$	(665	)	$	(113	)	$	1,405	$	(1,490	)	$	1,489

Equipment purchases and
capitalized improvements	$	--	$	--		$	19,851		$	--		$	2	$	--		$	19,853

Marine 

Marine 

For the nine months ended 

Vessel 

Aircraft 

Railcar 

Trailer 

Container 

September 30, 2002 

Leasing 

Leasing 

Leasing 

Leasing 

Leasing 

Other 1 

Total 

Revenues
Lease revenue	$	4,504		$	2,273	$	2,404		$	897		$	3,696	$	--		$	13,774
Interest income and other income		7			--		--			--			--		287			294
Gain (loss) on disposition of equipment		--			--		(4	)		13			148		--			157

Total revenues		4,511			2,273		2,400			910			3,844		287			14,225


Expenses
Operations support		3,792			20		511			529			43		47			4,942
Depreciation		1,110			--		839			275			2,830		13			5,067
Interest expense		--			--		--			--			--		1,044			1,044
Management fees to affiliate		225			--		159			46			186		--			616
General and administrative expenses		35			2		135			153			--		1,006			1,331
Provision for bad debts		--			2,178		5			23			--		--			2,206
Total expenses		5,162			2,200		1,649			1,026			3,059		2,110			15,206
Equity in net income of USPEs		3			337		--			--			--		--			340

Net income (loss)	$	(648	)	$	410	$	751		$	(116	)	$	785	$	(1,823	)	$	(641	)


Equipment capitalized improvements	$	--		$	--	$	9		$	--		$	--	$	--		$	9

10.    Net Income (Loss) Per Weighted-Average Class A Unit 

Net income (loss) per weighted-average Class A unit was computed by dividing net income or loss attributable to Class A members by the weighted-average number of Class A units deemed outstanding during the period. The weighted-average number of Class A units deemed outstanding during the three and nine months ended September 30, 2003 and 2002 was 4,971,311 units. 

11.    Debt 

The Fund is a participant in a $10.0 million warehouse facility. The warehouse facility, which was scheduled to expire on September 30, 2003, was extended until December 31, 2003 during September 2003. As of September 30, 2003 and December 31, 2002, the Fund had no borrowings outstanding under this facility. 

1    Includes certain interest income and other income and costs not identifiable to a particular segment, such as interest expense, and certain general and administrative and operations support expenses. 

PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C. 

(A Delaware Limited Liability Company) 

NOTES TO CONDENSED FINANCIAL STATEMENTS 

(unaudited) 

11.    Debt (continued) 

As the Fund may not invest cash generated from operations after January 1, 2003, the Manager does not expect the Fund to participate in the warehouse facility beyond its current expiration on December 31, 2003. 

12.    Commitments and Contingencies 

As of December 31, 2002, the Manager had committed the Fund to purchase a total of $19.8 million in railcar equipment. The funds to purchase these railcars were with an unaffiliated escrow agent and reported as cash held in escrow accounts on the accompanying unaudited balance sheets. 

Commitments and contingencies as of September 30, 2003 are as follows (in thousands of dollars): 

			Less than		1-3			4-5			After 5
Current Obligations	Total		1 Year			Years			Years			Years


Commitment to purchase railcars		$--		$--			$--			$--			$--
Note payable		16,000		3,000			8,000			5,000			--
Line of credit		--		--			--			--			--

		$16,000		$3,000			$8,000			5,000			$--

13.    Recent Accounting Pronouncements 

In January 2003, FASB issued Interpretation No. 46, "Consolidation of Variable Interest Entities" (FIN 46). This interpretation clarifies existing accounting principles related to the preparation of consolidated financial statements when the owners of an USPE do not have the characteristics of a controlling financial interest or when the equity at risk is not sufficient for the entity to finance its activities without additional subordinated financial support from others. FIN 46 requires the Fund to evaluate all existing arrangements to identify situations where the Fund has a "variable interest," commonly evidenced by a guarantee arrangement or other commitment to provide financial support, in a "variable interest entity," commonly a thinly capitalized entity, and further determine when such variable interest requires the Fund to consolidate the variable interest entities’ financial statements with its own. The Fund is required to perform this assessment by December 31, 2003 and consolidate any variable interest entities for which the Fund will absorb a majority of the entities’ expected losses or receive a majority of the expected residual gains. The Manager has not completed its analysis and has not concluded on the impact that FIN 46 will have. 

In May 2003, FASB issued Statement of Financial Accounting Standard No. 150, "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity" (SFAS No. 150) which establishes standards for how the Fund classifies and measures certain financial instruments with characteristics of both liabilities and equity. This standard was to be effective for the Fund’s quarter ending September 30, 2003. In October 2003, however, the FASB deferred the application of SFAS No. 150 indefinitely. 

In September 2001, the Accounting Standards Executive Committee (AcSEC) issued an Exposure Draft on a Statement of Position, "Accounting for Certain Costs and Activities Related to Property, Plant and Equipment" (the "Proposed Statement"). On September 9, 2003, AcSEC voted to approve the Proposed Statement and is expected to present it to the FASB in the fourth quarter of 2003. At this time, it is unclear whether the Proposed Statement will be issued or in what form. If the existing Proposed Statement is issued, it would require the Fund to modify its accounting policy for maintenance and repairs. Such costs would no longer be accrued in advance of performing the related maintenance and repairs; rather, the Proposed Statement requires these costs to be capitalized and amortized over their estimated useful life. 

PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C. 

(A Delaware Limited Liability Company) 

NOTES TO CONDENSED FINANCIAL STATEMENTS 

(unaudited) 

13.    Recent Accounting Pronouncements (continued) 

If the existing Proposed Statement is issued, it would require the Fund to modify its accounting policy for maintenance and repairs. Such costs would no longer be accrued in advance of performing the related maintenance and repairs; rather, the Proposed Statement requires these costs to be capitalized and amortized over their estimated useful life. The Fund has not yet quantified the impact of adopting the Proposed Statement on its financial statements. 

14. Subsequent Events 

The Fund declared and paid cash distributions to the members totaling $0.8 million during October and November 2003. 

During September 2003, the Fund’s owned marine vessel went into dry dock. The marine vessel was in dry-dock for approximately three weeks and was back in service during October 2003. The Manager expects that the dry dock will cost approximately $0.7 million and there will be no impact to the Fund’s statement of operations. The Fund has accrued this liability at September 30, 2003 and expects to pay for it during the fourth quarter of 2003. 

ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 

(I)    RESULTS OF OPERATIONS 

Comparison of the Professional Lease Management Income Fund I, L.L.C.’s (the Fund's) Operating Results for the Three Months Ended September 30, 2003 and 2002 

(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 third quarter of 2003, compared to the same quarter of 2002. Net gains from the disposal of equipment, interest and other income and certain expenses such as management fees to affiliate, depreciation and amortization, general and administrative expenses, loss on impairment of equipment and (recovery of) provision for bad debts relating to the operating segments (see Note 9 to the unaudited condensed financial statements), are not included in the owned equipment operation discussion because they are indirect in nature and not a result of operations but the result of owning a portfolio of equipment. The following table presents lease revenues less direct expenses by segment (in thousands of dollars): 

	For the Three Months
	Ended September 30,
	2003		2002


Marine containers	$	1,250	$	1,249
Railcars		874		543
Marine vessel		429		(73	)
Aircraft		260		750
Trailers		159		20

Marine containers:    Marine container lease revenues and direct expenses remained relatively the same at $1.3 million and $19,000, respectively, for the third quarter of 2003, compared to $1.3 million and $14,000, respectively, during the same quarter of 2002. A significant number of the Fund’s marine containers currently on a fixed rate lease will be switching to a lease based on utilization over the next 24 months. The Manager anticipates that this will result in a significant decrease in lease revenues. 

Railcars:    Railcar lease revenues and direct expenses were $1.0 million and $0.2 million, respectively, for the third quarter of 2003, compared to $0.7 million and $0.2 million, respectively, during the same quarter of 2002. An increase in railcar lease revenues of $0.5 million during the third quarter of 2003 was due to the purchase and lease of railcars during 2003. This increase was offset, in part, by a decrease of $0.2 million in lease revenues caused by the increase in the number of railcars off-lease in the third quarter of 2003 compared to the same period of 2002. During the third quarter of 2003, direct expenses decrease of $0.1 million were due to lower repairs and maintenance expense. This decrease was partially offset by higher insurance expenses of $31,000 compared to the same period of 2002. 

Marine vessel:    Marine vessel lease revenues and direct expenses were $1.7 million and $1.3 million, respectively, for the third quarter of 2003, compared to $1.3 million and $1.3 million, respectively, during the same quarter of 2002. Lease revenues increased $0.4 million in the third quarter of 2003 due to a higher lease rate earned on the Fund’s marine vessel. Direct operating expenses decreased $0.1 million during the third quarter of 2003 due to lower voyage expenses. 

Aircraft:    Aircraft lease revenues and direct expenses were $0.3 million and $7,000, respectively, for the third quarter of 2003, compared to $0.8 million and $7,000, respectively, during the same quarter of 2002. A decrease in lease revenues of $0.5 million was due to the reduction in the lease rate on three of the Fund's owned aircraft compared to the same period of 2002. 

Trailers:    Trailer lease revenues and direct expenses were $0.2 million and $0.1 million, respectively, for the third quarter of 2003, compared to $0.2 million and $0.2 million, respectively, during the same quarter of 2002. Direct expenses decreased $0.1 million in the third quarter of 2003 compared to the same period of 2002 due to reduced maintenance expense. 

(B)    Interest and Other Income 

Interest and other income remained relatively the same for the three months ended September 30, 2003 and 2002. During the third quarter of 2003, an increase in interest income of $33,000 was primarily due to interest income earned from a note receivable. This increase was offset by a $44,000 decrease in interest income caused by lower cash balances compared to the same period in 2002. 

(C)    Indirect Expenses Related to Owned Equipment Operations 

Total indirect expenses of $2.8 million for the three months ended September 30, 2003 decreased from $3.4 million for the same period in 2002. Significant variances are explained as follows: 

(i)    (Recovery of) provision for bad debts decreased $1.1 million compared to 2002. During 2003, the Fund recorded a recovery of accounts receivable of $0.5 million due to the collection of accounts receivable that had been previously reserved for as a bad debt. A provision for bad debts of $0.7 million was recorded in the third quarter of 2002 based on PLM Financial Services, Inc.’s (FSI or the Manager’s) evaluation of the collectability of receivables primarily related to one aircraft lessee; 

(ii)    A $0.2 million decrease in general and administrative expenses during the three months ended September 30, 2003 was due to lower administrative costs during the third quarter of 2003 compared to the same period of 2002; 

(iii)    A $44,000 decrease in interest expense was due to lower average borrowings outstanding during the quarter ended September 30, 2003 compared to the same period in 2002; 

(iv)    A $0.1 million increase in management fees was primarily due to the reduction in the provision for bad debts expense of $1.1 million; 

(v)    Loss on impairment of equipment increased $0.3 million during 2003 and resulted from the Fund reducing the carrying value of owned tank railcars to their estimated fair value. No impairment of equipment was required during the same period in 2002; and 

(vi)    A $0.4 million increase in depreciation expenses from 2002 levels reflects the increase of approximately $0.7 million caused by purchase of railcars during the first and third quarters of 2003 partially offset by a decrease of approximately $0.3 million caused by the double-declining balance method of depreciation which results in greater depreciation in the first years an asset is owned. 

(D)    Net Gain on Disposition of Owned Equipment 

Net gain on disposition of owned equipment for the third quarter of 2003 totaled $33,000 which resulted from the disposition of marine containers, trailers and railcars with a net book value of $0.1 million for proceeds of $0.1 million. Gain on disposition of owned equipment for the third quarter of 2002 totaled $0.1 million which resulted from the sale of marine containers and a railcar with a net book value of $0.1 million for proceeds of $0.3 million. 

(E)    Equity in Net Income of Unconsolidated Special-Purpose Entities (USPEs) 

Equity in net income of USPEs represents the Fund's share of the net income generated from the operation of jointly owned assets accounted for under the equity method of accounting. These entities are single purpose and have no debt or other financial encumbrances. 

The following USPE discussion is based on the Fund's proportional share of revenues, depreciation expense, direct expenses, and administrative expenses in the USPEs: 

As of September 30, 2003 and 2002, the Fund owned interests in two trusts that each own a commercial aircraft. During the three months ended September 30, 2003 and 2002, lease revenues of $0.3 million were partially offset by depreciation expense, direct expenses, and administrative expenses of $0.2 million. 

(F)    Net Income (Loss) 

As a result of the foregoing, the Fund had a net income of $0.4 million for the three months ended September 30, 2003, compared to net loss of $0.6 million during the same period of 2002. 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 third quarter of 2003 is not necessarily indicative of future periods. In the third quarter of 2003, the Fund distributed $1.2 million to Class A members, or $0.25 per weighted-average Class A unit. 

Comparison of the Fund's Operating Results for the Nine Months Ended September 30, 2003 and 2002 

(A)     Owned Equipment Operations 

Lease revenues less direct expenses on owned equipment decreased during the nine months ended September 30, 2003, compared to the same period of 2002. The following table presents lease revenues less direct expenses by segment (in thousands of dollars): 

	For the Nine Months
	Ended September 30,
	2003		2002


Marine containers	$	3,845	$	3,653
Railcars		2,384		1,893
Marine vessel		1,370		712
Aircraft		553		2,253
Trailers		337		368

Marine containers:    Marine container lease revenues and direct expenses were $3.9 million and $49,000, respectively, for the nine months ended September 30, 2003, compared to $3.7 million and $43,000, respectively, during the same period of 2002. The increase in lease revenues of $0.2 million during the nine months ended September 30, 2003 compared to the same period of 2002 was due to higher utilization on the Fund's marine containers. A significant number of the Fund’s marine containers currently on a fixed rate lease will be switching to a lease based on utilization over the next 24 months. The Manager anticipates that this will result in a significant decrease in lease revenues. 

Railcars:    Railcar lease revenues and direct expenses were $2.9 million and $0.5 million, respectively, for the nine months ended September 30, 2003, compared to $2.4 million and $0.5 million, respectively, during the same period of 2002. An increase in railcar lease revenues of $1.1 million during the nine months ended September 30, 2003 was due to the purchase and lease of railcars during 2003 offset, in part, by a decrease of $0.7 million in lease revenues caused by the increase in the number of railcars off-lease compared to the same period of 2002. During the nine months ended September 30, 2003, an increase in direct expenses of $0.1 million was due to higher insurance expenses. This increase was offset by a decrease of $0.1 million in repair and maintenance compared to the same period of 2002. 

Marine vessel:    Marine vessel lease revenues and direct expenses were $5.5 million and $4.1 million, respectively, for the nine months ended September 30, 2003, compared to $4.5 million and $3.8 million, respectively, during the same period of 2002. Lease revenues increased $1.0 million in the nine months ended September 30, 2003 due to a higher lease rate earned on the Fund’s marine vessel. Direct operating expenses increased $0.3 million during the nine months ended September 30, 2003 due to higher voyage expenses. 

Aircraft:    Aircraft lease revenues and direct expenses were $0.6 million and $41,000, respectively, for the nine months ended September 30, 2003, compared to $2.3 million and $20,000, respectively, during the same period of 2002. A decrease in lease revenues of $0.5 million was due to one of the Fund’s owned aircraft being off-lease during six months of the nine months ended September 30, 2003 compared to the same period of 2002, during which this aircraft was on-lease the entire nine months and a decrease of $1.1 million was due to the reduction in the lease rate on three of the Fund's owned aircraft compared to the same period of 2002. 

Trailers:    Trailer lease revenues and direct expenses were $0.6 million and $0.3 million, respectively, for the nine months ended September 30, 2003, compared to $0.9 million and $0.5 million, respectively, during the same period of 2002. During the nine months ended September 30, 2003, a decrease in lease revenues of $0.3 million was caused by lower lease rates earned on the Fund’s trailers. Direct expenses decreased $0.2 million in the nine months ended September 30, 2003 compared to the same period of 2002 due to lower repairs and maintenance. 

(B)    Interest and Other Income 

Interest and other income was $0.2 million for the nine months ended September 30, 2003 compared to $0.3 million for the same period in 2002. During the nine months ended September 30, 2003, an increase in interest income of $0.1 million was primarily due to interest income earned from a note receivable. This increase was offset by $0.2 million decrease in interest income caused by lower cash balances compared to the same period in 2002. 

(C)    Indirect Expenses Related to Owned Equipment Operations 

Total indirect expenses of $7.8 million for the nine months ended September 30, 2003 decreased from $10.3 million for the same period in 2002. Significant variances are explained as follows: 

(i)    (Recovery of) provision for bad debts decreased $3.5 million compared to 2002. During 2003, the Fund recorded a net recovery of accounts receivable of $1.4 million due to the collection of accounts receivable that had been previously reserved for as a bad debt. A provision for bad debts of $2.2 million was recorded in the nine months ended September 30, 2002 based on the Manager’s evaluation of the collectability of receivables primarily related to one aircraft lessee; 

(ii)    A $0.2 million decrease in general and administrative expenses during the three months ended September 30, 2003 was due to lower administrative costs during the nine months ended September 30, 2003 compared to the same period of 2002; 

(iii)    A $0.1 million decrease in interest expense was due to lower average borrowings outstanding during the nine months ended September 30, 2003 compared to the same period in 2002; 

(iv)    A $0.2 million increase in management fees was primarily due to the reduction in the provision for bad debts expense of $3.5 million; and 

(v)    Loss on impairment of equipment increased $0.3 million during 2003 and resulted from the Fund reducing the carrying value of certain owned tank railcars to their estimated fair value. No impairment of equipment was required during 2002; and 

(vi)    A $0.8 million increase in depreciation and amortization expenses from 2002 levels reflects the increase of approximately $1.6 million caused by purchase of railcars during the nine months ended September 30, 2003 partially offset by 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. 

(D)    Net Gain on Disposition of Owned Equipment 

Net gain on disposition of owned equipment for the nine months ended September 30, 2003 totaled $0.2 million which resulted from the disposition of marine containers, trailers and railcars with a net book value of $0.2 million for proceeds of $0.3 million. Net gain on disposition of owned equipment for the nine months ended September 30, 2002 totaled $0.2 million which resulted from the sale or disposition of marine containers and a railcar with a net book value of $0.2 million for proceeds of $0.3 million. 

(E)    Equity in Net Income of Unconsolidated Special-Purpose Entities 

Equity in net income of USPEs represents the Fund's share of the net income generated from the operation of jointly owned assets accounted for under the equity method of accounting. These entities are single purpose and have no debt or other financial encumbrances. 

The following USPE discussion is based on the Fund's proportional share of revenues, depreciation expense, direct expenses, and administrative expenses in the USPEs: 

As of September 30, 2003 and 2002, the Fund owned interests in two trusts that each own a commercial aircraft. During the nine months ended September 30, 2003, lease revenues of $0.9 million were partially offset by depreciation expense, direct expenses, and administrative expenses of $0.5 million. During the same period of 2002, lease revenues of $0.9 million were partially offset by depreciation expense, direct expenses, and administrative expenses of $0.6 million. 

A decrease in depreciation expense of $0.1 million was caused by the double-declining balance method of depreciation which results in greater depreciation in the first years an asset is owned. 

(F)    Net Income (Loss) 

As a result of the foregoing, the Fund had a net income of $1.5 million for the nine months ended September 30, 2003, compared to net loss of $0.6 million during the same period of 2002. The Fund's ability to operate and liquidate assets, secure leases, and re-lease those assets whose leases expire is subject to many factors. Therefore, the Fund's performance in the nine months ended September 30, 2003 is not necessarily indicative of future periods. In the nine months ended September 30, 2003, the Fund distributed $2.5 million to Class A members, or $0.50 per weighted-average Class A unit. 

(II)    CRITICAL ACCOUNTING POLICIES AND ESTIMATES 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Manager to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On a regular basis, the Manager reviews these estimates, including those related to asset lives and depreciation methods, impairment of long-lived assets, allowance for doubtful accounts, reserves related to legally mandated equipment repairs and contingencies and litigation. These estimates are based on the Manager's historical experience and on various other assumptions believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. The Manager believes, however, that the estimates, including those for the above-listed items, are reasonable and that actual results will not vary significantly from the estimated amounts. 

The Manager believes the following critical accounting policies affect the more significant judgments and estimates used in the preparation of the Fund's financial statements: 

Revenue recognition: Lease revenues are earned by the Fund monthly and no significant amounts are calculated on factors other than the passage of time. The Fund’s leases are accounted for as operating leases and are noncancellable. Rents received prior to their due dates are deferred. 

Asset lives and depreciation methods: The Fund’s primary business involves the purchase and subsequent lease of long-lived transportation and related equipment. The Manager has chosen asset lives that it believes correspond to the economic life of the related asset. The Manager has chosen a deprecation method that it believes matches the benefit to the Fund from the asset with the associated costs. These judgments have been made based on the Manager’s expertise in each equipment segment that the Fund operates. If the asset life and depreciation method chosen does not reduce the book value of the asset to at least the potential future cash flows from the asset to the Fund, the Fund would be required to record an impairment loss. Likewise, if the net book value of the asset was less than the economic value, the Fund may record a gain on sale upon final disposition of the asset. 

Impairment of long-lived assets: Whenever there is an indicator that an impairment may exist, the Manager reviews the carrying value of its equipment and investments in USPEs to determine if the carrying value of the assets may not be recoverable in consideration of the current economic conditions. This requires the Manager to make estimates related to future cash flows from each asset as well as the determination if the deterioration is temporary or permanent. If these estimates or the related assumptions change in the future, the Fund may be required to record additional impairment charges. 

Allowance for doubtful accounts: The Fund maintains allowances for doubtful accounts for estimated losses resulting from the inability of the lessees to make the lease payments. These estimates are primarily based on the amount of time that has lapsed since the related payments were due as well as specific knowledge related to the ability of the lessees to make the required payments. If the financial condition of the Fund’s lessees were to deteriorate, additional allowances could be required that would reduce income. Conversely, if the financial condition of the lessees were to improve or if legal remedies to collect past due amounts were successful, the allowance for doubtful accounts may need to be reduced and income would be increased. 

Reserves for repairs: The Fund accrues for legally required repairs to equipment such as dry docking for marine vessels and engine overhauls to aircraft engines over the period prior to the required repairs. The amount that is reserved is based on the Manager’s expertise in each equipment segment, the past history of such costs for that specific piece of equipment and discussions with independent, third party equipment brokers. If the amount reserved is not adequate to cover the cost of such repairs or if the repairs must be performed earlier than the Manager estimated, the Fund would incur additional repair and maintenance or equipment operating expenses. 

Contingencies and litigation: The Fund is subject to legal proceedings involving ordinary and routine claims related to its business. The ultimate legal and financial liability with respect to such matters cannot be estimated with certainty and requires the use of estimates in recording liabilities for potential litigation settlements. Estimates for losses from litigation are disclosed if considered possible and accrued if considered probable after consultation with outside counsel. If estimates of potential losses increase or the related facts and circumstances change in the future, the Fund may be required to record additional litigation expense. 

(III)    FINANCIAL CONDITION - CAPITAL RESOURCES AND LIQUIDITY 

For the nine months ended September 30, 2003, the Fund generated cash from operations of $7.1 million to meet its operating obligations, pay debt and interest payments and make distributions (total of $3.0 million for nine months ended September 30, 2003) to the members. 

During the nine months ended September 30, 2003, the Fund purchased railcars for $19.7 million and made capitalized improvements of $0.2 million. 

During the nine months ended September 30, 2003, the Fund disposed of owned equipment for proceeds of $0.3 million. 

Cash held in escrow accounts decreased $19.8 million during 2003. $19.7 million of the decrease in cash held in escrow accounts at December 31, 2002 was used to the purchase railcars during the nine months ended September 30, 2003, of which the Fund had entered into legally binding commitments to purchase in 2002. The remaining $0.1 million was returned to the Fund. 

Accounts and note receivable increased $0.4 million in the nine months ended September 30, 2003. This increase was due to a decrease in the allowance for bad debts of $1.4 million due to the collection of accounts receivable that had been previously reserved for as a bad debt and an increase of $0.4 million due to the timing of lease receipts partially offset by a decrease of $1.4 million in note receivable. 

Investments in USPEs decreased $0.5 million during the nine months ended September 30, 2003 due to cash distributions of $0.9 million from the USPEs to the Fund being partially offset by income of $0.4 million that was recorded by the Fund for its equity interests in the USPEs. 

Prepaid expenses decreased $0.2 million during 2003 due to the expense of insurance premiums during 2003 that were paid during 2002. 

Accounts payable increased $0.1 million during the nine months ended September 30, 2003 due to the timing of payments to vendors. 

Due to affiliates increased $0.1 million during the nine months ended September 30, 2003 due to timing of the payment to affiliates. 

Lessee deposits and reserve for repairs increased $0.1 million during the nine months ended September 30, 2003 due to the accrual of marine vessel dry-docking reserves of $0.2 million partially offset by a $0.1 million payment for the dry dock. The Fund is expected to spend an additional $0.6 million for the dry-docking during the fourth quarter 2003. 

The Fund is scheduled to make a debt payment of $3.0 million to the lenders of the note payable on December 31, 2003. The cash for this payment will come from operations and proceeds from equipment dispositions. 

The Fund is a participant in a $10.0 million warehouse facility. The warehouse facility is shared by the Fund, PLM Equipment Growth Fund V, PLM Equipment Growth Fund VI, PLM Equipment Growth & Income Fund VII, and Acquisub LLC, a wholly owned subsidiary of PLM International Inc. (PLMI). The facility provides for financing up to 100% of the cost of the equipment and expires on December 31, 2003. Any borrowings by the Fund are collateralized by equipment purchased with the proceeds of the loan. Outstanding borrowings by one borrower reduce the amount available to each of the other borrowers under the facility. Individual borrowings may be outstanding for no more than 270 days, with all advances due no later than December 31, 2003. Interest accrues 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 are guaranteed by PLMI. The Fund is not liable for the advances made to other borrowers. 

As of November 13, 2003, Acquisub LLC had outstanding borrowings on the warehouse facility of $10.0 million. There were no other outstanding borrowings on this facility by the Fund or any of the other eligible borrowers. 

As the Fund may not invest cash generated from operations after January 1, 2003, the Manager does not expect the Fund to participate in the warehouse credit facility beyond its current expiration date on December 31, 2003. 

(IV)    RECENT ACCOUNTING PRONOUNCEMENTS 

In January 2003, Financial Accounting Standards Board (FASB) issued Interpretation No. 46, "Consolidation of Variable Interest Entities" (FIN 46). This interpretation clarifies existing accounting principles related to the preparation of consolidated financial statements when the owners of an USPE do not have the characteristics of a controlling financial interest or when the equity at risk is not sufficient for the entity to finance its activities without additional subordinated financial support from others. FIN 46 requires the Fund to evaluate all existing arrangements to identify situations where the Fund has a "variable interest," commonly evidenced by a guarantee arrangement or other commitment to provide financial support, in a "variable interest entity," commonly a thinly capitalized entity, and further determine when such variable interest requires the Fund to consolidate the variable interest entities’ financial statements with its own. The Fund is required to perform this assessment by December 31, 2003 and consolidate any variable interest entities for which the Fund will absorb a majority of the entities’ expected losses or receive a majority of the expected residual gains. The Manager has not completed its analysis and has not concluded on the impact that FIN 46 will have. 

In May 2003, FASB issued Statement of Financial Accounting Standard No. 150, "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity" (SFAS No. 150) which establishes standards for how the Fund classifies and measures certain financial instruments with characteristics of both liabilities and equity. This standard was to be effective for the Fund’s quarter ending September 30, 2003. In October 2003, however, the FASB deferred the application of SFAS No. 150 indefinitely. 

In September 2001, the Accounting Standards Executive Committee (AcSEC) issued an Exposure Draft on a Statement of Position, "Accounting for Certain Costs and Activities Related to Property, Plant and Equipment" (the "Proposed Statement"). On September 9, 2003, AcSEC voted to approve the Proposed Statement and is expected to present it to the FASB in the first quarter of 2004. At this time, it is unclear whether the Proposed Statement will be issued or in what form. If the existing Proposed Statement is issued, it would require the Fund to modify its accounting policy for maintenance and repairs. Such costs would no longer be accrued in advance of performing the related maintenance and repairs; rather, the Proposed Statement requires these costs to be capitalized and amortized over their estimated useful life. 

(V)    OUTLOOK FOR THE FUTURE 

Several factors may affect the Fund's operating performance in the remainder of 2003 and beyond, including changes in the markets for the Fund's equipment and changes in the regulatory environment in which the equipment operates. 

The Fund's operation of a diversified equipment portfolio in a broad base of markets is intended to reduce its exposure to volatility in individual equipment sectors. 

Other factors affecting the Fund’s operations in the remainder of 2003 and beyond include: 

(1)    Starting in 2003 and continuing through 2005, a significant number of the Fund’s marine containers currently on a fixed rate lease will be switching to a lease based on utilization. The Manager anticipates that this will result in a significant decrease in lease revenues; 

(2)    Signs of economic recovery in the railcar segment continue to be mixed with some indicators showing less strength than previously forecasted. Total industrial production, the general driver of demand for railcars, is now projected to be unchanged in 2003. Chemical railcar loadings, the most important driver for the majority of the Fund’s fleet, are now flat versus 2002 as reported by the American Association of Railroads. If manufacturing recovers, chemical and allied products carloadings are generally forecasted to grow in the fourth quarter of 2003 but not to rebound strongly until 2004. On the positive side, North American railcar manufacturing capacity utilization, as reported informally by the manufacturers themselves, continues to demonstrate the increase noted at the end of the second quarter, and lead times have extended into the second quarter of next year. The speed of recovery in lease rates continues to be dependent on the number of idle railcars in fleets owned by various shippers and leasing competitors who have been very aggressive in quoted rates compared to historical norms; 

(3)    The Fund’s owned 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 . Freight rates earned during the first three quarters of 2003 showed some strength compared with 2002. The first quarter benefited from the continued political turmoil in Venezuela and the start up of the Iraqi conflict. Higher crude oil prices and reduced supply of gasoline and jet fuels available on the United States East Coast (USEC) due to the shut down of the Venezuela supply channel, meant longer haul product supplies out of Europe and the Baltic to maintain inventories for USEC. The net effect was improved transportation rates for our product carrier during the first two quarters of 2003. In the third quarter of 2003, the daily rates started drifting slightly lower after both conflicts were resolved and the beginning of the summer season. The Manager believes that the product markets will strengthen with the increase in worldwide economies, increase imports and demand in the fourth quarter 2003; 

(4)    Utilization of intermodal trailers owned by the Fund was 58% in the three months ended September 30, 2003 which was approximately 2% below the three months ended September 30, 2002. Industry-wide utilization of intermodal trailers was 50% in the three months ended September 30, 2003 compared to 52% in the same period of 2002. As the Fund's 45' trailers are smaller than the 48' trailers that many shippers prefer, the Manager expects utilization to have little opportunity to increase over the next few years; 

(5)    Market demand for new and used aircraft has been severely impacted by the poor financial condition of the airline industry. The Manager believes that there is a significant oversupply of commercial aircraft available, that has caused a decrease in aircraft fair market values and that this oversupply will continue for some time. The Manager does not expect these aircraft to return to their pre-September 11, 2001 values. 

During 2001, the lessee of three Stage II Boeing 737-200 commercial aircraft notified the Manager of its intention to return these aircraft and stopped making lease payments. During October 2002, the Manager reached an agreement with the lessee of this aircraft for the past due lease payments. The lessee made an initial payment during October 2002, to be followed by 23 equal monthly installments beginning in November 2002. Unpaid outstanding amounts will accrue interest at a rate of 5%. The balance outstanding at September 30, 2003 was $2.3 million. Due to the uncertainty of ultimate collection, the Manager will continue to fully reserve the unpaid outstanding balance less the security deposit from this lessee. As of November 13, 2003, the lessee was current with all the installment payments due to the Fund except for the installment payment due during November. 

Additionally, the same lessee is continuing to lease these aircraft on a month to month lease agreement. As of November 13, 2003, the lessee is five months in arrears with its lease payments to the Fund totaling $0.4 million. The Manager is currently reviewing its options including the possibility of sending the lessee a notification of default. Due to the age of these aircraft and the economic condition of the airline industry, should the Manager repossess these aircraft, they will be difficult to remarket and may be off-lease for a considerable period of time. 

The Manager considers the lessee of the Fund’s two partially owned MD-82 commercial aircraft a significant credit risk. The lessee has restructured leases (including a $5,000 a month reduction in the lease payment for the Fund’s aircraft) and renegotiated labor contracts. If this aircraft were to be returned prior to its lease expiration in 2008, the aircraft could be off-lease for a significant period of time or re-leased at a significantly lower lease rate; and 

(6)    As a result of the increase in off-lease equipment, the Manager expects the Fund will incur higher remarketing and storage costs during the remainder of 2003. 

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 some of these factors, or of their occurrence, makes it difficult for the Manager to clearly define trends or influences that may impact the performance of the Fund's equipment. The Manager continually monitors both the equipment markets and the performance of the Fund's equipment in these markets. The Manager may decide to reduce the Fund's exposure to equipment markets if it determines that it cannot operate equipment to achieve acceptable rates of return. 

Cash flow and disposition proceeds generated from operations after January 1, 2003 cannot be used to purchase additional equipment. The Fund will terminate on December 31, 2010, unless terminated earlier upon sale of all equipment or by certain other events. 

Over the next 15 months, the Fund expects to pay $6.0 million in debt payments to the lenders of the note payable and is scheduled to reimburse ship yards $0.6 million for required maintenance to it’s owned marine vessel. In addition, a number of the aircraft lessees have had financial difficulties resulting in additional costs and losses to the Fund. As a result of this, the Manager has determined that in order to meet these required expenditures, cash distributions to the members after November 15, 2003, will be discontinued in order to build working capital reserves. The Manager will review operations on a quarterly basis to determine if the Fund can declare a cash distribution to the members. 

Cash distributions when paid to the members generally consist of both a return of and a return on capital. Cash distributions do not represent and are not indicative of yield on investment. Actual yield on investment cannot be determined with any certainty until conclusion of the Fund and will be dependent upon the collection of all future contracted rent, the generation of renewal and/or re-lease rents and the residual value realized for each asset at its disposal. 

(VI)     FORWARD-LOOKING INFORMATION 

Except for the historical information contained herein, this Form 10-Q 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-Q should be read as being applicable to all related forward-looking statements wherever they appear in this Form 10-Q. There are a number of important factors that could cause actual results to differ materially from those expressed in any forward-looking statements made herein. These factors include, but are not limited to, the collection of the Fund’s contracted rents, the realization of residual proceeds, and future economic conditions. 

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 

The Fund’s primary market risk exposure is that of currency devaluation risk. During the nine months ended September 30, 2003, 76% of the Fund’s total lease revenues from wholly- and partially-owned equipment came from non-United States domiciled lessees. Most of the leases require payment in United States (U.S.) currency. If these lessees' currency devalues against the U.S. dollar, the lessees could encounter difficulty in making the U.S. dollar denominated lease payment. 

ITEM 4.    CONTROLS AND PROCEDURES 

Limitations on the Effectiveness of Controls 

The Manager’s management, including it’s President and Chief Financial Officer (CFO), does not expect that our internal controls or disclosure control will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. 

Because of the inherent limitations in all control systems, no evaluation of control can provide absolute assurance that all control issues and instances of fraud, if any, within the Fund have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, collusion of two or more people, or by management override of the control. The design of any system of controls also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. 

Notwithstanding the forgoing limitations, we believe that our internal controls and disclosure control provide reasonable assurances that the objectives of our control system are met. 

Quarterly Evaluation of the Fund’s Disclosure Controls and Internal Controls 

(1)    Within the 90-day period prior to the filing of this report, the Manager carried out an evaluation, under the supervision and with the participation of the Manager’s management, including it’s President and CFO, of the effectiveness of the design and operation of the Fund’s disclosure controls and procedures pursuant to Rule 13a-14 under the Securities Exchange Act of 1934 (the "Exchange Act"). Based upon that evaluation, the President and CFO concluded that the Fund’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Fund’s required to be included in the Fund’s exchange act filings. 

(2)    There have been no significant changes in the Fund’s internal controls or in other factors which could significantly affect internal controls subsequent to the date of the Manager carried out its evaluations. 

PART II - OTHER INFORMATION 

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K 

(a)    Exhibits 

10.15    Sixth amendment to the Warehouse Credit Agreement, dated September 30, 2003. 

99.1     Certificate of President pursuant to Section 906 of Sarbanes - Oxley Act. 

99.2     Certificate of Chief Financial Officer pursuant to Section 906 of Sarbanes - Oxley Act. 

(b)    Reports on Form 8-K 

None. 

CONTROL CERTIFICATION 

I, James A. Coyne, certify that: 

I have reviewed this quarterly report on Form 10-Q of Professional Lease Management Income Fund I, L.L.C.

Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

designed such disclosure controls and procedures to ensure that material information relating to the registrant is made known to us by others, particularly during the period in which this quarterly report is prepared;

evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and board of Managers:

all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

The registrant’s other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date:November 13,2003                                  By:  

                    /s/ James A. Coyne

              James A. Coyne 

               President 

CONTROL CERTIFICATION 

I, Richard K Brock, certify that: 

I have reviewed this quarterly report on Form 10-Q of Professional Lease Management Income Fund I, L.L.C.

Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

designed such disclosure controls and procedures to ensure that material information relating to the registrant is made known to us by others, particularly during the period in which this quarterly report is prepared;

evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and board of Managers:

all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

The registrant’s other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date:November 13,2003                                 By: 

                    /s/ Richard K Brock

              Richard K Brock 

             Chief Financial Officer 

            (Principal Financial Officer) 

PROFESSIONAL LEASE MANAGEMENT INCOME FUND I LLC 10-Q