IEA INCOME FUND XI LP
The following discussion of the Partnership’s historical financial condition and results of operations should be read in conjunction with the historical consolidated financial statements and the notes thereto and the other financial information appearing elsewhere in this report.       The information in this Annual Report on Form 10-K (the “Report”) contains certain “forward-looking statements” within the meaning of the securities law. These forward-looking statements reflect the current view of the Partnership and CCC, with respect to future events and financial performance and are subject to a number of risks and uncertainties, many of which are beyond the control of the Partnership and CCC. All statements other than statements of historical facts included in this Report, including statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” regarding the Partnership’s strategy, future operations, financial position, estimated revenues, projected costs, prospects, plans and objectives of the Partnership are forward-looking statements.       All forward-looking statements speak only as of the date of this Report. The Partnership does not undertake any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Although the Partnership and CCC believe that their plans, intentions and expectations reflected in or suggested by the forward-looking statements made in this report are reasonable, the Partnership and CCC can give no assurance that these plans, intentions or expectations will be achieved. Future economic, political and industry trends that could potentially impact revenues and profitability are difficult to predict, as well as the risks and uncertainties including, but not limited to, changes in demand for leased containers, changes in global business conditions and their effect on world trade, changes within the global shipping industry, the financial strength of the shipping lines and other sub-lessees of the Partnership’s containers, fluctuations in new container prices, changes in the costs of maintaining and repairing used containers, changes in competition, changes in the ability of the Leasing Company to maintain insurance on behalf of the Partnership’s container fleet, as well as other risks detailed herein and from time to time in the Partnership’s filings with the Securities and Exchange Commission.  16    Table of Contents  Liquidity and Capital Resources       During the Partnership’s first 10 years of operations, the Partnership’s primary objective was to generate cash flow from operations for distribution to its limited partners. Aside from the initial working capital reserve retained from the gross subscription proceeds (equal to approximately 1% of such proceeds), the Partnership relied primarily on container rental receipts to meet this objective as well as to finance current operating needs. No credit lines are maintained to finance working capital. Commencing in 2001, the Partnership’s 11th year of operations, CCC, on behalf of the Partnership, began focusing its attention on the disposition of its fleet in accordance with another of its original investment objectives, realizing the residual value of its containers after the expiration of their economic useful lives, estimated to be between 12 to 15 years after placement in leased service. As of December 31, 2005, the Partnership had been in operation for over fifteen years, and had sold or disposed of approximately 81% of its container fleet (measured on a TEU-basis). With the reduction in the size of the Partnership’s container fleet, the administrative expenses incurred by the Partnership, as a percent of its gross revenues, has increased. For these reasons, CCC, as the general partner, concluded that it would be in the best interest of the Partnership and its limited partners to sell its remaining containers in bulk.       CCC distributed a request for proposal (“RFP”) on November 30, 2005 to various third parties seeking their interest in purchasing the Partnership’s remaining on-hire containers (those containers on lease to third-party lessees). The RFP solicited bids for the Partnership’s containers on-hire and subject to master and term leases (referred to as “Operating Lease Containers”). As of September 30, 2005 (the date of the data in the RFP), the Partnership owned 740 twenty-foot, 415 forty-foot and 19 forty-foot high-cube marine dry cargo Operating Lease Containers and 14 twenty-foot and 1 forty-foot refrigerated Operating Lease Containers. CCC distributed the RFP to fifteen parties, including competitors of CCC and the Leasing Company in the container leasing business. Four parties submitted proposals to purchase the Partnership’s Operating Lease Containers. The high bidder for the Partnership’s Operating Lease Containers was Access Shipping Limited Partnership, a Connecticut limited partnership (“Access”). Access and affiliates of Access have purchased containers from prior limited partnerships managed by CCC, which containers are managed by CCC as leasing agent.       On January 19, 2006, the Fund completed the sale of its remaining Operating Lease Containers (measured as of January 1, 2006) to Access, for the adjusted bid amount of $1,040,579. The net book value of these Operating Lease Containers was $694,507. The Partnership reported this sale and the related purchase agreement as part of its January 19, 2006 Report on Form 8-K to the SEC.       With the completion of the sale of its Operating Lease Containers, the Partnership has now resolved to wind up and dissolve. CCC will proceed with the orderly liquidation of the remaining assets of the Partnership, with the proceeds thereof distributed as follows: (i) all of the Partnership’s debts and liabilities to persons other than CCC or the limited partners shall be paid and discharged; (ii) all of the Partnership’s debts and liabilities to CCC and the limited partners shall be paid and discharged; and (iii) the balance of such proceeds shall be distributed to CCC and the limited partners in accordance with the positive balances of CCC and the limited partners’ capital accounts. CCC shall contribute to the Partnership, if necessary, an amount equal to the lesser of the deficit balance in its capital account at the time of such liquidation, or 1.01% of the excess of the Limited Partners’ capital contribution to the Partnership over the capital contributions previously made to the Partnership by CCC, after giving effect to the allocation of income or loss arising from the liquidation of the Partnership’s assets.       Distributions are paid monthly, based primarily on each quarter’s cash flow from operations. Monthly distributions are also affected by periodic increases or decreases to working capital reserves, as deemed appropriate by CCC. Cash distributions from operations are allocated 5% to CCC and 95% to the limited partners. Distributions of sales proceeds are allocated 1% to CCC and 99% to the limited partners. This sharing arrangement will remain in place until the limited partners receive aggregate distributions in an amount equal to their capital contributions plus a 10% cumulative, compounded (daily), annual return on their adjusted capital contributions. Thereafter, all distributions will be allocated 15% to CCC and 85% to the limited partners, pursuant to Section 6.1(b) of the Partnership’s Partnership Agreement. Cash distributions from operations to CCC in excess of 5% of distributable cash will be considered an incentive fee and compensation to CCC.       The Partnership’s future distributions will comprise two liquidating distributions to the limited partners of the Partnership. The first liquidating distribution, representing the net proceeds from the sale of its Operating Lease Containers of approximately $1,030,173, or $0.52 per limited partnership unit, was distributed on February 28, 2006 to limited partners of record on February 1, 2006. The second and final liquidating distribution, representing the net proceeds generated from the sale of the Partnership’s remaining assets, after the payment or discharge of its remaining liabilities, is expected to be made on or before May 31, 2006. CCC is unable to estimate the amount of the final  17    Table of Contents  liquidating distribution. CCC anticipates that the Partnership will complete its liquidation by mid-year 2006 and de-register the Partnership’s outstanding limited partnership units under the Securities Exchange Act of 1934, as amended, thereby terminating the Partnership’s obligation to file periodic reports under the Exchange Act with the SEC.       Inclusive of the first liquidating distribution, the Partnership has distributed $38,047,714 in cash from operations and $8,416,648 in cash from container sales proceeds to its limited partners from inception through February 28, 2006 This represents total distributions of $46,464,362 or approximately 116% of the limited partners’ original invested capital.       At December 31, 2005, the Partnership had $652,774 in cash and cash equivalents, a decrease of $122,465 and $137,556, respectively, from the cash balances at December 31, 2004 and December 31, 2003. The Partnership invests its working capital, as well as cash flows from operations and the sale of containers that have not yet been distributed to CCC or its limited partners in money market funds. At December 31, 2005, the Partnership had an additional $45,000 as part of its working capital for expenses related to its final liquidation and subsequent dissolution.       Cash from Operating Activities: Net cash provided by operating activities primarily generated from the billing and collection of net lease revenue was $350,275 during 2005, compared to $578,644 and $575,184 during 2004 and 2003, respectively.       Cash from Investing Activities: Net cash provided by investing activities was $744,402 during 2005, compared to $597,455 and $735,742 in 2004 and 2003, respectively. These amounts represent sales proceeds generated from the sale of container equipment and proceeds received from sales-type lease receivables.       Cash from Financing Activities: Net cash used in financing activities was $1,217,142 during 2005 compared to $1,191,190 and $1,344,808 during 2004 and 2003, respectively. These amounts represent distributions to the Partnership’s general and limited partners.  Off-Balance Sheet Arrangements       As part of the Partnership’s ongoing business, the Partnership does not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities (“SPEs”), which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As of December 31, 2004, the Partnership was not involved in any material unconsolidated SPE transactions.  Contractual Obligations       As of December 31, 2005, the Partnership did not have any contractual obligations or commercial commitments.  Results of Operations  Market Overview       Pursuant to the Limited Partnership Agreement of the Partnership, all authority to administer the business of the Partnership is vested in CCC. A Leasing Agent Agreement (“Agreement”) exists between CCC and the Leasing Company, whereby the Leasing Company has the responsibility to manage the leasing operations of all equipment owned by the Partnership. Pursuant to the Agreement, the Leasing Company is responsible for leasing, managing and re-leasing the Partnership’s containers to ocean carriers, and has full discretion over which ocean carriers and suppliers of goods and services it may deal with. The Leasing Agent Agreement permits the Leasing Company to use the containers owned by the Partnership, together with other containers owned or managed by the Leasing Company and its affiliates, as part of a single fleet operated without regard to ownership.  18    Table of Contents       The primary component of the Partnership’s results of operations is net lease revenue. Net lease revenue is determined by deducting direct operating expenses, management fees and reimbursed administrative expenses from gross lease revenues billed by the Leasing Company from the leasing of the Partnership’s containers. Net lease revenue is directly related to the size, utilization and per-diem rental rates of the Partnership’s fleet. Direct operating expenses are direct costs associated with the Partnership’s containers. Direct operating expenses may be categorized as follows:       •   Activity-related expenses including agent and depot costs, such as repairs, maintenance and handling.        •   Inventory-related expenses for off-hire containers, comprising of storage and repositioning costs. These costs are sensitive to the quantity of off-hire containers as well as the frequency at which containers are re-delivered.        •   Legal and other expenses, including legal costs related to the recovery of containers and doubtful accounts, insurance and provisions for doubtful accounts.         The following table summarizes the composition of the Partnership’s fleet (based on container type) at December 31, 2005.                                                      Dry Cargo   Refrigerated       Containers   Container                       40-Foot           20-Foot   40-Foot   High-Cube   20-Foot   40-Foot     Containers on lease:                                           Master lease     404       199       11       10       —     Term lease                                           Short term 1     172       106       4       —       1     Long term 2     80       53       3       —       —     Sales-type lease     732       107       —       —       —                                                 Subtotal     1,388       465       18       10       1     Containers off lease     97       73       1       6       —                                                 Total container fleet     1,485       538       19       16       1                                                          1. Short term leases represent term leases that are either scheduled for renegotiation or that may expire in 2006.       2. Long term leases represent term leases, the majority of which will expire between 2007 and 2010.                                                                                                Dry Cargo   Refrigerated       Containers   Containers                                       40-Foot               20-Foot   40-Foot   High-Cube   20-Foot   40-Foot       Units   %   Units   %   Units   %   Units   %   Units   %     Total purchases     6,411       100 %     3,342       100 %     200       100 %     103       100 %     50       100 %   Less disposals     4,926       77 %     2,804       84 %     181       91 %     87       84 %     49       98 %                                                                                       Remaining fleet at December 31, 2005     1,485       23 %     538       16 %     19       9 %     16       16 %     1       2 %                                                                                         The following table summarizes the Partnership’s average utilization rates and average fleet size for each of the last three years.                                      2005   2004   2003     Fleet size (measured in twenty-foot equivalent units (TEU))                           Dry cargo containers     2,977       3,840       5,032     Refrigerated containers     38       77       126     Average utilization rates                           Dry cargo containers     94 %     93 %     84 %   Refrigerated containers     81 %     75 %     53 %     19    Table of Contents       At the end of 2005, the container leasing industry had completed a three year period that was one of the most favorable in its 35-year-plus history. Industry observers report that global container trade grew by an estimated rate of 9%, 11% and 8%, in 2005, 2004 and 2003, respectively. In comparison, global container trade grew by a modest 3.7% during 2001, a recession year. These favorable conditions contributed to a strong container leasing market, resulting in high levels of demand for existing containers and a decline in off-hire container inventories. During 2005, demand for existing dry cargo containers eased from the levels experienced in 2004 when demand often exceeded supply, resulting in a more balanced leasing market. As a result, utilization of the Partnership’s combined dry cargo container fleet declined to approximately 91% at December 31, 2005 when compared to 96% at December 31, 2004, still a very favorable level of utilization when compared to historical levels. Economic growth and global container trade will have little impact on the Partnership’s future operations as the Partnership has now resolved to wind up and dissolve. On January 19, 2006, the Partnership completed the sale of its remaining Operating Lease Containers (see the aforementioned discussion under Liquidity and Capital Resources). With the completion of the sale of its Operating Lease Containers, CCC will proceed with the orderly liquidation of the remaining assets of the Partnership, including its off-hire containers, the payment or discharge of its remaining liabilities, and the distribution of the final liquidating net proceeds to the partners of the Partnership. CCC anticipates that the Partnership will complete its liquidation by mid-year 2006.       During 2005, high utilization levels contributed to low inventories of off-hire containers as shipping lines employed more leased containers to meet the growth in containerized trade. Declining inventories have also contributed to an increase in the amount of proceeds realized on the sale of used containers, as fewer containers are available at non-factory locations to meet the demand of buyers. The inventory levels experienced during 2005 have generally resulted in substantial decreases in storage and other inventory-related operating expenses.       The Partnership’s dry cargo container per-diem rates experienced modest declines, as the lease market for older dry cargo containers remains competitive and, therefore, subject to significant pricing pressures. The Partnership’s average 2005 dry cargo container per-diem rate decreased approximately 2% in comparison to 2004. In contrast, the combined 2005 per-diem rental rate for the Partnership’s fleet of refrigerated containers increased by 5% in comparison to 2004. Unlike dry cargo containers, the refrigerated containers are built for specific market demands. As such, the markets for the leasing of refrigerated containers are narrower than the market for dry cargo containers and are subject to different trends and fluctuations than the dry cargo container market.       The price of a new 20-foot dry cargo container increased to a peak of $2,300 during the first nine months of 2005 and declined to approximately $1,500 by the end of December 31, 2005. By the end of January 2006, the price was as low as $1,450. This decline was due to reduced demand for new dry cargo containers, a corresponding buildup of new container inventories at Chinese container factories and a recent decline in the price of Corten steel and other raw materials. The decline in orders for new dry cargo containers was further affected by increased efficiencies by the shipping lines, as well as the fact that, during 2005, ports avoided the congestion problems that occurred in the U.S. and Europe during 2004. The decline in the cost of new dry cargo containers experienced during the latter half of 2005 was the first to have occurred in over three years. Container prices continue to be tied to energy costs, steel prices and interest rates, and are subject to fluctuations based on these variables. Industry experts report that most leasing companies reduced their container purchasing during the last half of 2005, and virtually took delivery of no additional equipment during the fourth quarter of 2005. Although the Partnership may no longer purchase new containers, the price of new containers indirectly contributed to the Partnership’s results of operations, influencing the level of lease per-diems for existing older containers, as well as container sale prices realized upon their eventual disposal.       The sale of the Partnership’s off-hire containers, in accordance with one of its aforementioned original investment objectives, also positively affected the Partnership’s results from operations, contributing to the Partnership’s high utilization levels, minimizing storage and other inventory-related costs incurred for its off-hire containers, as well as realizing favorable sale proceeds from the sale of its containers. During 2005, buyers continued to demand existing, older containers. In many geographical markets, sales prices for used containers increased as inventories of off-hire containers at non-factory locations declined, reducing the available supply of containers eligible for sale. A significant increase in inventory levels in future periods, as well as significant declines in new container prices, could adversely impact sales proceeds realized on the sale of the Partnership’s remaining containers.  Year Ended December 31, 2005 Compared to the Year Ended December 31, 2004       Net lease revenue was $413,946 for the year ended December 31, 2005 compared to $668,599 for the prior year. The decrease was primarily due to a $319,135 decline in gross rental revenue (a component of net lease revenue) from the year ended December 31, 2004. Gross rental revenue was impacted by the Partnership’s smaller fleet size. Other components of net lease revenue, including rental equipment operating expenses, management fees, and reimbursed administrative expenses, were lower by a combined $64,482 when compared to 2004, and partially offset the decline in  20    Table of Contents  gross lease revenue. The decrease in direct operating expense was attributable to the Partnership’s higher fleet utilization rates during 2005 and its impact on inventory-based expenses such as storage and repositioning. The decline in inventory-based expenses were partially offset by an increase in activity-related expenses such as repair and maintenance costs. The Partnership also experienced a reduction in the provision for doubtful accounts.       Depreciation expense of $323,699 in 2005 declined by $323,506 when compared to 2004, a direct result of the Partnership’s aging and declining fleet size.       Other general and administrative expenses amounted to $101,453 in 2005, an increase of $8,605 or 9% when compared to 2004, due to an increase in investor administration and communication expenses.       Net loss on disposal of equipment was a result of the Partnership’s disposal of 551 containers in 2005, compared to 719 containers during 2004, as well as a net loss recognized upon the amendment of a term lease, resulting in its reclassification as a sales-type lease during 2004. These disposals resulted in a net gain of $186,007 during 2005, compared to a net loss of $494,799 during 2004. The Partnership believes that the net loss on container disposals in 2005 was a result of various factors, including the volume of disposed containers, the age, condition, suitability for continued leasing, as well as the geographical location of the containers when disposed. These factors will continue to influence the amount of sales proceeds received and the related gain or loss on container disposals.       The level of the Partnership’s container disposals in subsequent periods, as well as the price of steel, new container prices and the current leasing market’s impact on sales prices for existing older containers such as those owned by the Partnership, will also contribute to fluctuations in the net gain or loss on disposals. There were no reductions to the carrying value of container rental equipment due to impairment during 2005, 2004 and 2003.  Year Ended December 31, 2004 Compared to the Year Ended December 31, 2003       Net lease revenue was $668,599 for the year ended December 31, 2004 compared to $672,306 for the prior year. The decrease was due to a $170,557 decline in gross rental revenue (a component of net lease revenue) from the year ended December 31, 2003. Gross rental revenue was impacted by the Partnership’s smaller fleet size, partially offset by an increase in fleet utilization rates. Other components of net lease revenue, including rental equipment operating expenses, management fees, and reimbursed administrative expenses, were lower by a combined $166,850 when compared to 2003, and partially offset the decline in gross lease revenue. The decrease in direct operating expense was attributable to the Partnership’s higher fleet utilization rates during 2004 and its impact on activity-based expenses such as storage and handling which declined by a combined $81,369. Also, contributing to the decline in direct operating expenses were declines in repositioning, and repair and maintenance expenses.       Depreciation expense of $647,205 in 2004 declined by $226,819 when compared to 2003, a direct result of the Partnership’s aging and declining fleet size.       Other general and administrative expenses amounted to $92,848 in 2004, an increase of $5,013 or 6% when compared to 2003.       Net loss on disposal of equipment for 2004 was $494,799, as compared to a net loss of $392,950 for 2003. The change was a result of two primary factors:       •   The Partnership’s disposal of 719 containers in 2004, as compared to 885 containers during 2003. These disposals resulted in a net loss of $100,265 during 2004, compared to a net loss of $392,950 during 2003. The Partnership believes that the net loss on container disposals in 2004 was a result of various factors, including the volume of disposed containers, the age, condition, suitability for continued leasing, as well as the geographical location of the containers when disposed. These factors will continue to influence the amount of sales proceeds received and the related gain or loss on container disposals.        •   The December 1, 2004 amendment of a term lease agreement with one lessee to include a bargain purchase option, in exchange for the lessee’s continued lease of these older containers and their eventual sale. As a result of the amendment, the Partnership reclassified the term lease agreement as a sales-type lease, recorded a sales-type lease receivable and recognized the sale of the 943 on-hire containers that were subject to the amended term lease agreement. The difference between the present value of the future payments under this lease and $574,198, the net book value of the containers at the time of the amendment, resulted in a net loss of $394,534. The sales-type lease expires March 31, 2006.    21    Table of Contents  Critical Accounting Policies       Container equipment – depreciable lives: The Partnership’s container rental equipment is depreciated using the straight-line basis over a useful life of 15 years to a residual value of 10%. The Partnership and CCC evaluate the period of amortization and residual values to determine whether subsequent events and circumstances warrant revised estimates of useful lives and residual values.       Container equipment – valuation: The Partnership and CCC review container rental equipment when changes in circumstances require consideration as to whether the carrying value of the equipment has become impaired, pursuant to guidance established in SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” The Partnership and CCC consider assets to be impaired if the carrying value of the asset exceeds the future projected cash flows from related operations (undiscounted and without interest charges). When impairment is deemed to exist, the assets are written down to fair value or future projected cash flows from related operations. The Partnership and CCC evaluate future cash flows and potential impairment of its fleet by container type rather than for each individual container. Therefore, future losses could result for individual container dispositions due to various factors including age, condition, suitability for continued leasing, as well as geographic location of the containers where disposed. Considerable judgment is required in estimating future cash flows from container rental equipment operations. Accordingly, the estimates may not be indicative of the amounts that may be realized in future periods. As additional information becomes available in subsequent periods, recognition of an impairment of the container rental equipment carrying values may be necessary based upon changes in market and economic conditions.       Allowance for doubtful accounts: The Leasing Company continually tracks the Partnership’s credit exposure to each of the sub-lessees of the Partnership’s containers using specialist third-party credit information services and reports prepared by its local staff to assess credit quality. The Leasing Company’s credit committee meets quarterly to analyze the performance of existing customers and to recommend actions taken in order to minimize credit risk. The Leasing Company derives an allowance for doubtful accounts from specific amounts provided against known probable losses plus an additional amount based on historical loss experience. However, the Partnership may be subject to an unexpected loss in net lease revenue resulting from sub-lessees of its containers that default under their container lease agreements with the Leasing Company.  New Accounting Pronouncements       In May 2005, the FASB issued SFAS No. 154 – “Accounting Changes and Error Corrections — a replacement of APB Opinion No. 20 and FASB Statement No. 3” (“SFAS 154”). SFAS 154 requires retrospective application to prior periods’ financial statements of a voluntary change in accounting principle unless it is impracticable. APB No. 20 previously required that most voluntary changes in accounting principle be recognized by including in net income of the period of the change, the cumulative effect of changing to the new accounting principle. SFAS 154 is effective for accounting changes and corrections of errors in fiscal years beginning after December 15, 2005.  Inflation       The Partnership believes inflation has not had a material adverse affect on the results of its operations.     Item 7A. Quantitative and Qualitative Disclosures About Market Risk       Exchange rate risk: In 2005, approximately 97% of the gross lease revenues billed by the Leasing Company on behalf of the Group, or on behalf of other third-party container owners, including the Partnership, were billed and paid in US dollars, and approximately 49% of expenses were incurred and paid in US dollars. For non-US dollar denominated revenues and expenses, the Leasing Company may enter into foreign currency contracts to reduce exposure to exchange rate risk. Of the non-US dollar direct operating expenses, the Leasing Company estimates approximately 70% are individually small, unpredictable and were incurred in varying denominations. Thus, the Leasing Company determined such amounts are not suitable for cost effective hedging. As exchange rates are outside of the control of the Partnership and Leasing Company, there can be no assurance that such fluctuations will not adversely affect the Partnership’s results of operations and financial condition.            Item 8. Financial Statements and Supplementary Data    22    Table of Contents     REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  The Partners IEA Income Fund XI, L.P. San Francisco, California   We have audited the accompanying balance sheets of IEA Income Fund XI, L.P. (the “Partnership”) as of December 31, 2005 and 2004, and the related statements of operations, partners’ capital, and cash flows for the three years in the period ended December 31, 2005. These financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these financial statements based on our audits.  We conducted our audits 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 Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits 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 Partnership’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 audits provide a reasonable basis for our opinion.  In our opinion, such financial statements present fairly, in all material respects, the financial position of the Partnership at December 31, 2005 and 2004, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2005, in conformity with accounting principles generally accepted in the United States of America.  /s/ Deloitte & Touche LLP  San Francisco, California March 16, 2006   23    Table of Contents  IEA INCOME FUND XI, L.P.     Balance Sheets  December 31, 2005 and 2004                              2005     2004       Assets                   Current assets:                   Cash and cash equivalents, includes $637,774 in 2005 and $760,239 in 2004 in interest-bearing accounts   $ 652,774     $ 775,239     Net lease and other receivables due from Leasing Company     78,740       290,032     Container rental equipment held for sale, net of accumulated depreciation of $2,937,740 at December 31, 2005 and $- at December 31, 2004     694,507       —                      Total current assets     1,426,021       1,065,271                                         Container rental equipment, at cost     682,173       6,213,647     Less accumulated depreciation     (530,903 )     (4,675,298 )                   Net container rental equipment     151,270       1,538,349                     Total assets   $ 1,577,291     $ 2,603,620                                         Partners’ Capital                                       Partners’ capital (deficit):                   General partner   $ (174,951 )   $ (331,842 )   Limited partners     1,752,242       2,935,462                                         Total partners’ capital   $ 1,577,291     $ 2,603,620                       The accompanying notes are an integral part of these financial statements.  24    Table of Contents  IEA INCOME FUND XI, L.P.     Statements of Operations  For the years ended December 31, 2005, 2004 and 2003                                      2005     2004     2003       Net lease revenue (notes 1 and 6)   $ 413,946     $ 668,599     $ 672,306                                 Other operating income (expenses):                           Depreciation     (323,699 )     (647,205 )     (874,024 )   Other general and administrative expenses     (101,453 )     (92,848 )     (87,835 )   Net gain (loss) on disposal of equipment     186,007       (494,799 )     (392,950 )                                                           (239,145 )     (1,234,852 )     (1,354,809 )                                                     Income (loss) from operations     174,801       (566,253 )     (682,503 )                               Other income:                           Interest income     16,012       4,145       3,090                                                       Net income (loss)   $ 190,813     $ (562,108 )   $ (679,413 )                                                     Allocation of net income (loss):                           General partner   $ 190,813     $ (5,621 )   $ (6,795 )   Limited partners     —       (556,487 )     (672,618 )                                                         $ 190,813     $ (562,108 )   $ (679,413 )                                                     Limited partners’ per unit share of net income (loss)   $ 0.00     $ (0.28 )   $ (0.34 )                           The accompanying notes are an integral part of these financial statements.  25    Table of Contents  IEA INCOME FUND XI, L.P.     Statements of Partners’ Capital  For the years ended December 31, 2005, 2004 and 2003                                      Limited     General               Partners     Partner     Total       Balances at January 1, 2003   $ 6,631,002     $ (249,863 )   $ 6,381,139                                 Net loss     (672,618 )     (6,795 )     (679,413 )                               Cash distributions     (1,308,209 )     (36,599 )     (1,344,808 )                                                     Balances at December 31, 2003     4,650,175       (293,257 )     4,356,918                                 Net loss     (556,487 )     (5,621 )     (562,108 )                               Cash distributions     (1,158,226 )     (32,964 )     (1,191,190 )                                                     Balances at December 31, 2004     2,935,462       (331,842 )     2,603,620                                 Net income     —       190,813       190,813                                 Cash distributions     (1,183,220 )     (33,922 )     (1,217,142 )                                                     Balances at December 31, 2005   $ 1,752,242     $ (174,951 )   $ 1,577,291                             The accompanying notes are an integral part of these financial statements.  26    Table of Contents  IEA INCOME FUND XI, L.P.     Statements of Cash Flows  For the years ended December 31, 2005, 2004 and 2003                                      2005     2004     2003       Cash flows from operating activities:                           Net income (loss)   $ 190,813     $ (562,108 )   $ (679,413 )   Adjustments to reconcile net loss to net cash from operating activities:                           Depreciation     323,699       647,205       874,024     Net (gain) loss on disposal of equipment     (186,007 )     494,799       392,950     (Increase) decrease in net lease and other receivables due from Leasing Company     21,770       (1,252 )     (12,377 )                                                     Total adjustments     159,462       1,140,752       1,254,597                                                       Net cash provided by operating activities     350,275       578,644       575,184                                                       Cash flows from investing activities:                           Proceeds from sale of container rental equipment     607,096       597,455       735,742     Proceeds collected on sales-type lease receivable     137,306       —       —                           Net cash provided by investing activities     744,402       597,455       735,742                                                       Cash flows from financing activities                           Distributions to general partner     (33,922 )     (32,964 )     (36,600 )   Distributions to limited partners     (1,183,220 )     (1,158,226 )     (1,308,208 )                         Net cash used in financing activities     (1,217,142 )     (1,191,190 )     (1,344,808 )                                                     Net decrease in cash and cash equivalents     (122,465 )     (15,091 )     (33,882 )                               Cash and cash equivalents at beginning of year     775,239       790,330       824,212                                                       Cash and cash equivalents at end of year   $ 652,774     $ 775,239     $ 790,330                                                       Supplemental disclosures of cash flow information:                           Noncash investing and financing activities:                           Sales-type lease receivable (net of unearned income) originating from amendment of term lease agreement   $ —     $ 179,664     $ —                             The accompanying notes are an integral part of these financial statements.  27    Table of Contents  IEA INCOME FUND XI, L.P.     Notes to Financial Statements  December 31, 2005, 2004 and 2003     (1)   Summary of Significant Accounting Policies         (a)   Nature of Operations            IEA Income Fund XI, L.P. (the “Partnership”) is a limited partnership organized under the laws of the State of California on July 30, 1990 for the purpose of owning and leasing marine cargo containers worldwide to ocean carriers. The Partnership’s operations are subject to the fluctuations of world economic and political conditions. The Partnership believes that the profitability of, and risks associated with, leases to foreign customers is generally the same as those to domestic customers. The Partnership’s leases generally require all payments to be made in United States currency.            Cronos Capital Corp. (“CCC”) is the general partner and, with its affiliate Cronos Containers Limited (the “Leasing Company”), manages the business of the partnership. CCC and the Leasing Company also manage the container leasing business for other partnerships affiliated with CCC.            The Partnership commenced operations on January 31, 1991, when the minimum subscription proceeds of $1,000,000 were obtained. The Partnership offered 2,000,000 units of limited partnership interest at $20 per unit, or $40,000,000. The offering terminated on November 30, 1991, at which time 1,999,812 limited partnership units had been sold.            One of the principal investment objectives of the Partnership was to lease its containers for ten to fifteen years, and then to dispose of them and liquidate. The Partnership has been in operation for over fifteen years. Through occasional sales, retirements and casualty losses, the Partnership had sold or disposed of approximately 81% of its container fleet (measured on a TEU-basis) as of December 31, 2005. With the reduction in the size of the Partnership’s container fleet, the administrative expenses incurred by the Partnership, as a percent of its gross revenues, has increased. For these reasons, CCC, as the general partner, concluded that it would be in the best interest of the Partnership and its limited partners to sell its remaining containers in bulk.            CCC distributed a request for proposal (“RFP”) on November 30, 2005 to third parties seeking their interest in purchasing the Partnership’s remaining on-hire containers (those containers on lease to third-party lessees). The RFP solicited bids for the Partnership’s containers on-hire and subject to master and term leases (referred to as “Operating Lease Containers”). As of September 30, 2005 (the date of the data in the RFP), the Partnership owned 740 twenty-foot, 415 forty-foot and 19 forty-foot high-cube marine dry cargo Operating Lease Containers and 14 twenty-foot and 1 forty-foot refrigerated Operating Lease Containers.            On January 19, 2006, the Partnership completed the sale of its remaining Operating Lease Containers to the high bidder for the Partnership’s containers, Access Shipping Limited Partnership, a Connecticut limited partnership (“Access”) for $1,040,579 (see Note 8). Access and affiliates of Access have purchased containers from prior limited partnerships managed by CCC, which containers are managed by CCC as leasing agent. With the completion of the sale of its Operating Lease Containers, the Partnership has now resolved to wind up and dissolve. CCC will proceed with the orderly liquidation of the remaining assets of the Partnership, including its off-hire containers, the payment or discharge of its remaining liabilities, and the distribution of the net proceeds of the Partnership’s liquidation to the partners of the Partnership.            CCC anticipates that the Partnership will make two liquidating distributions to the limited partners of the Partnership, the first, representing the net proceeds from the sale of its on-hire containers to Access, in the amount of approximately $0.52 per limited partnership unit, was paid on February 28, 2006 to limited partners of record on February 1, 2006. The second and final liquidating distribution, representing the net proceeds generated from the sale of the Partnership’s remaining assets, after the payment or discharge of its remaining liabilities, is expected to be made on or before May 31, 2006. CCC is unable to estimate the amount of the final liquidating distribution.        28    Table of Contents     IEA INCOME FUND XI, L.P.  Notes to Financial Statements       (a)   Nature of Operations (continued)            CCC anticipates that the Partnership will complete its liquidation by mid-year 2006 and de-register the Partnership’s outstanding limited partnership units under the Securities Exchange Act of 1934, as amended (“Exchange Act”), thereby terminating the Partnership’s obligation to file periodic reports under the Exchange Act with the Securities and Exchange Commission (“SEC”).        (b)   Leasing Company and Leasing Agent Agreement            The Partnership has entered into a Leasing Agent Agreement whereby the Leasing Company has the responsibility to manage the leasing operations of all equipment owned by the Partnership. Pursuant to the Agreement, the Leasing Company is responsible for leasing, managing and re-leasing the Partnership’s containers to ocean carriers and has full discretion over which ocean carriers and suppliers of goods and services it may deal with. The Leasing Agent Agreement permits the Leasing Company to use the containers owned by the Partnership, together with other containers owned or managed by the Leasing Company and its affiliates, as part of a single fleet operated without regard to ownership. Since the Leasing Agent Agreement meets the definition of an operating lease in Statement of Financial Accounting Standards (SFAS) No. 13, it is accounted for as a lease under which the Partnership is lessor and the Leasing Company is lessee.            The Leasing Agent Agreement generally provides that the Leasing Company will make payments to the Partnership based upon rentals collected from ocean carriers after deducting direct operating expenses and management fees to CCC and the Leasing Company. The Leasing Company leases containers to ocean carriers, under operating leases which are either master leases or term leases (mostly one to five years) and sales-type leases. Master leases do not specify the exact number of containers to be leased or the term that each container will remain on hire but allow the ocean carrier to pick up and drop off containers at various locations, and rentals are based upon the number of containers used and the applicable per-diem rate. Accordingly, rentals under master leases are all variable and contingent upon the number of containers used. Sales-type leases have fixed payment terms and provide the lessee with a purchase option. The net investment in sales-type leases represents a receivable due from the Leasing Company, net of unearned income. Unearned income, when recognized, is reflected in the Partnership’s statements of operations, providing a constant return on capital over the lease term. Unearned income is recorded as part of the net lease receivable due from the Leasing Company.        (c)   Concentrations of Credit Risk            The Partnership’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash, cash equivalents and net lease receivables due from the Leasing Company. See note 3 for further discussion regarding the credit risk associated with cash and cash equivalents.            Net lease receivables due from the Leasing Company (see notes 1(b) and 4 for discussion regarding net lease receivables) subject the Partnership to a significant concentration of credit risk. These net lease receivables, representing rentals earned by the Leasing Company, on behalf of the Partnership, from ocean carriers after deducting direct operating expenses and management fees to CCC and the Leasing Company, are remitted by the Leasing Company to the Partnership three to four times per month. The Partnership has historically never incurred a loss associated with the collectibility of unremitted net lease receivables due from the Leasing Company.        (d)   Basis of Accounting            The Partnership utilizes the accrual method of accounting. Net lease revenue is recorded by the Partnership in each period based upon its leasing agent agreement with the Leasing Company. Net lease revenue is generally dependent upon operating lease rentals from operating lease agreements between the Leasing Company and its various lessees, less direct operating expenses and management fees due in respect of the containers specified in each operating lease agreement.    29    Table of Contents     IEA INCOME FUND XI, L.P.  Notes to Financial Statements       (e)   Use of Estimates            The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which requires the Partnership to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.            The most significant estimates included within the financial statements are the container rental equipment estimated useful lives and residual values, and the estimate of future cash flows from container rental equipment operations, used to determine the carrying value of container rental equipment in accordance with SFAS No. 144. Considerable judgment is required in estimating future cash flows from container rental equipment operations. Accordingly, the estimates may not be indicative of the amounts that may be realized in future periods. As additional information becomes available in subsequent periods, recognition of an impairment of the container rental equipment carrying values may be necessary based upon changes in market and economic conditions.        (f)   Allocation of Net Income or Loss, Partnership Distributions and Partners’ Capital Accounts            Net income or loss has been allocated between the general and limited partners in accordance with the Partnership Agreement. The Partnership Agreement generally provides that CCC shall at all times maintain at least a 1% interest in each item of income or loss, including the gain arising from the sale of containers. The Partnership Agreement further provides that the gain arising from the sale of containers be allocated first to the partners with capital account deficit balances in an amount sufficient to eliminate any deficit capital account balance. Thereafter, the Partnership’s gains arising from the sale of containers are allocated to the partners in accordance with their share of sale proceeds distributed. The Partnership Agreement also provides for income (excluding the gain arising from the sale of containers) for any period, be allocated to CCC in an amount equal to that portion of CCC’s distributions in excess of 1% of the total distributions made to both CCC and the limited partners of the Partnership for such period, as well as other allocation adjustments.            Actual cash distributions differ from the allocations of net income or loss between the general and limited partners as presented in these financial statements. Partnership distributions are paid to its partners (general and limited) from distributable cash from operations, allocated 95% to the limited partners and 5% to CCC. Distributions of sales proceeds are allocated 99% to the limited partners and 1% to CCC. These allocations remain in effect until such time as the limited partners have received from the Partnership aggregate distributions in an amount equal to their capital contributions plus a 10% cumulative, compounded (daily), annual return on their adjusted capital contributions. Thereafter, all Partnership distributions will be allocated 85% to the limited partners and 15% to CCC. Cash distributions from operations to CCC in excess of 5% of distributable cash will be considered an incentive fee and will be recorded as compensation to CCC, with the remaining distributions from operations charged to partners’ capital.            Upon dissolution, the assets of the Partnership will be sold and the proceeds thereof distributed as follows: (i) all of the Partnership’s debts and liabilities to persons other than CCC or the limited partners shall be paid and discharged; (ii) all of the Partnership’s debts and liabilities to CCC and the limited partners shall be paid and discharged; and (iii) the balance of such proceeds shall be distributed to CCC and the limited partners in accordance with the positive balances of CCC and the limited partners’ capital accounts. CCC shall contribute to the Partnership, if necessary, an amount equal to the lesser of the deficit balance in its capital account at the time of such liquidation, or 1.01% of the excess of the Limited Partners’ capital contribution to the Partnership over the capital contributions previously made to the Partnership by CCC, after giving effect to the allocation of income or loss arising from the liquidation of the Partnership’s assets.    30    Table of Contents  IEA INCOME FUND XI, L.P.  Notes to Financial Statements       (g)   Acquisition Fees            Pursuant to the Partnership Agreement, acquisition fees paid to CCC are based on 5% of the equipment purchase price. These fees are capitalized and included in the cost of the rental equipment.        (h)   Container Rental Equipment            Container rental equipment is depreciated using the straight-line basis. Depreciation policies are also evaluated to determine whether subsequent events and circumstances warrant revised estimates of useful lives.            In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” container rental equipment is considered to be impaired if the carrying value of the asset exceeds the expected future cash flows from related operations (undiscounted and without interest charges). If impairment is deemed to exist, the assets are written down to fair value. An analysis is prepared each quarter projecting future cash flows from container rental equipment operations. Current and projected utilization rates, per-diem rental rates, direct operating expenses, fleet size and container disposals are the primary variables utilized by the analysis. Additionally, the Partnership evaluates future cash flows and potential impairment by container type rather than for each individual container, and as a result, future losses could result for individual container dispositions due to various factors, including age, condition, suitability for continued leasing, as well as the geographical location of containers when disposed. There were no impairment charges to the carrying value of container rental equipment during 2005, 2004 and 2003.        (i)   Income Taxes            The Partnership is not subject to income taxes, consequently no provision for income taxes has been made. The Partnership files federal and state annual information tax returns, prepared on the accrual basis of accounting. Taxable income or loss is reportable by the partners individually.        (j)   Financial Statement Presentation            The Partnership has determined that, for accounting purposes, the Leasing Agent Agreement is a lease, and the receivables, payables, gross revenues and operating expenses attributable to the containers managed by the Leasing Company are, for accounting purposes, those of the Leasing Company and not of the Partnership. Consequently, the Partnership’s balance sheets and statements of operations display the payments to be received by the Partnership from the Leasing Company as the Partnership’s receivables and revenues.        (k)   New Accounting Pronouncements            In May 2005, the FASB issued SFAS No. 154 – “Accounting Changes and Error Corrections — a replacement of APB Opinion No. 20 and FASB Statement No. 3” (“SFAS 154”). SFAS 154 requires retrospective application to prior periods’ financial statements of a voluntary change in accounting principle unless it is impracticable. APB No. 20 previously required that most voluntary changes in accounting principle be recognized by including in net income of the period of the change, the cumulative effect of changing to the new accounting principle. SFAS 154 is effective for accounting changes and corrections of errors in fiscal years beginning after December 15, 2005.    31    Table of Contents  IEA INCOME FUND XI, L.P.  Notes to Financial Statements     (2)   Operating Segment          An operating segment is a component of an enterprise that engages in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the enterprise’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and about which separate financial information is available. Management operates the Partnership’s container fleet as a homogenous unit and has determined that as such, it has a single reportable operating segment.          The Partnership derives revenues from marine dry cargo and refrigerated containers used by its customers in global trade routes. As of December 31, 2005, the Partnership owned 1,485 twenty-foot, 538 forty-foot and 19 forty-foot high-cube marine dry cargo containers, as well as 16 twenty-foot and one forty-foot marine refrigerated containers. A summary of gross lease revenue earned by the Leasing Company, on behalf of the Partnership, by product, for the years ended December 31, 2005, 2004 and 2003 follows:                                        2005     2004     2003       Dry cargo containers   $ 549,006     $ 810,921     $ 950,629     Refrigerated containers     53,822       111,042       141,891                                                       Total   $ 602,828     $ 921,963     $ 1,092,520                                    Due to the Partnership’s lack of information regarding the physical location of its fleet of containers when on lease in the global shipping trade. The Partnership believes that is does not possess discernible geographic segments as defined in SFAS No. 131 (“SFAS 131”), “Disclosures about Segments of an Enterprise and Related Information.”          The Partnership does not believe that its ongoing business is dependent upon a single sub-lessee of the Leasing Company, although the loss of one or more of the Leasing Company’s sub-lessees could have an adverse effect upon its business. Two of those sub-lessees generated more than 10% each of the Leasing Company’s rental revenue earned on behalf of the Partnership during 2005. APL Company Pte Ltd (“APL”) generated approximately 15% or $83,177, and Container Equipment Leasing generated approximately 11% or $62,684 of the Leasing Company’s rental revenue earned on behalf of the Partnership. Mediterranean Shipping Company S.A. (“MSC”) generated approximately 23% or $206,597, and APL generated approximately 10% or $92,871 of the Leasing Company’s rental revenue earned on behalf of the Partnership in 2004. Substantially all of the sub-lessees of the Leasing Company are billed and pay in United States dollars. One sub-lessee of the Leasing Company, MSC, generated approximately 24% or $265,098, of the Leasing Company’s rental revenue earned on behalf of the Partnership during 2003.       (3)   Cash and Cash Equivalents          Cash equivalents include money market funds that invest in highly-liquid securities, such as U.S. Treasury obligations, repurchase agreements secured by U.S. Treasury obligations, and obligations whose principal and interest are backed by the U.S. Government. Cash equivalents are carried at cost which approximates fair value, and at times, may exceed federally insured limits. The Partnership has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk.    32    Table of Contents     IEA INCOME FUND XI, L.P.  Notes to Financial Statements     (4)   Net Lease and Other Receivables Due from Leasing Company          Net lease and other receivables due from the Leasing Company are determined by deducting direct operating payables and accrued expenses, base management fees payable, and reimbursed administrative expenses payable to CCC and its affiliates from the rental billings earned by the Leasing Company under operating leases to ocean carriers for the containers owned by the Partnership as well as proceeds earned from container disposals. Net lease and other receivables at December 31, 2005 and December 31, 2004 were as follows:                                December 31,     December 31,         2005     2004       Gross lease and other receivables   $ 213,154     $ 285,162     Sales-type lease receivable (net of unearned income)     31,341       168,647                           244,495       453,809                         Less:                   Direct operating payables and accrued expenses     88,050       90,229     Base management fees payable     13,362       9,683     Reimbursed administrative expenses     3,509       4,646     Allowance for doubtful accounts     60,834       59,219                           165,755       163,777                     Net lease and other receivables   $ 78,740     $ 290,032                              On December 1, 2004, the Leasing Company, on behalf of the Partnership, amended a term lease agreement with one lessee to include a bargain purchase option, in exchange for the lessee’s continued lease of these older containers and their eventual sale. As a result of the amendment, the Partnership reclassified the term lease agreement as a sales-type lease, recorded a sales-type lease receivable and recognized the sale of 943 on-hire containers that were subject to the amended term lease agreement. The difference between the present value of the future payments under this lease and $574,198, the net book value of the containers at the time of the amendment, resulted in a net loss of $394,534 during 2004. The net loss originating from the amendment of the term lease agreement is reflected in the 2004 income statement as a component of net loss on the disposal of equipment, together with a $100,265 net loss on the disposal of equipment generated from an additional 719 containers disposed as part of the Partnership’s operating activities. The Partnership did not enter into any new sales-type leases during 2005. The minimum future lease rentals under this sales-type lease, net of unearned income are:                                        Net Sales-Type     Unearned Sales-Type     Minimum Future         Lease Receivable     Lease Income     Sales-Type Lease Rentals       2006   $ 31,658     $ 317     $ 31,341                             33    Table of Contents  IEA INCOME FUND XI, L.P.  Notes to Financial Statements     (5)   Net Lease Revenue          Net lease revenue is determined by deducting direct operating expenses, base management fees and reimbursed administrative expenses to CCC and its affiliates from the rental revenue earned by the Leasing Company under operating leases and sales-type leases to ocean carriers for the containers owned by the Partnership. Net lease revenue for the years ended December 31, 2005, 2004 and 2003, was as follows:                                        2005     2004     2003       Rental revenue   $ 596,375     $ 921,007     $ 1,092,520     Interest income from sales-type lease     6,453       956       —                                 602,828       921,963       1,092,520                                 Less:                           Rental equipment operating expenses     94,791       128,746       269,770     Base management fees     49,426       63,087       74,568     Reimbursed administrative expenses:                           Salaries     31,946       42,192       53,428     Other payroll related expenses     4,496       5,278       5,732     General and administrative expenses     8,223       14,061       16,716                           Total reimbursed administrative expenses     44,665       61,531       75,876                                 188,882       253,364       420,214                                                       Net lease revenue   $ 413,946     $ 668,599     $ 672,306                                (6)   Compensation to General Partner and its Affiliates          Base management fees are equal to 7% of the gross lease billings from the leasing of containers subject to leases whereby the aggregate rental payments due during the initial term of the lease are less than the purchase price of the equipment subject to the lease. Reimbursed administrative expenses are equal to the costs expended by CCC and its affiliates for services necessary for the prudent operation of the Partnership pursuant to the Partnership Agreement. The following compensation was paid or will be paid by the Partnership to CCC or its affiliates:                                        2005     2004     2003       Base management fees                           CCC   $ —     $ —     $ —     Leasing Company     49,426       63,087       74,568                                 49,426       63,087       74,568                           Reimbursed administrative expenses                           CCC     5,838       7,860       8,760     Leasing Company     38,827       53,671       67,116                                 44,665       61,531       75,876                                                           $ 94,091     $ 124,618     $ 150,444                                    The following net compensation was payable to CCC and the Leasing Company at December 31, 2005 and 2004:                                2005     2004       CCC   $ 565     $ 593     Leasing Company     16,306       13,736                                             $ 16,871     $ 14,329                       34    Table of Contents  IEA INCOME FUND XI, L.P.  Notes to Financial Statements     (7)   Limited Partners’ Capital          Cash distributions made to the limited partners during 2005, 2004 and 2003 included distributions of proceeds from equipment sales in the amount of $666,603, $658,272 and $758,262, respectively. These distributions, as well as cash distributions from operations, are used in determining “Adjusted Capital Contributions” as defined by the Partnership Agreement.          The limited partners’ per unit share of capital at December 31, 2005, 2004 and 2003 was $1, $1 and $2, respectively. This is calculated by dividing the limited partners’ capital at the end of each year by 1,999,812, the total number of limited partnership units.      (8)   Subsequent Event           On January 19, 2006, the Fund completed the sale of its remaining Operating Lease Containers (measured as of January 1, 2006) to Access, for the adjusted bid amount of $1,040,579. The net book value of these Operating Lease Containers was $694,507. The Partnership reported this sale and the related purchase agreement as part of its January 19, 2006 Report on Form 8-K to the SEC.          With the completion of the sale of its Operating Lease Containers, the Partnership has now resolved to wind up and dissolve. See note 1, herein, for further discussion.    35    Table of Contents
Inapplicable.     Item 9A. Controls and Procedures       The principal executive and principal financial officers of CCC have evaluated the disclosure controls and procedures of the Partnership as of the end of the period covered by this report . As used herein, the term “disclosure controls and procedures” has the meaning given to the term by Rule 13a-15 under the Securities Exchange Act of 1934, as amended (“Exchange Act”), and includes the controls and other procedures of the Partnership that are designed to ensure that information required to be disclosed by the Partnership in the reports that it files with the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Based upon their evaluation, the principal executive and principal financial officers of CCC have concluded that the Partnership’s disclosure controls and procedures were effective such that the information required to be disclosed by the Partnership in this report is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms applicable to the preparation of this report and is accumulated and communicated to CCC’s management, including CCC’s principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.       There have been no significant changes in the Partnership’s internal controls or in other factors that could significantly affect the Partnership’s internal controls subsequent to the evaluation described above conducted by CCC’s principal executive and financial officers.     Item 9B. Other Information       Inapplicable.  36    Table of Contents     PART III     Item 10. Directors and Executive Officers of the Partnership       The Partnership, as such, has no officers or directors, but is managed by CCC, the general partner. The officers and directors of CCC at February 28, 2006, are as follows:              Name   Office     Dennis J. Tietz    President, Chief Executive Officer and Director   John Kallas    Vice President, Chief Financial Officer and Director   Elinor A. Wexler    Vice President/Administration, Secretary and Director   Peter J. Younger    Director          Dennis J. Tietz Mr. Tietz, 53, President and Chief Executive Officer, is responsible for the general management of CCC. Mr. Tietz is also President and a director of Cronos Securities Corp. From 1986 until December 1998, Mr. Tietz was responsible for the organization, marketing and after-market support of CCC’s investment programs. Mr. Tietz was a regional manager for CCC, responsible for various container leasing activities in the U.S. and Europe from 1981 to 1986. Prior to joining CCC in December 1981, Mr. Tietz was employed by Trans Ocean Leasing Corporation as Regional Manager based in Houston, with responsibility for all leasing and operational activities in the U.S. Gulf.       Mr. Tietz was appointed Chief Executive Officer of the Cronos group on December 11, 1998, and Chairman of the Board of Directors on March 30, 1999.       Mr. Tietz holds a B.S. degree in Business Administration from San Jose State University and is a Registered Securities Principal with the NASD. Mr. Tietz served as Chairman of the International Institute of Container Lessors for its 2001 fiscal year, and currently sits on the Executive Committee of the Institute’s Board of Directors.       John Kallas Mr. Kallas, 43, was first elected Vice President and Chief Financial Officer of CCC in December 1993, and is directly responsible for CCC’s container investment programs, as well as accounting and treasury operations. Mr. Kallas joined the Board of Directors of CCC in November, 2000. Mr. Kallas has held various accounting positions since joining CCC including Controller, Director of Accounting and Corporate Accounting Manager. From 1985 to 1989, Mr. Kallas was an accountant with KPMG Peat Marwick, San Francisco, California.       Mr. Kallas holds a Masters degree in Finance and Business Administration from St. Mary’s College, a B.S. degree in Business Administration from the University of San Francisco, and is a certified public accountant. Mr. Kallas is also Treasurer of Cronos Securities Corp.       Elinor A. Wexler Ms. Wexler, 57, was elected Vice President — Administration and Secretary of CCC in August 1992. Ms. Wexler has been employed by CCC since 1987, and is responsible for CCC’s investor services, compliance and securities registration, as well as The Cronos Group’s investor relations. From 1983 to 1987, Ms. Wexler was Manager of Investor Services of The Robert A. McNeil Corporation, a real estate syndication company, in San Mateo, California. From 1971 to 1983, Ms. Wexler held various positions, including securities trader and international research editor, with Nikko Securities Co., International, based in San Francisco.       Ms. Wexler attended the University of Oregon, Portland State University and the Hebrew University of Jerusalem, Israel. Ms. Wexler is also Vice President and Secretary of Cronos Securities Corp. and a Registered Principal with the NASD.  Peter J. Younger Mr. Younger, 48, was elected to the Board of Directors of CCC in December 2005. See key management personnel of the Leasing Company for further information.  37    Table of Contents       The key management personnel of the Leasing Company and its affiliates at February 28, 2006, were as follows:              Name   Title     Peter J. Younger    President, Chief Operating Officer of The Cronos Group   John M. Foy    Senior Vice President/Pacific Region   John C. Kirby    Senior Vice President/North Atlantic Region   Frank P. Vaughan    Director, Leasing Company   Timothy W. Courtenay    Director, Leasing Company          Peter J. Younger Mr. Younger, 49, is the President and Chief Operating Officer of The Cronos Group, the Leasing Company’s corporate parent. He is a member of the Board of The Cronos Group and has held various officer positions with The Cronos Group since 1999. From 1991 through December 2004, Mr. Younger served in various officer positions with the Leasing Company, most recently as its managing Director. From 1987 to 1991, Mr. Younger served as Vice President and Controller of CCC. Prior to 1987, Mr. Younger was a certified public accountant and a principal with the accounting firm of Johnson, Glaze and Co., Salem, Oregon. Mr. Younger holds a B.S. degree in Business Administration from Western Baptist College, Salem, Oregon.       John M. Foy Mr. Foy, 60, is Senior Vice President/Pacific Region, and is directly responsible for the Leasing Company’s lease marketing operations in the Pacific, including the U.S. West Coast, Asia, Australia and New Zealand, and is based in San Francisco. From 1985 to 1993, Mr. Foy was Vice President/Pacific of Cronos with responsibility for dry cargo container lease marketing and operations in the Pacific Basin. From 1977 to 1985, Mr. Foy was Vice President of Marketing for Nautilus Leasing Services in San Francisco with responsibility for worldwide leasing activities. From 1974 to 1977, Mr. Foy was Regional Manager for Flexi-Van Leasing, a container lessor, with responsibility for container leasing activities in the Western United States. Mr. Foy holds a B.A. degree in Political Science from University of the Pacific, and a Bachelor of Foreign Trade from Thunderbird Graduate School of International Management.       John C. Kirby Mr. Kirby, 52, is directly responsible for the Leasing Company’s lease marketing operations in the Atlantic Region, including Europe, the US East Coast, Scandinavia, the Middle East, Africa, South America, and the Indian sub-continent. Mr. Kirby is also responsible for the Leasing Company’s operations, container purchasing, contract and billing administration, container repairs and leasing-related systems. Mr. Kirby is based in the United Kingdom. Mr. Kirby joined CCC in 1985 as European Technical Manager, and advanced to Director of European Operations in 1986, a position he held with CCC and later the Leasing Company, until his promotion to Vice President/Operations of the Leasing Company in 1992. In June 1997, Mr. Kirby was promoted to the position of Senior Vice President of the Leasing Company. From 1982 to 1985, Mr. Kirby was employed by CLOU Containers, a container leasing company, as Technical Manager, based in Hamburg, Germany. Mr. Kirby acquired a professional engineering qualification from the Mid-Essex Technical College in England.       Frank P. Vaughan Mr. Vaughan, 41, was appointed a Director of the Leasing Company in November 2000. Mr. Vaughan joined Cronos in 1991, and was appointed Vice President-Finance of The Cronos Group in 1999 and its Chief Financial Officer on March 31, 2005. Based in the U.K., Mr. Vaughan is responsible for The Cronos Group’s and the Leasing Company’s financial operations, including SEC reporting. Prior to joining Cronos in 1991, Mr. Vaughan, was an accountant with the Automobile association in the U.K., from 1987 to 1991, where he worked in their insurance, travel, publishing, and member services divisions.       Mr. Vaughan holds a Bachelor of Commerce degree, with honors, from University College Cork, and is a qualified Chartered Management Accountant in the U.K.       Timothy W. Courtenay Mr. Courtenay, 45, joined the Leasing Company in 1995 and is based in the U.K. Mr. Courtenay is primarily responsible for credit and risk management, in addition to being responsible for the management of the container asset system and other support roles within Cronos’ finance function. From 1988 to when he joined Cronos, Mr. Courtenay was a financial controller for a real estate firm based in London, England. Mr. Courtenay holds a B.A. degree, with honors, in Accountancy from Leeds University and is a qualified Chartered management Accountant. Mr. Courtenay also holds a diploma in employment law.  38    Table of Contents  Audit Committee       The Partnership is governed by CCC pursuant to the terms and provisions of its Partnership Agreement. The business of CCC, in turn, is supervised by its board of directors, consisting of Dennis J. Tietz, John Kallas, Elinor A. Wexler and Peter J. Younger. All of the members of CCC’s board of directors are officers of CCC and therefore are not “independent” as defined by the rules of the SEC. The board of directors of CCC oversees the accounting and financial reporting processes of the Partnership and the audits of the financial statements of the Partnership.  Audit Committee Financial Expert       The board of directors of CCC has determined that John Kallas, a member of CCC’s board, qualifies as an audit committee financial expert within the meaning of the rules of the SEC. CCC’s board has made this judgment by reason of Mr. Kallas’ experience and training, described above in Mr. Kallas’ biography, under the listing of officers and directors of CCC. Because Mr. Kallas is an officer of CCC, he is not considered “independent” within the meaning of the rules of the SEC.  Code of Ethics       CCC has adopted a Code of Ethics (the “Code”) that applies to the senior officers of CCC, including the officers identified above. The Code is designed to promote honest and ethical conduct by such officers in their management of the business of CCC, including its activities as general partner of the Partnership; the full and fair disclosure in the reports and documents CCC prepares for and on behalf of the Partnership; and compliance with applicable governmental laws, rules, and regulations. The Code provides a mechanism for the reporting of violations of the Code and measures to enforce adherence to the Code. A copy of the Code may be requested, without charge, from:  Cronos Capital Corp. The General Partner Attention: Corporate Secretary One Front Street, Suite 925 San Francisco, CA 94111 (415) 677-8990 ir@cronos.com  Section 16(a) Beneficial Ownership Reporting Compliance       The Partnership has followed the practice of reporting acquisitions and dispositions of the Partnership’s units of limited partnership interests by CCC, its general partner. As CCC did not acquire or dispose of any of the Partnership’s units of limited partnership interests during the fiscal year ended December 31, 2005, no reports of beneficial ownership under Section 16(a) of the Securities Exchange Act of 1934, as amended, were filed with the SEC.  39    Table of Contents     Item 11. Executive Compensation       Partnership distributions are paid to its partners (general and limited) from distributable cash from operations, allocated 95% to the limited partners and 5% to CCC. Distributions of sales proceeds are allocated 99% to the limited partners and 1% to CCC. These allocations remain in effect until such time as the limited partners have received from the Partnership aggregate distributions in an amount equal to their capital contributions plus a 10% cumulative, compounded (daily), annual return on their adjusted capital contributions. Thereafter, all Partnership distributions will be allocated 85% to the limited partners and 15% to CCC.       The Partnership will not pay or reimburse CCC or the Leasing Company for any remuneration payable by them to their executive officers, directors or any other controlling persons. However, the Partnership will reimburse CCC and the Leasing Company for certain services pursuant to the Partnership Agreement. These services include but are not limited to (i) salaries and related salary expenses for services which could be performed directly for the Partnership by independent parties, such as legal, accounting, transfer agent, data processing, operations, communications, duplicating and other such services; (ii) performing administrative services necessary to the prudent operations of the Partnership.       The following table sets forth the fees the Partnership paid (on a cash basis) to CCC or the Leasing Company (“CCL”) for the year ended December 31, 2005.                                      Cash Fees and       Name   Description   Distributions     1)    CCL    Base management fees — equal to 7% of gross lease billings from the leasing of containers subject to leases whereby the aggregate rental payments due during the initial term of the lease are less than the purchase price of the equipment subject to the lease pursuant to Section 4.3 of the Limited Partnership Agreement    $ 45,746                         2)    CCC CCL    Reimbursed administrative expenses — equal to the costs expended by CCC and its affiliates for services necessary to the prudent operation of the Partnership pursuant to Section 4.4 of the Limited Partnership Agreement    $ $ 5,866 39,937                         3)    CCC    Interest in Fund — 5% of distributions of distributable cash for any quarter pursuant to Section 6.1 of the Limited Partnership Agreement    $ 33,922       40    Table of Contents     Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters       (a) Securities Authorization for Issuance Under Equity Compensation Plans       Inapplicable.       (b) Security Ownership of Certain Beneficial Owners       There is no person or “group” of persons known to the management of CCC to be the beneficial owner of more than five percent of the outstanding units of limited partnership interests of the Partnership.       (c) Security Ownership of Management       The Partnership has no directors or officers. It is managed by CCC. CCC owns 6,791 units, representing 0.34% of the total amount of units outstanding.       (d) Changes in Control       Inapplicable.     Item 13. Certain Relationships and Related Transactions       (a) Transactions with Management and Others  The Partnership’s only transactions with management and other related parties during 2005 were limited to those fees paid or amounts committed to be paid (on an annual basis) to CCC, the general partner, and its affiliates. See Item 11, “Executive Compensation,” herein.       (b) Certain Business Relationships       Inapplicable.       (c) Indebtedness of Management       Inapplicable.       (d) Transactions with Promoters       Inapplicable.  41    Table of Contents     Item 14. Principal Accountant Fees and Services       CCC, on behalf of the Partnership has appointed Deloitte & Touche LLP as the Partnership’s independent auditor for the fiscal year ending December 31, 2005. CCC’s board of directors has the authority to pre-approve audit related and non-audit services on behalf of the Partnership, that are not prohibited by law, to be performed by the Partnership’s independent auditors.  Audit Fees       Audit fees represent fees for professional services provided in connection with the audit of the Partnership’s financial statements and review of its quarterly financial statements and audit services provided in connection with its statutory or regulatory filings. The Partnership incurred fees of $14,742 and $14,960 during the fiscal years ending December 31, 2005 and 2004, respectively, for these audit services.  Audit-Related Fees       The Partnership did not incur audit-related fees during the fiscal years ending December 31, 2005 and 2004. Typically, audit-related fees, if incurred, would consist of fees for accounting consultations and other attestation services.  Tax Fees       The Partnership did not incur tax fees during the fiscal years ending December 31, 2005 and 2004. Typically, tax fees, if incurred, would consist of fees for compliance services, tax advice and tax planning.  All Other Fees       The Partnership did not incur any other fees for services provided by its independent auditor during the fiscal years ending December 31, 2005 and 2004.  42    Table of Contents     PART IV     Item 15. Exhibits and Financial Statement Schedules                      Page       (1) Financial Statements            Report of Independent Registered Public Accounting Firm     23     (2) The following financial statements of the Partnership are included in Part II, Item 8:            Balance Sheets – as of December 31, 2005 and 2004     24     Statements of Operations – for the years ended December 31, 2005, 2004 and 2003     25     Statements of Partners’ Capital – for the years ended December 31, 2005, 2004 and 2003     26     Statements of Cash Flows – for the years ended December 31, 2005, 2004 and 2003     27     Notes to Financial Statements     28            All schedules are omitted as the information is not required or the information is included in the financial statements or notes thereto.       (3) Exhibits                              Exhibit               No   Description   Method of Filing            3(a)     Limited Partnership Agreement of the Partnership, amended and restated as of December 14, 1990    *                              3(b)     Certificate of Limited Partnership    **                              10(a)     Form of Leasing Agent Agreement with LPI Leasing Partners International N.V.    ***                              10(b)     Assignment of Leasing Agent Agreement dated January 1, 1992 between the Partnership, CCC (formerly Intermodal Equipment Associates), Cronos Containers N.V. (formerly LPI Leasing Partners International N.V.) and Cronos Containers Limited    ****                              31.1     Rule 13a-14 Certification    Filed with this document                              31.2     Rule 13a-14 Certification    Filed with this document                              32     Section 1350 Certifications    Filed with this document *****                *   Incorporated by reference to Exhibit “A” to the Prospectus of the Partnership dated December 14, 1990, included as part of Registration Statement on Form S-1 (No. 33-36701)     **   Incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 (No. 33-36701)     ***   Incorporated by reference to Exhibit 10.2 to the Registration Statement on Form S-1 (No. 33-36701)     ****   Incorporated by reference to Exhibit 10(b) to the Report on Form 10-K for the fiscal year ended December 31, 2000     *****   This certification, required by Section 906 of the Sarbanes-Oxley Act of 2002, other than as required by Section 906, is not to be deemed “filed” with the Commission or subject to the rules and regulations promulgated by the Commission under the Securities Exchange Act of 1934, as amended, or to the liabilities of Section 18 of said Act.   43    Table of Contents     SIGNATURES       Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Partnership has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.                        IEA INCOME FUND XI, L.P.                    By    Cronos Capital Corp.            The General Partner                            By    /s/ Dennis J. Tietz                         Dennis J. Tietz            President and Director of Cronos Capital Corp. (“CCC”)            Principal Executive Officer of CCC     Date: March 24, 2006       Pursuant to the requirement of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Cronos Capital Corp., the managing general partner of the Partnership, in the capacities and on the dates indicated:                  Signature   Title   Date         /s/ Dennis J. Tietz    President and Director of    March 24, 2006     Dennis J. Tietz    Cronos Capital Corp.            (“CCC”) (Principal Executive            Officer of CCC)                   /s/ John Kallas    Chief Financial Officer and    March 24, 2006     John Kallas    Director of            Cronos Capital Corp. (“CCC”)            (Principal Financial and            Accounting Officer of CCC)                   /s/ Elinor A. Wexler    Vice President-Administration,    March 24, 2006     Elinor A. Wexler    Secretary and Director of            Cronos Capital Corp.              Table of Contents     Exhibit Index                              Exhibit               No.   Description   Method of Filing            3(a)     Limited Partnership Agreement of the Partnership, amended and restated as of December 14, 1990    *                              3(b)     Certificate of Limited Partnership    **                              10(a)     Form of Leasing Agent Agreement with LPI Leasing Partners International N.V.    ***                              10(b)      Assignment of Leasing Agent Agreement dated January 1, 1992 between the Partnership, CCC (formerly Intermodal Equipment Associates), Cronos Containers N.V. (formerly LPI Leasing Partners International N.V.) and Cronos Containers Limited    ****                              31.1     Rule 13a-14 Certification    Filed with this document                              31.2     Rule 13a-14 Certification    Filed with this document                              32     Section 1350 Certifications    Filed with this document                    *****        (b)   Reports on Form 8-K          No reports on Form 8-K were filed by the Partnership during the quarter ended December 31, 2005.               *   Incorporated by reference to Exhibit “A” to the Prospectus of the Partnership dated December 14, 1990, included as part of Registration Statement on Form S-1 (No. 33-36701)     **   Incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 (No. 33-36701)     ***   Incorporated by reference to Exhibit 10.2 to the Registration Statement on Form S-1 (No. 33-36701)     ****   Incorporated by reference to Exhibit 10(b) to the Report on Form 10-K for the fiscal year ended December 31, 2000     *****   This certification, required by Section 906 of the Sarbanes-Oxley Act of 2002, other than as required by Section 906, is not to be deemed “filed” with the Commission or subject to the rules and regulations promulgated by the Commission under the Securities Exchange Act of 1934, as amended, or to the liabilities of Section 18 of said Act.           EX-31.1 2 f18776aexv31w1.htm EXHIBIT 31.1    exv31w1       Exhibit 31.1  IEA Income Fund XI  Rule 13a-14 CERTIFICATIONS        I, Dennis J. Tietz, certify that:       1. I have reviewed this annual report on Form 10-K of IEA Income Fund XI (the “Partnership”);       2. Based on my knowledge, this annual 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 annual report;       3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the Partnership as of, and for, the periods presented in this annual report;       4. The other certifying officer of Cronos Capital Corp. (“CCC”), the General Partner of the Partnership, and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Partnership and we have:            (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Partnership, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; and            (b) evaluated the effectiveness of the Partnership’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and            (c) disclosed in this report any change in the Partnership’s internal control over financial reporting that occurred during the Partnership’s most recent fiscal quarter (the Partnership’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Partnership’s internal control over financial reporting.       5. CCC’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Partnership’s auditors and the Audit Committee of Partnership’s Board of Directors (or persons performing the equivalent function):            (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Partnership’s ability to record, process, summarize and report financial information; and            (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Partnership’s internal control over financial reporting.  Date: March 24, 2006                    /s/ DENNIS J TIETZ   Dennis J Tietz            President and Chief Executive Officer of CCC                 EX-31.2 3 f18776aexv31w2.htm EXHIBIT 31.2    exv31w2       Exhibit 31.2  IEA Income Fund XI  Rule 13a-14 CERTIFICATIONS        I, John Kallas, certify that:       1. I have reviewed this annual report on Form 10-K of IEA Income Fund XI (the “Partnership”);       2. Based on my knowledge, this annual 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 annual report;       3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the Partnership as of, and for, the periods presented in this annual report;       4. The other certifying officer of Cronos Capital Corp. (“CCC”), the General Partner of the Partnership, and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Partnership and we have:            (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Partnership, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; and            (b) evaluated the effectiveness of the Partnership’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and            (c) disclosed in this report any change in the Partnership’s internal control over financial reporting that occurred during the Partnership’s most recent fiscal quarter (the Partnership’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Partnership’s internal control over financial reporting.       5. CCC’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Partnership’s auditors and the Audit Committee of Partnership’s Board of Directors (or persons performing the equivalent function):            (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Partnership’s ability to record, process, summarize and report financial information; and            (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Partnership’s internal control over financial reporting.  Date: March 24, 2006                    /s/ JOHN KALLAS   John Kallas            Chief Financial Officer of CCC                 EX-32 4 f18776aexv32.htm EXHIBIT 32    exv32       EXHIBIT 32  CERTIFICATION PURSUANT TO 18 U.S.C. § 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2004*  In connection with the Annual Report of IEA Income Fund XI (the “Partnership”) on Form 10-K for the fiscal period ended December 31, 2005, as filed with the Securities and Exchange Commission (the “Report”), the undersigned, Dennis J. Tietz, the President and Chief Executive Officer of Cronos Capital Corp., the General Partner of the Partnership, and John Kallas, the Chief Financial Officer of Cronos Capital Corp., certify, based on their knowledge, that:       (i)   The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and        (ii)   The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Partnership.    March 24, 2006                         By:                            /s/ Dennis J. Tietz          Dennis J. Tietz,         President and Chief Executive Officer of Cronos Capital Corp., General Partner of the Partnership                                                                   /s/ John Kallas          John Kallas,         Chief Financial Officer of Cronos Capital Corp,. General Partner of the Partnership          A SIGNED ORIGINAL OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906 HAS BEEN PROVIDED TO THE COMPANY AND WILL BE RETAINED BY THE COMPANY AND FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION OR ITS STAFF UPON REQUEST.             *   This certification, required by Section 906 of the Sarbanes-Oxley Act of 2002, other than as required by Section 906, shall not be deemed to be “filed” with the Commission or subject to the rules and regulations promulgated by the Commission under the Securities Exchange Act of 1934, as amended, or to the liabilities of Section 18 of said Act.           -----END PRIVACY-ENHANCED MESSAGE-----