##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the fiscal year ended December 31, 2002

OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
ACT OF 1934

For the transition period from       to      .

Commission file number 0-19770

IEA INCOME FUND XI, L.P.

(Exact name of registrant as
specified in its charter)




|California                                                     |  | 94-3122430                          
|-------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer Identification No.)

One Front Street, 15th Floor, San Francisco, California 94111

(Address of principal executive
offices)        (Zip Code)


Registrants telephone number, including area code (415) 677-8990

Securities registered pursuant to Section 12(b) of the Act:



|                    |  |                         
|------------------- |  | ------------------------
|                    |  | Name of each exchange on
|Title of each class |  | which registered        
|                    |  |                         
|Not Applicable      |  |                         
|                    |  |                         

Securities registered pursuant to Section 12(g) of the Act:

UNITS OF LIMITED PARTNERSHIP INTERESTS

---

(Title of Class)


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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (§229.405 of this chapter) is not contained herein, and will
not be contained, to the best of Registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.      [X]

The aggregate market value of the voting stock held by non-affiliates of the
registrant is not applicable.

Documents incorporated by Reference



| |                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------
| | Prospectus of IEA Income Fund XI, L.P., dated
December 14, 1990 included as part of Registration Statement on Form S-1 (No. 33-36701)





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##### 



IEA INCOME FUND XI, L.P.

Report on Form 10-K for the Fiscal Year
Ended December 31, 2002

TABLE OF CONTENTS

|                                                                                               |  |  |    |      |  | 
|---------------------------------------------------------------------------------------------- |  |  | -- | ---- |  | 
|                                                                                               |  |  |    | PAGE
|PART I                                                                                        
|Item 1  Description of Business                                                               |  |  | 3  |     
|Item 2  Properties                                                                            |  |  | 11 |     
|Item 3  Legal Proceedings                                                                     |  |  | 11 |     
|Item 4  Submission of Matters to a Vote of Security Holders                                   |  |  | 11 |     
|PART II                                                                                       
|Item 5  Market for the Registrant                                                             |  |  | 12 |     
|Item 6  Selected Financial Data                                                               |  |  | 13 |     
|Item 7  Managements Discussion and Analysis of Financial Condition and Results of Operations |  |  | 13 |     
|Item 7A Quantitative and Qualitative Disclosures About Market Risk                            |  |  | 17 |     
|Item 8  Financial Statements and Supplementary Data                                           |  |  | 17 |     
|Item 9  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure  |  |  | 30 |     
|PART III                                                                                      
|Item 10  Directors and Executive Officers of the Registrant                                   |  |  | 31 |     
|Item 11  Executive Compensation                                                               |  |  | 33 |     
|Item 12  Security Ownership of Certain Beneficial Owners and Management                       |  |  | 34 |     
|Item 13  Certain Relationships and Related Transactions                                       |  |  | 34 |     
|Item 14  Controls and Procedures                                                              |  |  | 34 |     
|PART IV                                                                                       
|Item 15  Exhibits, Financial Statement Schedules, and Reports on Form 8-K                     |  |  | 35 |     

2



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PART I - FINANCIAL INFORMATION

Item 1.      Business



|(a) | General Development of Business
|--- | -------------------------------

The Registrant 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, special purpose containers and container related
equipment to unaffiliated third-party lessees. The Registrant was initially
capitalized with $100, and commenced offering its limited partnership interests
to the public subsequent to December 14, 1990, pursuant to its Registration
Statement on Form S-1 (File No. 33-36701). The offering terminated on November
30, 1991.

The Registrant raised $39,996,240 in subscription proceeds. The following
table sets forth the use of said subscription proceeds:

|                                     |                                    |   |            |           |                |  |               |      |  
|------------------------------------ | ---------------------------------- | - | ---------- | --------- | -------------- |  | ------------- | ---- | -
|                                     |                                    |   |            |           |                |  | Percentage of
|                                     |                                    |   | Amount     |           | Gross Proceeds
|                                     |                                    |   |            |           |               
|Gross Subscription Proceeds          |                                    | $ | 39,996,240 |           |                |  | 100.0         | %   
|Public Offering Expenses:            |                                    |   |            |           |                |  |               |     
|                                     | Underwriting Commissions           |   | $          | 3,999,634 |                |  |               | 10.0 | %
|                                     | Offering and Organization Expenses |   | $          | 703,234   |                |  |               | 1.7  | %
|                                     |                                    |   |            |           |                |  |               |     
|                                     | Total Public Offering Expenses     |   | $          | 4,702,868 |                |  |               | 11.7 | %
|                                     |                                    |   |            |           |                |  |               |     
|Net Proceeds                         |                                    | $ | 35,293,372 |           |                |  | 88.3          | %   
|Acquisition Fees                     |                                    | $ | 345,466    |           |                |  | 0.9           | %   
|Working Capital Reserve              |                                    | $ | 401,330    |           |                |  | 1.0           | %   
|                                     |                                    |   |            |           |                |  |               |     
|Gross Proceeds Invested in Equipment |                                    | $ | 34,546,576 |           |                |  | 86.4          | %   
|                                     |                                    |   |            |           |                |  |               |     

The general partner of the Registrant is Cronos Capital Corp. (CCC), a
wholly-owned subsidiary of Cronos Holdings/Investments (U.S.), Inc., a Delaware
corporation. These and other affiliated companies are ultimately wholly-owned
by The Cronos Group, a holding company registered in Luxembourg (the Parent
Company) and are collectively referred to as the Group. The activities of
the container division of the Group are managed through the Groups subsidiary
in the United Kingdom, Cronos Containers Limited (the Leasing Company). The
Leasing Company manages the leasing operations of all equipment owned by the
Group on its behalf or managed on behalf of third-party container owners,
including all programs organized by CCC.

For a discussion of recent developments in the Registrants business, see
Item 7, Managements Discussion and Analysis of Financial Condition and Result
of Operations.

For information concerning the containers acquired by the Registrant, see
Item 2, Properties.

3



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##### 





|(b) | Financial Information About Segments
|--- | ------------------------------------

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. The Leasing Companys management operates the Registrants
container fleet as a homogenous unit and has determined that as such it has a
single reportable operating segment.

The Registrant derives revenues from dry cargo containers and refrigerated
containers. As of December 31, 2002, the Registrant operated 2,537
twenty-foot, 1,480 forty-foot and 83 forty-foot high-cube marine dry cargo
containers, as well as 86 twenty-foot and 28 forty-foot marine refrigerated
cargo containers. A summary of gross lease revenue earned by the Leasing
Company, on behalf of the Registrant, by product, for the years ended December
31, 2002, 2001 and 2000 follows:

|                        |  |      |           |      |  |      |           |  |  |   |           | 
|----------------------- |  | ---- | --------- | ---- |  | ---- | --------- |  |  | - | --------- | 
|                        |  | 2002 |           | 2001 |  | 2000
|                        |  |      |           |      |  |     
|Dry cargo containers    |  | $    | 1,297,226 |      |  | $    | 2,235,041 |  |  | $ | 3,340,744 | 
|Refrigerated containers |  |      | 146,785   |      |  |      | 259,923   |  |  |   | 319,192   | 
|                        |  |      |           |      |  |      |           |  |  |   |           | 
|Total                   |  | $    | 1,444,011 |      |  | $    | 2,494,964 |  |  | $ | 3,659,936 | 
|                        |  |      |           |      |  |      |           |  |  |   |           | 

Due to the Registrants lack of information regarding the physical
location of its fleet of containers when on lease in the global shipping trade,

it is impracticable to provide the geographic area information. Any attempt to
separate foreign operations from domestic operations would be dependent on
definitions and assumptions that are so subjective as to render the information
meaningless and potentially misleading.

One sub-lessee of the Leasing Company, Mediterranean Shipping Company S.A.
(MSC), generated approximately 13% or $328,468 of the Leasing Companys
rental revenue earned on behalf of the Registrant during 2002. During 2001 one
sub-lessee of the Leasing Company, MSC, generated approximately 11% or $427,047
of the Leasing Companys rental revenue earned on behalf of the Registrant.
During 2000 no single sub-lessee of the Leasing Company contributed more than
10% of the Leasing Companys rental revenue earned on behalf of the Registrant.



|(c) | Narrative Description of Business
|--- | ---------------------------------

(c)(1)(i)      A marine cargo container is a reusable metal container designed
for the efficient carriage of cargo with a minimum of exposure to loss from
damage or theft. Containers are manufactured to conform to worldwide standards
of container dimensions and container ship fittings adopted by the
International Standards Organization (ISO) in 1968. The standard container
is either 20' long x 8' wide x 8'6'' high (one twenty-foot equivalent unit
(TEU), the standard unit of physical measurement in the container industry)
or 40' long x 8' wide x 8'6'' high (two TEU). Standardization of the
construction, maintenance and handling of containers allows containers to be
picked up, dropped off, stored and repaired efficiently throughout the world.
This standardization is the foundation on which the container industry has
developed.

Standard dry cargo containers are rectangular boxes with no moving parts,
other than doors, and are typically made of steel. They are constructed to
carry a wide variety of cargoes ranging from heavy industrial raw materials to
light-weight finished goods. Specialized containers such as refrigerated and
tank containers are utilized for the transport of temperature-sensitive goods
and for the carriage of liquid cargo. Cellular palletwide containers (CPCs)
provide shipping lines with a container with extra width for the carriage of
unitized or palletized cargoes. Dry cargo containers currently constitute
approximately 88% (in TEU) of the worldwide container fleet. Refrigerated and
tank containers currently constitute approximately 5% (in TEU) of the worldwide
container fleet, with open-tops and other specialized containers constituting
the remaining 7%.

One of the primary benefits of containerization has been the ability of
the shipping industry to effectively lower freight rates due to the
efficiencies created by standardized intermodal containers. Containers can be
handled much more efficiently than loose cargo and are typically shipped via
several modes of transportation, including truck, rail and ship. Containers
require loading and unloading only once and remain sealed until arrival at the
final destination, significantly reducing transport time, labor and handling
costs and losses due to damage and theft. Efficient movement of containerized
cargo between ship and shore reduces the amount of time that a ship must spend
in port and reduces the transit time of freight moves.

4



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##### 



The logistical advantages and reduced freight rates brought about by
containerization have been major catalysts for world trade growth since the
late 1960s, resulting in increased demand for containers. The worlds
container fleet has grown from an estimated 270,000 TEU in 1969 to
approximately 16 million TEU by the end of 2002.

The container leasing business is cyclical, and depends largely upon the
rate of growth in the volume of world trade. The container leasing industry
has experienced cyclical downturns during the last sixteen years.

Benefits of Leasing

Leasing companies own approximately 44% of the worlds container fleet
with the balance owned predominantly by shipping lines. Shipping lines, which
traditionally operate on tight profit margins, often supplement their owned
fleet of containers by leasing a portion of their equipment from container
leasing companies and, in doing so, achieve the following financial and
operational benefits:



| |  |  | Leasing allows the shipping lines to utilize the equipment they need
without having to make large capital expenditures;                                                       
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Leasing offers a shipping line an alternative source of financing in a
traditionally capital-intensive industry;                                                              
|
| |  |  | Leasing enables shipping lines to expand their routes and market shares at
a relatively inexpensive cost without making a permanent commitment to
support their new structure;
|
| |  |  | Leasing allows shipping lines to respond to changing seasonal and trade
route demands, thereby optimizing their capital investment and storage
costs.                         

Types of Leases

On behalf of the Registrant, the Leasing Company leases the Registrants
containers primarily to shipping lines operating in major trade routes (see
Item 1(d)). Most if not all of the Registrants marine dry cargo containers
are leased pursuant to operating leases, whereby the containers are leased to
the ocean carrier on a daily basis for any desired length of time, with the
flexibility of picking up and dropping off containers at various agreed upon
locations around the world. Some of the Registrants containers may be leased
pursuant to term leases, which may have durations of one to five years.
Specialized containers are generally leased on longer-term leases because the
higher cost, value and complexity of this equipment makes it more expensive to
redeliver and lease out.



| |  |  | Master lease.Master leases are short-term leases under which a customer
reserves the right to lease a certain number of containers, as needed under
a general agreement between the lessor and the lessee. Such leases provide
customers with greater flexibility by allowing customers to pick up and
drop off containers where and when needed, subject to restrictions and
availability, on pre-agreed terms. The commercial terms of master leases
are usually negotiated annually. Master leases also define the number of
containers that may be returned within each calendar month, the return
locations and applicable drop-off charges. Due to the increased
flexibility they offer, master leases usually command higher per-diem rates
and generate more ancillary fees (including pick-up, drop-off, handling and
off-hire fees) than term leases. Master lease agreements have a duration
of less than one year and include one-way, repositioning and round-trip
leases. Ocean carriers generally use one-way leases to manage trade
imbalances (where more containerized cargo moves in one direction than
another) by picking up a container in one port and dropping it off at
another location after one or more legs of a voyage.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Term lease.Term leases are for a fixed period of time and include both
long and short-term commitments, with most extending from three to five
years. Term lease agreements may contain early termination penalties that
apply in the event of early redelivery. In most cases, however, equipment
is not returned prior to the expiration of the lease. Term leases provide
greater revenue stability to the lessor, but at lower lease rates than
master leases. Ocean carriers use long-term leases when they have a need
for identified containers for a specified term. They differ from master
leases in that they define the number of containers to be leased and the
lease term.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

5



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##### 



The percentage of equipment on term leases as compared to master leases
varies widely among leasing companies, depending upon each companys strategy
or margins, operating costs and cash flows.

Lease rates depend on several factors including the type of lease, length
of term, maintenance provided, type and age of the equipment, location and
availability, and market conditions.

The terms and conditions of the Leasing Companys leases provide that
customers are responsible for paying all taxes and service charges arising from
container use, maintaining the containers in good and safe operating condition
while on lease and paying for repairs, excluding ordinary wear and tear, upon
redelivery. Some leases provide for a damage protection plan whereby
lessees, for an additional payment (which may be in the form of a higher
per-diem rate), are relieved of the responsibility of paying some of the repair
costs upon redelivery of the containers. The Leasing Company provides this
service to selected customers. Repairs provided under such plans are carried
out by the same depots, under the same procedures, as are repairs to containers
not covered by such plans. Customers also are required to insure leased
containers against physical damage and loss, and against third party liability
for loss, damage, bodily injury or death.

Customers

The Registrant is not dependent upon any particular sub-lessee or group of
sub-lessees of the Leasing Company. Only one sub-lessee of the Leasing Company
accounted for more than 10% of the Leasing Companys rental revenue earned on
behalf of the Registrant. This sub-lessee, MSC, generated approximately 13% or
$328,468 of the Leasing Companys rental revenue earned during 2002 on behalf
of the Registrant. MSC is a private company located in Switzerland and is
ranked as the second largest container liner operator in the world.
Substantially all of the customers of the Leasing Company are billed and pay in
United States dollars.

The Leasing Company sets maximum credit limits for the Registrants
customers, limiting the number of containers leased to each according to
established credit criteria. The Leasing Company continually tracks its credit
exposure to each customer. The Leasing Companys credit committee meets
quarterly to analyze the performance of the Registrants customers and to
recommend actions to be taken in order to minimize credit risks. The Leasing
Company uses specialist third party credit information services and reports
prepared by local staff to assess credit applications.

The Registrant may be subject to unexpected loss in rental revenue from
lessees of its containers that default under their container lease agreements
with the Leasing Company. The Registrant and Leasing Company maintain
insurance against loss or damage to the containers, loss of lease revenue in
certain cases and costs of container recovery and repair in the event that a
customer declares bankruptcy.

Fleet Profile

The Registrant acquired high-quality dry cargo containers manufactured to
specifications that exceed ISO standards and are designed to minimize repair
and operating costs.

Dry cargo containers are the most commonly used type of container in the
shipping industry. The Registrants dry cargo container fleet is constructed
of all Corten® steel (i.e., Corten® roofs, walls, doors and undercarriage), which
is a high-tensile steel yielding greater damage and corrosion resistance than
mild steel.

Refrigerated containers are used to transport temperature-sensitive
products, such as meat, fruit, vegetables and photographic film. All of the
Registrants refrigerated containers have high-grade stainless steel interiors.
The majority of the Registrants 20-foot refrigerated containers have
high-grade stainless steel walls, while most of the Registrants 40-foot
refrigerated containers are steel framed with aluminum outer walls to reduce
weight. As with the dry cargo containers, all refrigerated containers are
designed to minimize repair and maintenance and maximize damage resistance.

The Registrant purchased its dry containers from manufacturers in Korea
and Taiwan. The Registrants refrigerated containers were purchased mainly
from Korean manufacturers. The majority of its refrigeration units were
purchased from Carrier Transicold, one of the primary container refrigeration
unit suppliers in the United States.

6



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As of December 31, 2002, the Registrant owned 2,537 twenty-foot, 1,480
forty-foot, 83 forty-foot high-cube marine dry cargo containers and 86
twenty-foot and 28 forty-foot refrigerated cargo containers. The following
table sets forth the number of containers on lease, by container type and lease
type as of December 31, 2002:

|                                        |               |                |  |                     |       | 
|--------------------------------------- | ------------- | -------------- |  | ------------------- | ----- | 
|                                        |               |                |  | Number of          
|                                        |               |                |  | Containers on Lease
|                                        |               |                |  |                    
|20-Foot Dry Cargo Containers:           |               |                |  |                    
|                                        | Term Leases   |                |  | 1,502               |      
|                                        | Master Leases |                |  | 809                 |      
|                                        |               |                |  |                     |      
|                                        |               | Total on Lease |  |                     | 2,311 | 
|                                        |               |                |  |                     |      
|40-Foot Dry Cargo Containers:           |               |                |  |                    
|                                        | Term Leases   |                |  | 741                 |      
|                                        | Master Leases |                |  | 279                 |      
|                                        |               |                |  |                     |      
|                                        |               | Total on Lease |  |                     | 1,020 | 
|                                        |               |                |  |                     |      
|40-Foot High-Cube Dry Cargo Containers: |               |                |  |                    
|                                        | Term Leases   |                |  | 19                  |      
|                                        | Master Leases |                |  | 34                  |      
|                                        |               |                |  |                     |      
|                                        |               | Total on Lease |  |                     | 53    | 
|                                        |               |                |  |                     |      
|20-Foot Refrigerated Cargo Containers:  |               |                |  |                    
|                                        | Term Leases   |                |  | 21                  |      
|                                        | Master Leases |                |  | 25                  |      
|                                        |               |                |  |                     |      
|                                        |               | Total on Lease |  |                     | 46    | 
|                                        |               |                |  |                     |      
|40-Foot Refrigerated Cargo Containers:  |               |                |  |                    
|                                        | Term Leases   |                |  | 11                  |      
|                                        | Master Leases |                |  | 2                   |      
|                                        |               |                |  |                     |      
|                                        |               | Total on Lease |  |                     | 13    | 
|                                        |               |                |  |                     |      

The Leasing Company makes payments to the Registrant based upon rentals
collected from customers after deducting certain operating expenses associated
with the containers, such as the base management fee payable to the Leasing
Company, certain expense reimbursements payable to CCC and the Leasing Company,
the costs of maintenance and repairs not performed by lessees, independent
agent fees and expenses, depot expenses for handling, inspection and storage,
and additional insurance.

Repair and Maintenance

All containers are inspected and repaired when redelivered by customers,
who are obligated to pay for all damage repair, excluding wear and tear,
according to standardized industry guidelines. Some customers are relieved of
the responsibility of paying some repair costs upon redelivery of containers,
as described under Description of Business  Lease Profile. Depots in major
port areas perform repair and maintenance that is verified by either
independent surveyors or the Leasing Companys technical and operations staff.

Before any repair or refurbishment is authorized on older containers in
the Registrants fleet, the Leasing Companys technical and operations staff
reviews the age, condition and type of container, and its suitability for
continued leasing. The Leasing Company compares the cost of such repair or
refurbishment with the prevailing market resale price that might be obtained
for that container and makes the appropriate decision whether to repair or sell
the container. The Leasing Company is authorized to make this decision on
behalf of the Registrant and makes this decision by applying the same standards
to the Registrants containers as to its own containers.

7



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##### 



Disposition of Used Containers

The Leasing Company estimates that the period for which a container may be
used as a leased marine cargo container ranges from 12 to 15 years. On behalf
of the Registrant, the Leasing Company disposes of used containers in a
worldwide market in which buyers include wholesalers, mini-storage operations,
construction companies and others. Although a used refrigerated container will
command a higher price than a used dry cargo container, a dry cargo container
will achieve a higher percentage of its original price. The market for used
containers generally depends on new container prices, the quantity of
containers targeted for disposal and the overall lease market for containers at
a particular location. As the Registrants fleet ages, a larger proportion of
its revenue and cash flow may be derived from selling its containers.

Operations

The Registrants sales and marketing operations are conducted through the
Leasing Company in the United Kingdom, with support provided by area offices
and dedicated agents located in San Francisco; New Jersey; Antwerp; Genoa;
Gothenburg; Hamburg; Singapore; Hong Kong; Sydney; Tokyo; Taipei; Seoul; Rio de
Janeiro; Shanghai and Madras.

The Leasing Company also maintains agency relationships with approximately
20 independent agents around the world, who are generally paid a commission
based upon the amount of revenues generated in the region or the number of
containers that are leased from their area. The agents are located in
jurisdictions where the volume of the Leasing Companys business necessitates a
presence in the area but is not sufficient to justify a fully-functioning
Leasing Company office or dedicated agent. Agents provide marketing support to
the area offices covering the region, together with limited operational
support.

In addition, the Leasing Company relies on the services of approximately
300 independently-owned and operated depots around the world to inspect,
repair, maintain and store containers while off-hire. The Leasing Companys
area offices authorize all container movements into and out of the depot and
supervise all repairs and maintenance performed by the depot. The Leasing
Companys technical staff sets the standards for repair of its owned and
managed fleet throughout the world and monitors the quality of depot repair
work. The depots provide a vital link to the Leasing Companys operations, as
the redelivery of a container into a depot is the point at which the container
is off-hired from one customer and repaired in preparation for re-leasing to
the next customer.

The Leasing Companys global network is integrated with its computer
system and provides 24-hour communication between offices, agents and depots.
The system allows the Leasing Company to manage and control the Registrants
fleet on a global basis, providing it with the responsiveness and flexibility
necessary to service the master lease market effectively. This system is an
integral part of the Leasing Companys service, as it processes information
received from the various offices, generates billings to the Leasing Companys
lessees and produces a wide range of reports on all aspects of the Leasing
Companys leasing activities. The system records the life history of each
container, including the length of time on and off lease and repair costs, as
well as port activity trends, leasing activity and equipment data per customer.
The operations and marketing data is fully interfaced with the finance and
accounting system to provide revenue, cost and asset information to management
and staff around the world.

Insurance

The Leasing Companys lease agreements typically require lessees to obtain
insurance to cover all risks of physical damage and loss of the equipment under
lease, as well as public liability and property damage insurance. However, the
precise nature and amount of the insurance carried by each ocean carrier varies
from lessee to lessee. In addition, the Registrant has purchased secondary
insurance effective in the event that a lessee fails to have adequate primary
coverage. This insurance covers liability arising out of bodily injury and/or
property damage as a result of the ownership and operation of the containers,
as well as insurance against loss or damage to the containers, loss of lease
revenue in certain cases and cost of container recovery and repair in the event
that a customer goes into bankruptcy. The Registrant believes that the nature
and the amounts of its insurance are customary in the container leasing
industry and subject to standard industry deductions and exclusions.

(c)(1)(ii)       Inapplicable.

(c)(1)(iii)      Inapplicable.

(c)(1)(iv)      Inapplicable.

8



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(c)(1)(v)      The Registrants containers are leased globally; therefore,

seasonal fluctuations are minimal. Other economic and business factors to
which the transportation industry in general and the container leasing industry
in particular are subject, include fluctuations in supply and demand for
equipment resulting from, among other things, obsolescence, changes in the
methods or economics of a particular mode of transportation or changes in
governmental regulations or safety standards.

(c)(1)(vi)      The Registrant established an initial working capital reserve
of approximately 1% of subscription proceeds raised. In addition, the
Registrant may reserve additional amounts from anticipated cash distributions
to the partners to meet working capital requirements.

Amounts due under master leases are calculated at the end of each month
and billed approximately six to eight days thereafter. Amounts due under
short-term and long-term leases are set forth in the respective lease
agreements and are generally payable monthly. However, payment is normally
received within 45-100 days of billing. Past due penalties are not customarily
collected from lessees and, accordingly, are not generally levied by the
Leasing Company against lessees of the Registrants containers.

(c)(1)(vii)      For the year ended December 31, 2002, one sub-lessee of the
Leasing Company, MSC, accounted for approximately 13% or $328,468 of the
Leasing Companys rental revenue earned on behalf of the Registrant. The
Registrant does not believe that its ongoing business is dependent upon a
single customer, although the loss of one or more of its largest customers
could have an adverse effect upon its business.

(c)(1)(viii)   Inapplicable.

(c)(1)(ix)     Inapplicable.

(c)(1)(x)      Competition among container leasing companies is based upon
several factors, including the location and availability of inventory, lease
rates, the type, quality and condition of the containers, the quality and
flexibility of the service offered and the professional relationship between
the customer and the lessor. Other factors include the speed with which a
leasing company can prepare its containers for lease and the ease with which a
lessee believes it can do business with a lessor or its local area office. Not
all container leasing companies compete in the same market, as some supply only
dry cargo containers and not specialized containers. In addition to dry cargo
containers, refrigerated containers and tanks, the Leasing Company supplies a
wide range of dry freight special containers.

The Leasing Company, on behalf of the Registrant, competes with various
container leasing companies in the markets in which it conducts business.
Mergers and acquisitions have been a feature of the container leasing industry
for over a decade and the leasing market is essentially comprised of three
distinct groups: the very large (in TEU terms) companies, GE SeaCo, Textainer
Group, Transamerica Leasing, Triton Container International Ltd. and Interpool
Inc., who between them, with fleets of around 1 million TEU each in mid-2002,
control approximately two thirds of the total leased fleet; a middle tier of
companies possessing fleets in the 200,000 to 500,000 TEU range; and the
smaller more specialized fleet operators. In recent years, several major
leasing companies, as well as numerous smaller ones, have been acquired by
competitors. The Leasing Company believes that the current trend toward
consolidation in the container leasing industry will continue, up to a point.
There appears to be an upper limit to the size of the optimum fleet, beyond
which dis-economies of scale and/or barriers against further market share
development become apparent. Furthermore, ocean carriers have a tendency to
support a number of lessors simultaneously in order to maximize competition and
increase the number of available locations for redelivery of containers.
Economies of scale, worldwide operations, diversity, size of fleet and
financial strength are increasingly important to the successful operation of a
container leasing business. Additionally, as containerization continues to
grow, and as regions such as China, South America and the Indian sub-continent
generate an increasing volume of containerized cargo, customers may demand more
flexibility from leasing companies regarding per-diem rates, pick-up and
drop-off locations, and the availability of containers.

In recent years, the Leasing Company and other lessors have developed
certain internet-based applications. For the Leasing Company, these
applications allow customers access to make on-line product inquiries. The
Leasing Company is continuing to develop this side of its business and will
introduce other internet options as suitable applications are identified.

Some of the Leasing Companys competitors have greater financial resources
than the Leasing Company and may be more capable of offering lower per diem
rates on a larger fleet. In the Leasing Companys experience, however, ocean
carriers will generally lease containers from more than one leasing company in
order to minimize dependence on a single supplier. Furthermore, by having as
many suppliers as possible, the carrier is able to maximize the number of
off-hires

9



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##### 



and off-hire locations available, as typically each supplier may limit the
number of containers that can be off-hired by location. The advantage to the
carrier is that this prevents the carrier from being burdened with an excess
number of off-hired containers, which incur both storage and per diem charges,
in a low demand market.

(c)(1)(xi)      Inapplicable.

(c)(1)(xii)     Environmental Matters

Countries that are signatories to the Montreal Protocol on the environment
agreed in November 1992 to restrict the use of environmentally destructive
refrigerants, banning production (but not use) of refrigerant gases that are
chlorofluorocarbon compounds (CFCs) beginning in January 1996. CFCs are used
in the operation, insulation and manufacture of refrigerated containers. The
environmental impact of CFCs has become increasingly prominent. On January 1,
2001, it became illegal for environmentally-destructive refrigerants to be
handled, other than for disposal, in most member countries of the European
Union. In the second quarter of 2001, the Leasing Company conducted a review
of the Registrants refrigerated container equipment, which resulted in the
recording of impairment charges on those containers using a CFC refrigerant,
affecting both containers on and off-hire. The Leasing Company has implemented
a disposal program for the Registrants impaired, refrigerated containers.
This program has targeted the off-hire containers for immediate disposal.
Those that are currently on lease will be disposed of when redelivered and
off-hired by the lessee. These impaired, refrigerated containers may command
lower prices in the used container market.

In the past, the Leasing Company has retrofitted certain refrigerated
containers with non-CFC refrigerants. The Leasing Company has decided not to
retrofit any containers owned by the Registrant. In the unlikely event that
retrofitting expenses should be required, the Registrant believes they would
not be material to its results of operations.

(c)(1)(xiii)      The Registrant, as a limited partnership, is managed by CCC,
the general partner, and accordingly does not itself have any employees. At
February 28, 2003, CCC had 11 employees, consisting of 3 officers, 5 other
managers and 3 clerical and staff personnel.



|(d) | Financial Information About Geographic Areas
|--- | --------------------------------------------

The Registrants business is not divided between foreign or domestic
operations. The Registrants business is the leasing of containers worldwide
to ocean carriers. To this extent, the Registrants operations are subject to
the fluctuations of world economic and political conditions. Such factors may
affect the pattern and levels of world trade.

The Registrant believes that the profitability of, and risks associated
with, leases to foreign customers is generally the same as those of leases to
domestic customers. The Leasing Companys leases generally require all
payments to be made in United States currency.

10



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##### 



Item 2.      Properties

As of December 31, 2002, the Registrant owned 2,537 twenty-foot, 1,480
forty-foot and 83 forty-foot high-cube marine dry cargo containers, as well as

86 twenty-foot and 28 forty-foot refrigerated containers suitable for
transporting cargo by rail, sea or highway. The average age, manufacturers
invoice cost and estimated useful life of the Registrants containers as of
December 31, 2002 were as follows:

|                                       |  |             |  |             |  |              |        |  |  |  |  | 
|-------------------------------------- |  | ----------- |  | ----------- |  | ------------ | ------ |  |  |  |  | 
|                                       |  | Estimated   |  |             |  |              |        |  |  | 
|                                       |  | Useful Life |  | Average Age |  | Average Cost
|                                       |  |             |  |             |  |             
|20-Foot Dry Cargo Containers           |  | 12-15 years |  | 11 Years    |  | $            | 2,757  | 
|40-Foot Dry Cargo Containers           |  | 12-15 years |  | 11 Years    |  | $            | 4,558  | 
|40-Foot High-Cube Dry Cargo Containers |  | 12-15 years |  | 12 Years    |  | $            | 4,991  | 
|20-Foot Refrigerated Cargo Containers  |  | 12-15 years |  | 12 Years    |  | $            | 17,196 | 
|40-Foot Refrigerated Cargo Containers  |  | 12-15 years |  | 12 Years    |  | $            | 19,152 | 

Utilization by lessees of the Registrants containers fluctuates over time
depending on the supply of and demand for containers in the Registrants
inventory locations. During 2002, utilization of the Registrants containers
averaged 76% and 45% respectively, for the Registrants dry cargo and
refrigerated container fleet.

During 2002, the Registrant disposed of 1,096 twenty-foot, 563 forty-foot
and 51 forty-foot high-cube marine dry cargo containers, as well as 10
twenty-foot and 14 forty-foot refrigerated cargo containers at an average book
loss of $535 per container.

Previously, the Registrant embarked on a refrigerated reshell program,
whereby certain forty-foot refrigerated cargo containers considered to be no
longer suitable for leasing were converted to twenty-foot refrigerated
containers. The reshelling involved the removal of the existing machinery from
the forty-foot refrigerated containers and reassembling the machinery with new
twenty-foot refrigerated container shells. The reshell program expired at the
end of 2000.

Item 3.      Legal Proceedings

None

Item 4.      Submission of Matters to a Vote of Security Holders

Inapplicable.

11



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##### 



PART II

Item 5.      Market for Registrants Common Equity and Related Stockholder Matters

(a)       Market Information

|                                                                                                                                                                                     |  |                                        |  |                        
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | -------------------------------------- |  | -----------------------
|(a)(1)(i)    The Registrants outstanding units of limited partnership
interests are not traded on any market nor does an established public trading
market exist for such purposes.
|                                                                                                                                                                                     |  |                                        |  |                        
|(a)(1)(ii)                                                                                                                                                                           |  | Inapplicable.                          |  |                        
|                                                                                                                                                                                     |  |                                        |  |                        
|(a)(1)(iii)                                                                                                                                                                          |  | Inapplicable.                          |  |                        
|                                                                                                                                                                                     |  |                                        |  |                        
|(a)(1)(iv)                                                                                                                                                                           |  | Inapplicable.                          |  |                        
|                                                                                                                                                                                     |  |                                        |  |                        
|(a)(1)(v)                                                                                                                                                                            |  | Inapplicable.                          |  |                        
|                                                                                                                                                                                     |  |                                        |  |                        
|(a)(2)                                                                                                                                                                               |  | Inapplicable.                          |  |                        
|                                                                                                                                                                                     |  |                                        |  |                        
|(b)                                                                                                                                                                                  |  | Holders                                |  |                        
|                                                                                                                                                                                     |  |                                        |  |                        
|                                                                                                                                                                                     |  |                                        |  | Number of Unit Holders 
|(b)(1)                                                                                                                                                                               |  | Title of Class                         |  | as of December 31, 2002
|                                                                                                                                                                                     |  |                                        |  |                        
|                                                                                                                                                                                     |  | Units of limited partnership
interests |  | 3,232                  

(c)      Dividends

Inapplicable. For the distributions made by the Registrant to its limited partners, see Item 6, Selected Financial Data.

12



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Item 6.      Selected Financial Data

|                                                            |  |                         |            |      |  |      |            |      |  |      |            |   |  |   |            |   |  |   |            | 
|----------------------------------------------------------- |  | ----------------------- | ---------- | ---- |  | ---- | ---------- | ---- |  | ---- | ---------- | - |  | - | ---------- | - |  | - | ---------- | 
|                                                            |  | Year Ended December 31,
|                                                            |  |                        
|                                                            |  | 2002                    |            | 2001 |  | 2000 |            | 1999 |  | 1998
|                                                            |  |                         |            |      |  |      |            |      |  |     
|Net lease revenue                                           |  | $                       | 849,782    |      |  | $    | 1,627,441  |      |  | $    | 2,459,974  |   |  | $ | 2,105,544  |   |  | $ | 2,860,286  | 
|Net (loss) income                                           |  | $                       | (1,300,584 | )    |  | $    | (1,312,231 | )    |  | $    | (169,883   | ) |  | $ | (133,300   | ) |  | $ | 655,187    | 
|Net (loss) income per unit of
limited partnership interest  |  | $                       | (0.64      | )    |  | $    | (0.69      | )    |  | $    | (0.13      | ) |  | $ | (0.12      | ) |  | $ | 0.26       | 
|Cash distributions per unit of
limited partnership interest |  | $                       | 1.24       |      |  | $    | 1.78       |      |  | $    | 1.72       |   |  | $ | 1.43       |   |  | $ | 1.50       | 
|At year-end:                                                |  |                         |            |      |  |      |            |      |  |      |            |   |  |   |            |   |  |   |            | 
|Total assets                                                |  | $                       | 6,381,139  |      |  | $    | 10,225,430 |      |  | $    | 15,211,956 |   |  | $ | 19,013,837 |   |  | $ | 22,149,507 | 
|Partners capital                                           |  | $                       | 6,381,139  |      |  | $    | 10,225,430 |      |  | $    | 15,211,956 |   |  | $ | 18,938,837 |   |  | $ | 22,074,507 | 



---

Item 7.      Managements Discussion and Analysis of Financial Condition and Results of Operations

Liquidity and Capital Resources

During the Registrants first 10 years of operations, the Registrant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 Registrant 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
Registrants 11th year of operations, the Registrant 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. During this period, the
Registrant began to actively dispose of its fleet, with cash proceeds from
equipment disposals, in addition to cash from operations, providing the cash
flow for distributions to the limited partners. The decision to dispose of
containers is influenced by various factors including age, condition,
suitability for continued leasing as well as the geographical location when
disposed.

Cash distributions from operations are allocated 5% to the general partner
and 95% to the limited partners. Distributions of sales proceeds are allocated
1% to the general partner 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 the
general partner and 85% to the limited partners, pursuant to section 6.1(b) of
the Registrants Partnership Agreement. Cash distributions from operations to
the general partner in excess of 5% of distributable cash will be considered an
incentive fee and compensation to the general partner.

From inception through February 28, 2003, the Registrant has distributed
$36,472,863 in cash from operations and $5,149,512 in cash from container sales
proceeds to its limited partners. This represents total distributions of
$41,622,375 or approximately 104% of the limited partners original invested
capital. 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
the general partner. Sales proceeds distributed to its partners may fluctuate
in subsequent periods, reflecting the level of container disposals.

At December 31, 2002, the Registrant had $824,212 in cash and cash
equivalents, a decrease of $380,873 and $806,579, respectively, from the cash
balances at December 31, 2001 and December 31, 2000. The Registrant 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.

13



---



##### 



Cash from Operating Activities:Net cash provided by operating activities
was $851,020 and $1,724,170 during 2002 and 2001, respectively, primarily
generated from the billing and collection of net lease revenue.

Cash from Investing Activities:Net cash provided by investing activities
was $1,311,814 and $1,524,419 in 2002 and 2001, respectively. These amounts
represent sales proceeds generated from the sale of container equipment.

Cash from Financing Activities:Net cash used in financing activities was
$2,543,707 during 2002 compared to $3,674,295 during 2001. These amounts
represent distributions to the Registrants general and limited partners. The
Registrants continuing container disposals, as well as current market
conditions, may produce lower operating results and, consequently, lower
distributions to its partners in subsequent periods.

Results of Operations

Year Ended December 31, 2002 Compared to the Year Ended December 31, 2001

A Leasing Agent Agreement (Agreement) exists between the Registrant and
the Leasing Company, whereby the Leasing Company has the responsibility to
manage the leasing operations of all equipment owned by the Registrant.
Pursuant to the Agreement, the Leasing Company is responsible for leasing,
managing and re-leasing the Registrant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 Registrant, 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. At December 31, 2002, 42% of the
original equipment remained in the Registrants fleet, as compared to 59% at
December 31, 2001. The following chart summarizes the composition of the
Registrants fleet (based on container type) at December 31, 2002.

|                      |                        |          |       |            |       |              |       |           |       |         |    |         |    |  |    |    |    |  |    |    |    | 
|--------------------- | ---------------------- | -------- | ----- | ---------- | ----- | ------------ | ----- | --------- | ----- | ------- | -- | ------- | -- |  | -- | -- | -- |  | -- | -- | -- | 
|                      |                        |          |       | Dry Cargo  |       | Refrigerated
|                      |                        |          |       | Containers |       | Containers  
|                      |                        |          |       |            |       |             
|                      |                        |          |       |            |       |              |       |           |       |         |    | 40-Foot |    |  |    |    |    |  |    |   
|                      |                        |          |       | 20-Foot    |       | 40-Foot      |       | High-Cube |       | 20-Foot |    | 40-Foot
|                      |                        |          |       |            |       |              |       |           |       |         |    |        
|Containers on lease:  |                        |          |       |            |       |              |       |           |       |         |    |         |    |  |    |    |    |  |    |   
|                      | Master lease           |          |       | 809        |       |              |       | 279       |       |         |    | 34      |    |  |    | 25 |    |  |    | 2  |   
|                      | Term lease (1-5 years) |          |       | 1,502      |       |              |       | 741       |       |         |    | 19      |    |  |    | 21 |    |  |    | 11 |   
|                      |                        |          |       |            |       |              |       |           |       |         |    |         |    |  |    |    |    |  |    |    |   
|                      |                        | Subtotal |       |            | 2,311 |              |       |           | 1,020 |         |    |         | 53 |  |    |    | 46 |  |    |    | 13 | 
|Containers off lease  |                        |          | 226   |            |       |              | 460   |           |       |         | 30 |         |    |  | 40 |    |    |  | 15 |   
|                      |                        |          |       |            |       |              |       |           |       |         |    |         |    |  |    |    |    |  |    |    |   
|Total container fleet |                        |          | 2,537 |            |       |              | 1,480 |           |       |         | 83 |         |    |  | 86 |    |    |  | 28 |   
|                      |                        |          |       |            |       |              |       |           |       |         |    |         |    |  |    |    |    |  |    |    |   

|                                     |                |  |            |       |              |  |           |    |         |  |         |       |   |  |       |    |   |  |         |     |   |  |     |    |   |  |     |    |  |  |     |    |   |  |    |    |  |  |     |    |  
|------------------------------------ | -------------- |  | ---------- | ----- | ------------ |  | --------- | -- | ------- |  | ------- | ----- | - |  | ----- | -- | - |  | ------- | --- | - |  | --- | -- | - |  | --- | -- |  |  | --- | -- | - |  | -- | -- |  |  | --- | -- | -
|                                     |                |  | 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 |  |            | 3,874 |              |  |           | 60 | %       |  |         | 1,862 |   |  |       | 56 | % |  |         | 117 |   |  |     | 59 | % |  |     | 17 |  |  |     | 17 | % |  |    | 22 |  |  |     | 44 | %
|                                     |                |  |            |       |              |  |           |    |         |  |         |       |   |  |       |    |   |  |         |     |   |  |     |    |   |  |     |    |  |  |     |    |   |  |    |    |  |  |     |   
|Remaining fleet at December 31, 2002 |                |  | 2,537      |       |              |  | 40        | %  |         |  | 1,480   |       |   |  | 44    | %  |   |  | 83      |     |   |  | 41  | %  |   |  | 86  |    |  |  | 83  | %  |   |  | 28 |    |  |  | 56  | % 
|                                     |                |  |            |       |              |  |           |    |         |  |         |       |   |  |       |    |   |  |         |     |   |  |     |    |   |  |     |    |  |  |     |    |   |  |    |    |  |  |     |   

Improved market conditions for all container types and the implementation
of several Leasing Company marketing initiatives during 2002 resulted in a 53%
reduction in the Registrants off-hire container inventories. Utilization
increased from 72% at the beginning of the year to 80% at December 31, 2002.

Over the past two years, the slowdown and uneven recovery in the global
economy has led to reduced levels of capital available for new container
investment. The lower levels of new container production during 2001 and the
first half of 2002 addressed, to some extent, the problems of container
over-supply created by the higher levels of new container production achieved
during 1999 and 2000. As a result, demand increased for the existing container
fleets of leasing companies and shipping lines, including the Registrants
containers. During 2002, the surge in demand for existing containers
contributed to reducing off-hire inventories primarily in Asia, and to a lesser
extent Europe and North America. In many parts of Asia and particularly in the
south eastern ports, the demand for cargo containers exceeded available
supplies. To exploit such opportunities, the Leasing Company repositioned
off-hire equipment to locations of greatest demand and pursued leasing
opportunities through its global network of marketing resources.

14



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##### 



The Registrants average fleet size and utilization rates for the years
ended December 31, 2002, 2001 and 2000 were as follows:

|                                                            |                         |  |      |       |      |  |      |       |   |  |  |        |  
|----------------------------------------------------------- | ----------------------- |  | ---- | ----- | ---- |  | ---- | ----- | - |  |  | ------ | -
|                                                            |                         |  | 2002 |       | 2001 |  | 2000
|                                                            |                         |  |      |       |      |  |     
|Fleet size (measured in
twenty-foot equivalent units (TEU)) |                         |  |      |       |      |  |      |       |   |  |  |       
|                                                            | Dry cargo containers    |  |      | 6,724 |      |  |      | 9,021 |   |  |  | 11,244 |  
|                                                            | Refrigerated containers |  |      | 161   |      |  |      | 193   |   |  |  | 197    |  
|Average utilization rates                                   |                         |  |      |       |      |  |      |       |   |  |  |       
|                                                            | Dry cargo containers    |  |      | 76    | %    |  |      | 75    | % |  |  | 79     | %
|                                                            | Refrigerated containers |  |      | 45    | %    |  |      | 56    | % |  |  | 61     | %

Since December 2001, the combined per diem rate for the Registrants fleet
of dry cargo containers declined by approximately 22%. Most of this decline
occurred in the first three months of 2002 and is attributable to three main
factors:



| | 1. |  | Per diem rental rates decreased in correlation with the reduction of
new container prices and interest rate levels;                                                                                                
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | The Leasing Company converted lease agreements with certain shipping
lines from master to long-term lease, providing greater revenue
stability but at lower lease rates than those earned under master
leases; and,
|
| | 3. |  | The Leasing Company initiated new long term leases for older
equipment resulting in lower per diem rates, while significantly
reducing off-hire container inventory levels.                                        

An improvement in lease per-diem rates is not expected until new container
prices increase to much higher levels. The effect of the reduction in per diem
rates, combined with the decline in the Registrants fleet size, contributed
to a reduction in gross rental revenue (a component of net lease revenue), but
also contributed to significantly lower direct operating expenses due to the
reduction in storage and other inventory related costs.

The demand for cargo containers has continued into early 2003. However,
wide-ranging concerns remain about waning consumer confidence within the
worlds economies, a rise in oil prices, weak global stock markets,
geopolitical concerns arising from uncertainties with Iraq and North Korea, as
well as an increase in new container production, which may temper the current
demand for leased containers.

Despite recent improvements in container leasing market conditions, the
effect of the sporadic global economic recovery on the container leasing
industrys customers, the shipping lines, coupled with their acquisition of
new, larger container ships, has created a condition of excess shipping
capacity. The uncertainty over the financial strength of the shipping industry
appears to favor the larger more established shipping lines. The Registrant,
CCC and the Leasing Company continue to remain cautious, as some shipping lines
have reported operating losses during 2002. The financial impact of such
losses on these shipping lines may eventually influence the demand for leased
containers as some shipping lines may experience additional financial
difficulties, consolidate or become insolvent. Although the ultimate outcome,
as well as its impact on the container leasing industry and the Registrants
results of operations, is unknown, CCC, on behalf of the Registrant, will work
closely with the Leasing Company to monitor outstanding receivables,
collections, and credit exposure to various existing and new customers.

The primary component of the Registrant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 rental
revenues billed by the Leasing Company from the leasing of the Registrants
containers. Net lease revenue is directly related to the size, utilization and
per-diem rental rates of the Registrants fleet.

Net lease revenuewas $849,782 for the year ended December 31, 2002
compared to $1,627,441 for the prior year. The decrease was due to a
$1,050,953 decline in gross rental revenue (a component of net lease revenue)
from the year December 31, 2001. Gross rental revenue was impacted by the
Registrants smaller fleet size and lower per-diem rental rates. Other
components of net lease revenue, including rental equipment operating expenses,
management fees, and reimbursed administrative expenses, were lower by a
combined $273,294 when compared to 2001, and partially offset the decline in
gross lease revenue. Contributing to the decline in direct operating expenses
were declines in repair and maintenance, repositioning, handling and storage
costs.

Depreciation expenseof $1,144,103 in 2002 was $366,881 lower than in 2001
due to a declining fleet size. Effective June 1, 2001, the Registrant changed
the estimated life of its rental container equipment from an estimated 12 year
life to a

15



---



##### 



15 year life, and its estimated salvage value from 30% to 10% of original
equipment cost. The effect of these changes was an increase in depreciation
expense of approximately $26,500 during 2002.

Other general and administrative expenseswere $91,301 in 2002, a decrease
of $30,400 or 25% when compared to 2001. Contributing to this decrease were
declines in professional fees, costs related to investor communications and net
exchange rate losses.

Net loss on disposal of equipmentwas a result of the Registrants
disposal of 1,734 containers in 2002, as compared to 1,616 containers during
2001. These disposals resulted in a net loss of $927,487 for 2002, compared to
a net loss of $934,924 for 2001. The Registrant believes that the net loss on
container disposals in 2002 was a result of various factors, including 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 decision to repair or dispose of a container when it is returned
by a lessee, as well as the amount of sales proceeds received and the related
gain or loss on container disposals. The level of the Registrants container
disposals in subsequent periods will also contribute to fluctuations in the net
gain or loss on disposals.

Impairment chargeswere incurred by the Registrant relating to
refrigerated container equipment with R12 refrigerant gas (the R12
Containers). In the second quarter of 2001, the Leasing Company undertook a
review of the Registrants refrigerated container equipment. Due to the
environmental impact of the R12 refrigerant gas and other R12 Container
marketing considerations, the Leasing Company concluded that effective July 1,
2001, off-hire inventories of the Registrants R12 Containers would be targeted
for immediate sale. The Leasing Company also conducted a review of the
Registrants R12 Containers that were on lease at June 30, 2001.



| | Assets to be disposed of:In June 2001, the Leasing Company committed to a
plan to dispose of 31 R12 Containers with a carrying value of $271,506. It
was concluded that the carrying value of these R12 Containers exceeded fair
value and accordingly, an impairment charge of $193,256 was recorded to
operations under impairment losses. Fair value was determined by discounting
future expected cash flows. At December 31, 2002, 20 of the original 31 R12
refrigerated containers have been disposed. Although the remaining 31 R12
refrigerated containers were originally classified as held for sale after
their impairment in June 2001, the Registrant has reclassified these
containers as held and used as of December 31, 2002, with eight R12
refrigerated containers on-hire under term and master leases, two R12
refrigerated containers off-hire and available for lease, and one R12
refrigerated container off-hire and available for disposal. Included in the
net loss on the disposal of equipment for the years 2002 and 2001 are gains
of $14,754 and $2,124 on the sale of 12 and eight refrigerated containers,
respectively, that were targeted for sale as of June 30, 2001.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | Assets to be held and used:The Leasing Company conducted a review of 52 R12
Containers with a carrying value of $443,136 that were on lease at June 30,
2001. It was concluded that the carrying value of these R12 Containers
exceeded the future cash flows expected to result from the use of these
containers and their eventual disposition, and therefore was not recoverable.
Accordingly, a charge of $225,394 was recorded to operations under
impairment losses. Fair value was determined by discounting future expected
cash flows.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

Year Ended December 31, 2001 Compared to the Year Ended December 31, 2000

Net lease revenuewas $1,627,441 for the year 2001 compared to $2,459,974
for the prior year. The decrease was due to a $1,164,972 decline in gross
rental revenue (a component of net lease revenue) from the year 2000. Gross
rental revenue was impacted by the Registrants smaller fleet size, lower
per-diem rental rates and lower combined 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 $332,439 when compared to the year 2000, and partially offset the
decline in gross lease revenue. Contributing to the decline in direct
operating expenses were declines in repair and maintenance, handling and
storage costs, as well as the provision for doubtful accounts.

Depreciation expenseof $1,510,184 in 2001 was $330,246 lower than 2000
due to a declining fleet size. Effective June 1, 2001, the Registrant changed
the estimated life of its rental container equipment from an estimated 12 year
life to a 15 year life, and its estimated salvage value from 30% to 10% of
original equipment cost. The effect of these changes was an increase in
depreciation expense of approximately $39,000 in the year 2001.

Other general and administrative expensesincreased to $121,701 in 2001,
from $88,576 in 2000, representing an increase of $33,125 or 37%. Contributing
to this increase were professional fees and costs related to investor
communications and net exchange rate losses.

16



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##### 



Net loss on disposal of equipmentwas a result of the Registrant disposing
of 1,616 containers during 2001, as compared to 1,487 containers during 2000.
These disposals resulted in a net loss of $934,924 for 2001 as compared to a
net loss of $764,906 for 2000. The Registrant believes that the net loss on
container disposals in 2001 was a result of various factors including the age,
condition, suitability for continued leasing, as well as the geographic
location of the containers when disposed.

Critical Accounting Policies

Container equipment  depreciable lives: Container rental equipment is
depreciated over a useful life of 15 years to a residual value of 10%. The
Registrant re-evaluates 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 Registrant reviews 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 Registrant considers 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
projected discounted cash flows from related operations. The Registrant
periodically evaluates 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, reserves for the impairment of the container
rental equipment carrying values may be necessary based upon changes in market
and economic conditions.

New Accounting Pronouncements

In June 2002, the Financial Accounting Standards Board issued SFAS No.
146, (SFAS 146), Accounting for Costs Associated with Exit or Disposal
Activities, which addresses accounting for restructuring and similar costs.
The Registrant does not consider the provisions of SFAS 146 to have any effect
on its financial position or results of operations.

Inflation

The Registrant believes inflation has not had a material adverse effect on the
results of its operations.

Item 7A.      Quantitative and Qualitative Disclosures About Market Risk

Exchange rate risk:Substantially all of the Registrants revenues are
billed and paid in US dollars, and a significant portion of costs are billed
and paid in US dollars. The Leasing Company believes that the proportion of US
dollar revenues may decrease in future years, reflecting a more diversified
customer base and lease portfolio. Of the remaining costs, the majority are
individually small, unpredictable and incurred in various denominations and
thus are not suitable for cost effective hedging.

The Leasing Company may hedge a portion of the expenses that are
predictable and are principally in UK pounds sterling. As exchange rates are
outside of the control of the Registrant and Leasing Company, there can be no
assurance that such fluctuations will not adversely affect its results of
operations and financial condition.

Item 8.      Financial Statements and Supplementary Data

17



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##### 



INDEPENDENT AUDITORS REPORT

The Partners
IEA Income Fund XI, L.P.

We have audited the accompanying balance sheets of IEA Income Fund XI, L.P.
(the Partnership) as of December 31, 2002 and 2001, and the related
statements of operations, partners capital, and cash flows for each of the
three years in the period ended December 31, 2002. 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 auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Partnership at December 31, 2002 and
2001, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2002, in conformity with
accounting principles generally accepted in the United States of America.

/s/ Deloitte & Touche LLP

San Francisco, California
February 14, 2003

18



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##### 



IEA INCOME FUND XI, L.P.

Balance Sheets

December 31, 2002 and 2001

|                                    |                                                                                                                   |                                         |                         |                   |           |           |            |            |           |            |  | 
|----------------------------------- | ----------------------------------------------------------------------------------------------------------------- | --------------------------------------- | ----------------------- | ----------------- | --------- | --------- | ---------- | ---------- | --------- | ---------- |  | 
|                                    |                                                                                                                   |                                         |                         |                   |           | 2002      |            | 2001      
|                                    |                                                                                                                   |                                         |                         |                   |           |           |            |           
|                                    |                                                                                                                   |                                         |                         | Assets            |           |           |            |            |           |            |  | 
|Current assets:                     |                                                                                                                   |                                         |                         |                   |           |           |            |           
|                                    | Cash and cash equivalents, includes $710,625 in 2002
and $1,191,050 in 2001 in interest-bearing accounts (note 3) |                                         | $                       | 824,212           |           |           | $          | 1,205,085  |          
|                                    | Net lease receivables due from Leasing Company
(notes 1 and 4)                                                    |                                         |                         | 83,131            |           |           |            | 153,719    |          
|                                    |                                                                                                                   |                                         |                         |                   |           |           |            |            |          
|                                    |                                                                                                                   |                                         | Total current assets    |                   |           | 907,343   |            |            |           | 1,358,804  | 
|                                    |                                                                                                                   |                                         |                         |                   |           |           |            |            |          
|Container rental equipment, at cost |                                                                                                                   |                                         | 16,001,043              |                   |           |           | 22,142,480 |           
|                                    | Less accumulated depreciation                                                                                     |                                         |                         | 10,527,247        |           |           |            | 13,275,854 |          
|                                    |                                                                                                                   |                                         |                         |                   |           |           |            |            |          
|                                    |                                                                                                                   | Net container rental equipment (note 1) |                         |                   | 5,473,796 |           |            |            | 8,866,626 |           
|                                    |                                                                                                                   |                                         |                         |                   |           |           |            |            |          
|                                    |                                                                                                                   |                                         | Total assets            |                   | $         | 6,381,139 |            |            | $         | 10,225,430 | 
|                                    |                                                                                                                   |                                         |                         |                   |           |           |            |            |          
|                                    |                                                                                                                   |                                         |                         | Partners Capital |           |           |            |            |           |            |  | 
|Partners capital (deficit):        |                                                                                                                   |                                         |                         |                   |           |           |            |           
|                                    | General partner                                                                                                   |                                         | $                       | (249,863          | )         |           | $          | (167,917   | )        
|                                    | Limited partners (note 8)                                                                                         |                                         |                         | 6,631,002         |           |           |            | 10,393,347 |          
|                                    |                                                                                                                   |                                         |                         |                   |           |           |            |            |          
|                                    |                                                                                                                   |                                         | Total partners capital |                   | $         | 6,381,139 |            |            | $         | 10,225,430 | 
|                                    |                                                                                                                   |                                         |                         |                   |           |           |            |            |          

The accompanying notes are an integral part of these financial statements.

19



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##### 



IEA INCOME FUND XI, L.P.

Statements of Operations

For the years ended December 31, 2002, 2001 and 2000

|                                             |                                           |                      |            |            |            |      |            |            |            |   |           |           |          |  
|-------------------------------------------- | ----------------------------------------- | -------------------- | ---------- | ---------- | ---------- | ---- | ---------- | ---------- | ---------- | - | --------- | --------- | -------- | -
|                                             |                                           |                      |            | 2002       |            | 2001 |            | 2000      
|                                             |                                           |                      |            |            |            |      |            |           
|Net lease revenue (notes 1 and 6)            |                                           | $                    | 849,782    |            |            | $    | 1,627,441  |            |            | $ | 2,459,974 |          
|Other operating expenses:                    |                                           |                      |            |            |            |      |            |            |            |   |           |          
|                                             | Depreciation (note 1)                     |                      |            | 1,144,103  |            |      |            | 1,510,984  |            |   |           | 1,841,230 |         
|                                             | Other general and administrative expenses |                      |            | 91,301     |            |      |            | 121,701    |            |   |           | 88,576    |         
|                                             | Net loss on disposal of equipment         |                      |            | 927,487    |            |      |            | 934,924    |            |   |           | 764,906   |         
|                                             | Impairment losses                         |                      |            |           |            |      |            | 418,650    |            |   |           |          |         
|                                             |                                           |                      |            |            |            |      |            |            |            |   |           |          
|                                             |                                           |                      | 2,162,891  |            |            |      | 2,986,259  |            |            |   | 2,694,712 |          
|                                             |                                           |                      |            |            |            |      |            |            |            |   |           |          
|                                             |                                           | Loss from operations |            |            | (1,313,109 | )    |            |            | (1,358,818 | ) |           |           | (234,738 | )
|Other income:                                |                                           |                      |            |            |            |      |            |            |            |   |           |          
|                                             | Interest income                           |                      |            | 12,525     |            |      |            | 46,587     |            |   |           | 64,855    |         
|                                             |                                           |                      |            |            |            |      |            |            |            |   |           |          
|                                             |                                           | Net loss             |            | $          | (1,300,584 | )    |            | $          | (1,312,231 | ) |           | $         | (169,883 | )
|                                             |                                           |                      |            |            |            |      |            |            |            |   |           |          
|Allocation of net income (loss):             |                                           |                      |            |            |            |      |            |            |            |   |           |          
|                                             | General partner                           |                      | $          | (13,006    | )          |      | $          | 58,099     |            |   | $         | 86,715    |         
|                                             | Limited partners                          |                      |            | (1,287,578 | )          |      |            | (1,370,330 | )          |   |           | (256,598  | )       
|                                             |                                           |                      |            |            |            |      |            |            |            |   |           |          
|                                             |                                           | $                    | (1,300,584 | )          |            | $    | (1,312,231 | )          |            | $ | (169,883  | )        
|                                             |                                           |                      |            |            |            |      |            |            |            |   |           |          
|Limited partners per unit share of net loss |                                           | $                    | (0.64      | )          |            | $    | (0.69      | )          |            | $ | (0.13     | )        
|                                             |                                           |                      |            |            |            |      |            |            |            |   |           |          

The accompanying notes are an integral part of these financial statements.

20



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##### 



IEA INCOME FUND XI, L.P.

Statements of Partners Capital

For the years ended December 31, 2002, 2001 and 2000

|                              |  |          |            |         |  |       |          |   |  |   |            |  
|----------------------------- |  | -------- | ---------- | ------- |  | ----- | -------- | - |  | - | ---------- | -
|                              |  | Limited  |            | General |  |       |          |  
|                              |  | Partners |            | Partner |  | Total
|                              |  |          |            |         |  |      
|Balances at January 1, 2000   |  | $        | 19,019,620 |         |  | $     | (80,783  | ) |  | $ | 18,938,837 |  
|Net (loss) income             |  |          | (256,598   | )       |  |       | 86,715   |   |  |   | (169,883   | )
|Cash distributions            |  |          | (3,433,014 | )       |  |       | (123,984 | ) |  |   | (3,556,998 | )
|                              |  |          |            |         |  |       |          |   |  |   |            |  
|Balances at December 31, 2000 |  |          | 15,330,008 |         |  |       | (118,052 | ) |  |   | 15,211,956 |  
|Net (loss) income             |  |          | (1,370,330 | )       |  |       | 58,099   |   |  |   | (1,312,231 | )
|Cash distributions            |  |          | (3,566,331 | )       |  |       | (107,964 | ) |  |   | (3,674,295 | )
|                              |  |          |            |         |  |       |          |   |  |   |            |  
|Balances at December 31, 2001 |  |          | 10,393,347 |         |  |       | (167,917 | ) |  |   | 10,225,430 |  
|Net loss                      |  |          | (1,287,578 | )       |  |       | (13,006  | ) |  |   | (1,300,584 | )
|Cash distributions            |  |          | (2,474,767 | )       |  |       | (68,940  | ) |  |   | (2,543,707 | )
|                              |  |          |            |         |  |       |          |   |  |   |            |  
|Balances at December 31, 2002 |  | $        | 6,631,002  |         |  | $     | (249,863 | ) |  | $ | 6,381,139  |  
|                              |  |          |            |         |  |       |          |   |  |   |            |  

The accompanying notes are an integral part of these financial statements.

21



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##### 



IEA INCOME FUND XI, L.P.

Statements of Cash Flows

For the years ended December 31, 2002, 2001 and 2000

|                                                     |                                                                          |                                                            |                                           |            |           |           |           |            |           |           |           |            |           |           | 
|---------------------------------------------------- | ------------------------------------------------------------------------ | ---------------------------------------------------------- | ----------------------------------------- | ---------- | --------- | --------- | --------- | ---------- | --------- | --------- | --------- | ---------- | --------- | --------- | 
|                                                     |                                                                          |                                                            |                                           |            | 2002      |           | 2001      |            | 2000     
|                                                     |                                                                          |                                                            |                                           |            |           |           |           |            |          
|Cash flows from operating activities:                |                                                                          |                                                            |                                           |            |           |           |           |            |           |           |           |           
|                                                     | Net loss                                                                 |                                                            | $                                         | (1,300,584 | )         |           | $         | (1,312,231 | )         |           | $         | (169,883   | )        
|                                                     | Adjustments to reconcile net loss to net cash from
operating activities: |                                                            |                                           |            |           |           |           |            |           |           |           |            |          
|                                                     |                                                                          | Depreciation                                               |                                           |            | 1,144,103 |           |           |            | 1,510,984 |           |           |            | 1,841,230 |          
|                                                     |                                                                          | Loss on impairment                                         |                                           |            |          |           |           |            | 418,650   |           |           |            |          |          
|                                                     |                                                                          | Net loss on disposal of equipment                          |                                           |            | 927,487   |           |           |            | 934,924   |           |           |            | 764,906   |          
|                                                     |                                                                          | Decrease in net lease receivables due from
Leasing Company |                                           |            | 80,014    |           |           |            | 171,843   |           |           |            | 208,300   |          
|                                                     |                                                                          | Decrease in accrued expenses                               |                                           |            |          |           |           |            |          |           |           |            | (75,000   | )        
|                                                     |                                                                          |                                                            |                                           |            |           |           |           |            |           |           |           |            |          
|                                                     |                                                                          |                                                            | Total adjustments                         |            |           | 2,151,604 |           |            |           | 3,036,401 |           |            |           | 2,739,436 | 
|                                                     |                                                                          |                                                            |                                           |            |           |           |           |            |           |           |           |            |          
|                                                     |                                                                          |                                                            | Net cash provided by operating activities |            |           | 851,020   |           |            |           | 1,724,170 |           |            |           | 2,569,553 | 
|                                                     |                                                                          |                                                            |                                           |            |           |           |           |            |           |           |           |            |          
|Cash flows from investing activities:                |                                                                          |                                                            |                                           |            |           |           |           |            |           |           |           |           
|                                                     | Proceeds from sale of container rental equipment                         |                                                            |                                           | 1,311,814  |           |           |           | 1,524,419  |           |           |           | 1,353,042  |          
|                                                     | Purchases of container rental equipment                                  |                                                            |                                           |           |           |           |           |           |           |           |           | (44,856    | )        
|                                                     |                                                                          |                                                            |                                           |            |           |           |           |            |           |           |           |            |          
|                                                     |                                                                          |                                                            | Net cash provided by investing activities |            |           | 1,311,814 |           |            |           | 1,524,419 |           |            |           | 1,308,186 | 
|                                                     |                                                                          |                                                            |                                           |            |           |           |           |            |           |           |           |            |          
|Cash flows from financing activities                 |                                                                          |                                                            |                                           |            |           |           |           |            |           |           |           |           
|                                                     | Distributions to partners                                                |                                                            |                                           | (2,543,707 | )         |           |           | (3,674,295 | )         |           |           | (3,556,998 | )        
|                                                     |                                                                          |                                                            |                                           |            |           |           |           |            |           |           |           |            |          
|Net (decrease) increase in cash and cash equivalents |                                                                          |                                                            | (380,873                                  | )          |           |           | (425,706  | )          |           |           | 320,741   |           
|Cash and cash equivalents at beginning of year       |                                                                          |                                                            | 1,205,085                                 |            |           |           | 1,630,791 |            |           |           | 1,310,050 |           
|                                                     |                                                                          |                                                            |                                           |            |           |           |           |            |           |           |           |            |          
|Cash and cash equivalents at end of year             |                                                                          | $                                                          | 824,242                                   |            |           | $         | 1,205,085 |            |           | $         | 1,630,791 |           
|                                                     |                                                                          |                                                            |                                           |            |           |           |           |            |           |           |           |            |          

The accompanying notes are an integral part of these financial statements.

22



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##### 



IEA INCOME FUND XI, L.P.

Notes to Financial Statements

December 31, 2002, 2001 and 2000



|(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. To this extent, the Partnerships operations are
subject to the fluctuations of world economic and political conditions.
Such factors may affect the pattern and levels of world trade. The
Partnership believes that the profitability of, and risks associated
with, leases to foreign customers is generally the same as those of
leases 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 shall continue until December 31, 2010, unless
terminated sooner upon the occurrence of certain events.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |     |  | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| | (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, generally under operating leases which are
either master leases or term leases (mostly one to five years). 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. Most containers are
leased to ocean carriers under master leases; leasing agreements with
fixed payment terms are not material to the financial statements. Since
there are no material minimum lease rentals, no disclosure of minimum
lease rentals is provided in these financial statements.

23



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##### 



IEA INCOME FUND XI, L.P.

Notes to Financial Statements



| | (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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | (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 adequacy of 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,
reserves for the 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 and Partnership Distributions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |     |  | Net income or loss has been allocated between the general and limited
partners in accordance with the Partnership Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |     |  | 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 the general partner.
Distributions of sales proceeds are allocated 99% to the limited
partners and 1% to the general partner. 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
the general partner. Cash distributions from operations to the general
partner in excess of 5% of distributable cash will be considered an
incentive fee

24



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##### 



IEA INCOME FUND XI, L.P.

Notes to Financial Statements



|    |  | and will be recorded as compensation to the general partner, with the
remaining distributions from operations charged to partners capital.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|   
|(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
method. Depreciation policies are also evaluated to determine whether
subsequent events and circumstances warrant revised estimates of useful
lives. Effective June 1, 2001, the estimated depreciable life was
changed from a twelve-year life to a fifteen-year life and the estimated
salvage value was changed from 30% to 10% of the original equipment
cost. The effect of these changes is an increase to depreciation
expense of approximately $26,500 and $39,000 for 2002 and 2001,
respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 
|   
|    |  | SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets, was adopted by the Partnership effective January 1, 2002,
without a significant impact on its financial statements. In accordance
with SFAS No. 144, 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. | 
|   
|    |  | In June 2001, the Partnership recorded impairment charges relating to
refrigerated container equipment which reduced results of operations by
$418,650 or $0.21 per limited partnership unit. The impairment charges
were a result of CCCs and the Leasing Companys review of the
Partnerships refrigerated container equipment. The purpose of the
review was to consider recent changes in the marketplace and economic
environment and to identify the consequences, if any, from an accounting
perspective. The Leasing Company identified a number of issues that
have had an impact on the carrying value of certain equipment at June
30, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 
|   

|                                                                                                                                                                                                             | i.   | In 1992, the Montreal Protocol outlawed the production
of the R12 refrigerant gas by developed countries. Since that
date, shipping lines and leasing companies have operated fleets
including refrigerated container equipment with the R12
refrigerant gas (the R12 Containers). However, the
environmental impact of refrigerant gases has become increasingly
prominent. On January 1, 2001, it became illegal for R12 to be
handled, other than for disposal, in most member countries of the
European Union.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                            
|                                                                                                                                                                                                             | ii.  | Several of the major shipping lines that lease from the
Leasing Company, as well as other leasing companies, have
committed to eliminating R12 Containers from their fleets in
2001. Inventories consisting of R12 Containers will continue to
increase as shipping lines redeliver the containers from existing
leases.                                                                                                                                                                                            
|                                                                                                                                                                                                            
|                                                                                                                                                                                                             | iii. | During 2000, the Leasing Company completed a number of
term leases for R12 Containers. However, over the course of
2001, the factors outlined above, together with the deteriorating
economic environment, have resulted in a very slow leasing market
for R12 Containers. In addition, it is probable that residual
prices for R12 Containers will decrease as R12 Containers are
redelivered from existing leases.                                                                                                
|                                                                                                                                                                                                            
|The Leasing Company considered the impact of these factors in June 2001
and decided to change the current marketing strategy for R12 Containers.
The Leasing Company concluded that, effective July 1, 2001, |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

25



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##### 



IEA INCOME FUND XI, L.P.

Notes to Financial Statements



| |     |  | inventories of R12 Containers would be targeted for immediate sale. The
Leasing Company also conducted a review of R12 Containers that were on
lease at June 30, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | Assets to be disposed of:In June 2001, the Leasing Company committed to
a plan to dispose of 31 R12 Containers with a carrying value of
$271,506. It was concluded that the carrying value of these R12
containers exceeded fair value and accordingly, an impairment charge of
$193,256 was recorded to operations under impairment losses. At
December 31, 2002, 20 of the original 31 R12 refrigerated containers
have been disposed. Although the remaining 11 R12 refrigerated
containers were originally classified as held for sale after their
impairment in June 2001, the Partnership has reclassified these
containers as held and used as of December 31, 2002, with eight R12
refrigerated containers on-hire under term and master leases, two R12
refrigerated containers off-hire and available for lease and one R12
refrigerated container off-hire and available for disposal. Included in
the net loss on the disposal of equipment for the years 2002 and 2001
are gains of $14,754 and $2,124 on the sale of 12 and eight refrigerated
containers, respectively, that were targeted for sale as of June 30,
2001.
|
| |     |  | Assets to be held and used:The Leasing Company conducted a review of 52
R12 Containers with a carrying value of $443,136 that were on lease at
June 30, 2001. It was concluded that the carrying value of these R12
Containers exceeded the future cash flows expected to result from the
use of these containers and their eventual disposition, and therefore
was not recoverable. Accordingly, a charge of $225,394 was recorded to
operations under impairment losses. Fair value was determined by
discounting future expected cash flows.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |     |  | There were no impairment charges to the carrying value of container
rental equipment during 2001 and 2000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | (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 June 2002, the Financial Accounting Standards Board issued SFAS No.
146, (SFAS 146), Accounting for Costs Associated with Exit or
Disposal Activities, which addresses accounting for restructuring and
similar costs. The Registrant does not consider the provisions of SFAS
146 to have any effect on its financial position or results of
operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

26



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##### 



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 dry cargo containers and refrigerated
containers. As of December 31, 2002, the Partnership owned 2,537
twenty-foot, 1,480 forty-foot and 83 forty-foot high-cube marine dry cargo
containers, as well as 86 twenty-foot and 28 forty-foot marine refrigerated
cargo 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, 2002, 2001 and 2000 follows:                                                                    

|                        |  |      |           |      |  |      |           |  |  |   |           | 
|----------------------- |  | ---- | --------- | ---- |  | ---- | --------- |  |  | - | --------- | 
|                        |  | 2002 |           | 2001 |  | 2000
|                        |  |      |           |      |  |     
|Dry cargo containers    |  | $    | 1,297,226 |      |  | $    | 2,235,041 |  |  | $ | 3,340,744 | 
|Refrigerated containers |  |      | 146,785   |      |  |      | 259,923   |  |  |   | 319,192   | 
|                        |  |      |           |      |  |      |           |  |  |   |           | 
|Total                   |  | $    | 1,444,011 |      |  | $    | 2,494,964 |  |  | $ | 3,659,936 | 
|                        |  |      |           |      |  |      |           |  |  |   |           | 



|    |  | 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, it is
impracticable to provide the geographic area information.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The Partnership is not dependent upon any particular customer or group of
customers of the Leasing Company. Only one sub-lessee of the Leasing
Company accounts for more than 10% of the Partnerships revenue. This
customer, Mediterranean Shipping Company S. A. (MSC), generated
approximately 13% or $328,468 of the Leasing Companys rental revenue earned
during 2002 on behalf of the Partnership. One sub-lessee of the Leasing
Company, MSC, generated approximately 11% or $427,047 of the Leasing
Companys rental revenue earned during 2001 on behalf of the Partnership.
No single sub-lessee of the Leasing Company contributed more than 10% of the
Leasing Companys rental revenue earned during 2000 on behalf of the
Partnership.
|   
|(3) |  | Cash and Cash Equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|    |  | Cash equivalents include money market funds that invest in highly-liquid
first-tier 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.                                                                                                                                                                                                                     

27



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##### 



IEA INCOME FUND XI, L.P.

Notes to Financial Statements



|(4) |  | Net Lease Receivables Due from Leasing Company                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | Net lease 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
receivables at December 31, 2002 and December 31, 2001 were as follows:

|                                               |  |              |         |              |  |   |         | 
|---------------------------------------------- |  | ------------ | ------- | ------------ |  | - | ------- | 
|                                               |  | December 31, |         | December 31,
|                                               |  | 2002         |         | 2001        
|                                               |  |              |         |             
|Gross lease receivables                        |  | $            | 388,269 |              |  | $ | 633,711 | 
|Less:                                          |  |              |         |              |  |   |         | 
|Direct operating payables and accrued expenses |  |              | 199,723 |              |  |   | 317,999 | 
|Damage protection reserve (note 5)             |  |              | 11,091  |              |  |   | 24,128  | 
|Base management fees payable                   |  |              | 41,911  |              |  |   | 55,290  | 
|Reimbursed administrative expenses             |  |              | 7,415   |              |  |   | 12,390  | 
|Allowance for doubtful accounts                |  |              | 44,998  |              |  |   | 70,185  | 
|                                               |  |              |         |              |  |   |         | 
|Net lease receivables                          |  | $            | 83,131  |              |  | $ | 153,719 | 
|                                               |  |              |         |              |  |   |         | 



|(5) |  | Damage Protection Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The Leasing Company offers a repair service to several lessees of the
Partnerships containers, whereby the lessee pays an additional rental fee
for the convenience of having the Partnership incur the repair expense for
containers damaged while on lease. This fee is recorded as revenue when
earned according to the terms of the rental contract. An accrual has been
recorded to provide for the estimated costs incurred by this service. This
accrual is a component of net lease receivables due from the Leasing Company
(see note 4). The Partnership is not responsible in the event repair costs
exceed predetermined limits, or for repairs that are required for damages
not defined by the damage protection plan agreement.
|   
|(6) |  | 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 to ocean carriers for the containers owned by the
Partnership. Net lease revenue for the years ended December 31, 2002, 2001
and 2000, was as follows:                                                                                                                                                                                                                                                                                                                                              

|                                             |                                     |   |           |        |      |   |           |        |  |   |           |         | 
|-------------------------------------------- | ----------------------------------- | - | --------- | ------ | ---- | - | --------- | ------ |  | - | --------- | ------- | 
|                                             |                                     |   | 2002      |        | 2001 |   | 2000     
|                                             |                                     |   |           |        |      |   |          
|Rental revenue                               |                                     | $ | 1,444,011 |        |      | $ | 2,494,964 |        |  | $ | 3,659,936 |        
|Less:                                        |                                     |   |           |        |      |   |           |        |  |   |           |        
|Rental equipment operating expenses          |                                     |   | 396,712   |        |      |   | 562,800   |        |  |   | 759,888   |        
|Base management fees (note 7)                |                                     |   | 99,994    |        |      |   | 173,112   |        |  |   | 248,039   |        
|Reimbursed administrative expenses (note 7): |                                     |   |           |        |      |   |           |        |  |   |           |        
|                                             | Salaries                            |   |           | 68,206 |      |   |           | 88,646 |  |   |           | 129,286 | 
|                                             | Other payroll related expenses      |   |           | 7,610  |      |   |           | 8,969  |  |   |           | 11,681  | 
|                                             | General and administrative expenses |   |           | 21,707 |      |   |           | 33,996 |  |   |           | 51,068  | 
|                                             |                                     |   |           |        |      |   |           |        |  |   |           |        
|Net lease revenue                            |                                     | $ | 849,782   |        |      | $ | 1,627,441 |        |  | $ | 2,459,974 |        
|                                             |                                     |   |           |        |      |   |           |        |  |   |           |        

28



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##### 



IEA INCOME FUND XI, L.P.

Notes to Financial Statements



|(7) |  | Compensation to General Partner and its Affiliates                                                                                                                                                                                                                                                                                                                                                                                           
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | Base management fees are equal to 7% of gross lease revenues attributable to
operating leases pursuant to the Partnership Agreement. 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:

|                                   |  |      |         |      |  |      |         |  |  |   |         | 
|---------------------------------- |  | ---- | ------- | ---- |  | ---- | ------- |  |  | - | ------- | 
|                                   |  | 2002 |         | 2001 |  | 2000
|                                   |  |      |         |      |  |     
|Base management fees               |  | $    | 99,994  |      |  | $    | 173,112 |  |  | $ | 248,039 | 
|Reimbursed administrative expenses |  |      | 97,523  |      |  |      | 131,611 |  |  |   | 192,035 | 
|                                   |  |      |         |      |  |      |         |  |  |   |         | 
|                                   |  | $    | 197,517 |      |  | $    | 304,723 |  |  | $ | 440,074 | 
|                                   |  |      |         |      |  |      |         |  |  |   |         | 



|(8) |  | Limited Partners Capital                                                                                                                                                                                                                                                                                                                                                     
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | Cash distributions made to the limited partners during 2002, 2001 and 2000
included distributions of proceeds from equipment sales in the amount of
$1,441,532, $1,874,822 and $1,583,183, 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, 2002, 2001
and 2000 was $3, $5 and $8, 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.                                                                                                        

************************

29



---



##### 



Item 9.      Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

Inapplicable.

30



---



##### 



PART III

Item 10.      Directors and Executive Officers of the Registrant

The Registrant, as such, has no officers or directors, but is managed by
CCC, the general partner. The officers and directors of CCC at February 28,
2003, 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
|John M. Foy      |  | Director                                             

Dennis J. Tietz     Mr. Tietz, 50, as President and Chief Executive Officer,
is responsible for the general management of CCC. Mr. Tietz was appointed
Chief Executive Officer of The Cronos Group, indirect corporate parent of CCC,
in December 1998 and elected Chairman of the Board in March 1999. Mr. Tietz is
also President and a director of Cronos Securities Corp. From 1986 until
August 1992, 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 holds a B.S. degree in Business Administration from San Jose
State University and is a Registered Securities Principal with the NASD.

John Kallas     Mr. Kallas, 40, was elected Vice President, Chief Financial
Officer of CCC in November, 2000. Mr. Kallas also joined the Board of
Directors of CCC in November, 2000. Mr. Kallas has been employed by CCC since
1989, and is responsible for managed container investment programs, treasury,
and CCCs financial operations. Mr. Kallas has held various accounting
positions since joining Cronos including Controller, Director of Accounting and
Corporate Accounting Manager. From 1985 to 1989, Mr. Kallas was an accountant
with KPMG Peat Marwick, San Francisco.

Mr. Kallas holds a Masters degree in Finance and Business Administration
from St. Marys College, a B.S. degree in Business Administration/Accounting
from the University of San Francisco and is a certified public accountant.

Elinor A. Wexler     Ms. Wexler, 54, was elected Vice President -
Administration and Secretary of CCC in August 1992. Ms. Wexler joined the
Board of Directors of CCC in June 1997. Ms. Wexler has been employed by CCC
since 1987, and is responsible for investor services, compliance and securities
registration. From 1983 to 1987, Ms. Wexler was Manager of Investor Services
for 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.

John M. Foy     Mr. Foy, 57, was elected to the Board of Directors of CCC in
April 1999. See key management personnel of the Leasing Company for further
information.

31



---



##### 



The key management personnel of the Leasing Company and its affiliates at
February 28, 2003, were as follows:

|                 |  |                                                     
|---------------- |  | ----------------------------------------------------
|Name             |  | Title                                               
|                 |  |                                                     
|Peter J. Younger |  | Chief Operating Officer/Chief Financial Officer     
|John M. Foy      |  | Senior Vice President/Americas                      
|Nico Sciacovelli |  | Senior Vice President/Europe, Middle East and Africa
|John C. Kirby    |  | Senior Vice President/Operations                    

Peter J. Younger     Mr. Younger, 46, was elected to the Board of Directors of
The Cronos Group on January 13, 2000. Mr. Younger will serve as a director
until the 2004 annual meeting and his successor is elected and takes office.
Mr. Younger was appointed as Chief Operating Officer of The Cronos Group on
August 4, 2000, and its Chief Financial Officer in March 1997. From 1991 to
1997, Mr. Younger served as Vice President of Finance for the Leasing Company,
located in the UK. From 1987 to 1991 Mr. Younger served as Vice President and
Controller for CCC in San Francisco. Prior to 1987, Mr. Younger was a
certified public accountant and a principal with the accounting firm of
Johnson, Glaze and Co. in Salem, Oregon. Mr. Younger holds a B.S. degree in
Business Administration from Western Baptist College, Salem, Oregon.

John M. Foy     Mr. Foy, 57, is directly responsible for the Leasing Companys
lease marketing and operations in North America, Central America, and South
America, and is based in San Francisco. From 1985 to 1993, Mr. Foy was Vice
President/Pacific 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.

Nico Sciacovelli     Mr. Sciacovelli, 53, was elected Senior Vice President -
Europe, Middle East and Africa in June 1997. Mr. Sciacovelli is directly
responsible for the Leasing Companys lease marketing and operations in Europe,
the Middle East and Africa and is based in Italy. Since joining Cronos in
1983, Mr. Sciacovelli served as Area Director and Area Manager for Southern
Europe. Prior to joining Cronos, Mr. Sciacovelli was a Sales Manager at
Interpool Ltd.

John C. Kirby     Mr. Kirby, 49, is responsible for container purchasing,
contract and billing administration, container repairs and leasing-related
systems, and 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 Senior Vice President/Operations of the Leasing Company in 1992.
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.

Section 16(a) Beneficial Ownership Reporting Compliance

The Registrant has followed the practice of reporting acquisitions and
dispositions of the Registrants units of limited partnership interests by CCC,
its general partner. As CCC did not acquire or dispose of any of the
Registrants units of limited partnership interests during the fiscal year
ended December 31, 2002, no reports of beneficial ownership under Section 16(a)
of the Securities Exchange Act of 1934, as amended, were filed with the SEC.

32



---



##### 



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 the general partner. Distributions of sales proceeds are allocated
99% to the limited partners and 1% to the general partner. 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 the general partner.

The Registrant 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 Registrant will reimburse the general
partner 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 Registrant 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 Registrant.

The following table sets forth the fees the Registrant paid (on a cash
basis) to CCC or the Leasing Company (CCL) for the year ended December 31,
2002.

|   |  |         |  |                                                                                                                                                                                                                           |  |               |         | 
|-- |  | ------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ------- | 
|   |  |         |  |                                                                                                                                                                                                                           |  | Cash Fees and
|   |  | Name    |  | Description                                                                                                                                                                                                               |  | Distributions
|   |  |         |  |                                                                                                                                                                                                                           |  |              
|1) |  | CCL     |  | Base management fees - equal to 7% of
gross lease revenues attributable to
operating leases pursuant to Section 4.3
of the Limited Partnership Agreement                                                                  |  | $             | 113,372 | 
|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 Registrant
pursuant to Section 4.4 of the Limited
Partnership Agreement |  | $             | 16,524  | 
|   |  |         |  |                                                                                                                                                                                                                           |  | $             | 85,972  | 
|3) |  | CCC     |  | Interest in Fund - 5% of distributions of
distributable cash for any quarter
pursuant to Section 6.1 of the Limited
Partnership Agreement                                                                                 |  | $             | 68,940  | 

33



---



##### 



Item 12.     Security Ownership of Certain Beneficial Owners and Management



|(a) | 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 Registrant.



|(b) | Security Ownership of Management
|--- | --------------------------------

The Registrant 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.



|(c) | Changes in Control
|--- | ------------------

Inapplicable.

Item 13.      Certain Relationships and Related Transactions



|(a) | Transactions with Management and Others
|--- | ---------------------------------------

The Registrants only transactions with management and other related parties
during 2002 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.

Item 14.      Controls and Procedures

The principal executive and principal financial officers of CCC have
evaluated the disclosure controls and procedures of the Registrant within 90
days prior to the filing of this annual report. As used herein, the term
disclosure controls and procedures has the meaning given to the term by Rule
13a-14 under the Securities Exchange Act of 1934, as amended (Exchange Act),
and includes the controls and other procedures of the Registrant that are
designed to ensure that information required to be disclosed by the Registrant
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 Registrants
disclosure controls and procedures provide reasonable assurance that the
information required to be disclosed by the Registrant 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.

There have been no significant changes in the Registrants internal
controls or in other factors that could significantly affect the Registrants
internal controls subsequent to the evaluation described above conducted by
CCCs principal executive and financial officers.

34



---



##### 



PART IV

Item 15.      Exhibits, Financial Statement Schedules and Reports on
Form 8-K

|      |  |                                                                                        |  |  |    |      |  | 
|----- |  | -------------------------------------------------------------------------------------- |  |  | -- | ---- |  | 
|      |  |                                                                                        |  |  |    | Page
|      |  |                                                                                        |  |  |    |     
|(a)1. |  | Financial Statements                                                                   |  |  |    |     
|      |  | Independent Auditors' Report                                                           |  |  | 18 |     
|(a)2. |  | The following financial statements of the Registrant are included in Part II, Item 8:  |  |  |    |     
|      |  | Balance Sheets  as of December 31, 2002 and 2001                                      |  |  | 19 |     
|      |  | Statements of Operations  for the years ended December 31, 2002, 2001 and 2000        |  |  | 20 |     
|      |  | Statements of Partners' Capital  for the years ended December 31, 2002, 2001 and 2000 |  |  | 21 |     
|      |  | Statements of Cash Flows  for the years ended December 31, 2002, 2001 and 2000        |  |  | 22 |     
|      |  | Notes to Financial Statements                                                          |  |  | 23 |     

All schedules are omitted as the information is not required or the
information is included in the financial statements or notes thereto.

35



---



##### 





|(a)3. | Exhibits
|----- | --------

|        |  |                                                                                                                                                                                                                                             |  |                 
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------
|Exhibit |  |                                                                                                                                                                                                                                             |  |                 
|No      |  | Description                                                                                                                                                                                                                                 |  | Method of Filing
|        |  |                                                                                                                                                                                                                                             |  |                 
|3(a)    |  | Limited Partnership Agreement of the Registrant,
amended and restated as of December 14, 1990                                                                                                                                               |  | *               
|        |  |                                                                                                                                                                                                                                             |  |                 
|3(b)    |  | Certificate of Limited Partnership of the Registrant                                                                                                                                                                                        |  | **              
|        |  |                                                                                                                                                                                                                                             |  |                 
|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 Registrant, CCC (formerly
Intermodal Equipment Associates), Cronos Containers
N.V. (formerly LPI Leasing Partners International
N.V.) and Cronos Containers Limited |  | ****            
|        |  |                                                                                                                                                                                                                                             |  |                 
|99.1    |  | Certification pursuant to 18 U.S.C. § 1350, as
adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.                                                                                                                           |  | *****           
|        |  |                                                                                                                                                                                                                                             |  |                 
|99.2    |  | Certification pursuant to 18 U.S.C. § 1350, as
adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.                                                                                                                           |  | *****           



|(b) | Reports on Form 8-K
|--- | -------------------



| |                                                                                                
| | -----------------------------------------------------------------------------------------------
| | No reports on Form 8-K were filed by the Registrant during the quarter
ended December 31, 2002.



---

|      |  |                                                                                                                                                                                                                                                                                                                                                           
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*     |  | Incorporated by reference to Exhibit A to the Prospectus of the
Registrant 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, 1999                                                                                                                                                                                                                                         
|     
|***** |  | These two certifications, required by Section 906 of the Sarbanes-Oxley
Act of 2002, other than as required by Section 906, are not 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.

36



---



##### 



SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant 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 25, 2003

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 Registrant, in the
capacities and on the dates indicated:

|                     |  |                                                          |  |               
|-------------------- |  | -------------------------------------------------------- |  | --------------
|Signature            |  | Title                                                    |  | Date          
|                     |  |                                                          |  |               
|/s/ Dennis J. Tietz  |  | President and Director of
Cronos Capital Corp.           |  | March 25, 2003
|Dennis J. Tietz      |  | (CCC) (Principal Executive
Officer of CCC)             |  |               
|                     |  |                                                          |  |               
|/s/ John Kallas      |  | Chief Financial Officer and
Director of                  |  | March 25, 2003
|John Kallas          |  | Cronos Capital Corp. (CCC)                             |  |               
|                     |  | (Principal Financial and
Accounting Officer of CCC)      |  |               
|                     |  |                                                          |  |               
|/s/ Elinor A. Wexler |  | Vice President-Administration,
Secretary and Director of |  | March 25, 2003
|Elinor A. Wexler     |  | Cronos Capital Corp.                                     |  |               

Supplemental Information

The Registrants annual report will be furnished to its limited partners
on or about April 30, 2003. Copies of the annual report will be concurrently
furnished to the Commission for information purposes only, and shall not be
deemed to be filed with the Commission.





---



##### 



Exhibit Index

(a)3.   Exhibits

|        |  |                                                                                                                                                                                                                                             |  |                 
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------
|Exhibit |  |                                                                                                                                                                                                                                             |  |                 
|No.     |  | Description                                                                                                                                                                                                                                 |  | Method of Filing
|        |  |                                                                                                                                                                                                                                             |  |                 
|3(a)    |  | Limited Partnership Agreement of the Registrant,
amended and restated as of December 14, 1990                                                                                                                                               |  | *               
|        |  |                                                                                                                                                                                                                                             |  |                 
|3(b)    |  | Certificate of Limited Partnership of the Registrant                                                                                                                                                                                        |  | **              
|        |  |                                                                                                                                                                                                                                             |  |                 
|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 Registrant, CCC (formerly
Intermodal Equipment Associates), Cronos Containers
N.V. (formerly LPI Leasing Partners International
N.V.) and Cronos Containers Limited |  | ****            
|        |  |                                                                                                                                                                                                                                             |  |                 
|99.1    |  | Certification pursuant to 18 U.S.C. § 1350, as
adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.                                                                                                                           |  | *****           
|        |  |                                                                                                                                                                                                                                             |  |                 
|99.2    |  | Certification pursuant to 18 U.S.C. § 1350, as
adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.                                                                                                                           |  | *****           



|(b) | Reports on Form 8-K                                                                            
|--- | -----------------------------------------------------------------------------------------------
|   
|    | No reports on Form 8-K were filed by the Registrant during the quarter
ended December 31, 2002.



---

|*     |  | Incorporated by reference to Exhibit A to the Prospectus of the
Registrant 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, 1999                                                                                                                                                                                                                                         
|     
|***** |  | These two certifications, required by Section 906 of the Sarbanes-Oxley
Act of 2002, other than as required by Section 906, are not 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.





---



##### 



IEA Income Fund XI

CERTIFICATIONS
(Exchange Act Rule 13a-14)

I, Dennis J. Tietz, certify that:

1.      I have reviewed this annual report on Form 10-K of IEA Income Fund XI
(the Registrant);

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
Registrant 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 Registrant, and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the Registrant and we have:

(a)     designed such disclosure controls and procedures to ensure that
material information relating to the Registrant is made known to us by others
within CCC, particularly during the period in which this annual report is being
prepared;

(b)     evaluated the effectiveness of the Registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
annual report (the Evaluation Date); and

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

5.      CCCs other certifying officer and I have disclosed, based on our most
recent evaluation, to the Registrants auditors and the Board of Directors of
CCC:

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

(b)     any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrants internal controls;
and

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

Date: March 25, 2003

/s/ DENNIS J TIETZ
Dennis J Tietz
President and Chief Executive Officer of CCC





---



##### 



IEA Income Fund XI

CERTIFICATIONS
(Exchange Act Rule 13a-14)

I, John Kallas, certify that:

1.     I have reviewed this annual report on Form 10-K of IEA Income Fund XI
(the Registrant);

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
Registrant 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 Registrant, and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the Registrant and we have:

(a)      designed such disclosure controls and procedures to ensure that
material information relating to the Registrant is made known to us by others
within CCC, particularly during the period in which this annual report is being
prepared;

(b)      evaluated the effectiveness of the Registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
annual report (the Evaluation Date); and

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

5.     CCCs other certifying officer and I have disclosed, based on our most
recent evaluation, to the Registrants auditors and the Board of Directors of
CCC:

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

(b)      any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrants internal controls;
and

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

Date: March 25, 2003

/s/ JOHN KALLAS

---

JOHN KALLAS
Chief Financial Officer of CCC






---



##### 



Exhibit Index



|        |  |                                                                                                                                                                                                                                              |  |                 
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------
|Exhibit |  |                                                                                                                                                                                                                                              |  |                 
|No.     |  | Description                                                                                                                                                                                                                                  |  | Method of Filing
|        |  |                                                                                                                                                                                                                                              |  |                 
|3(a)    |  | Limited Partnership Agreement of the Registrant, amended and restated as of December 14, 1990                                                                                                                                                |  | *               
|       
|3(b)    |  | Certificate of Limited Partnership of the Registrant                                                                                                                                                                                         |  | **              
|       
|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 Registrant, CCC (formerly
Intermodal Equipment Associates), Cronos Containers
N.V. (formerly LPI Leasing Partners International
 N.V.) and Cronos Containers Limited |  | ****            
|       
|99.1    |  | Certification pursuant to 18 U.S.C. § 1350, as
adopted pursuant to Section 906 of the
 Sarbanes-Oxley Act of 2002.                                                                                                                           |  | *****           
|       
|99.2    |  | Certification pursuant to 18 U.S.C. § 1350, as
adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.                                                                                                                            |  | *****           



---



|*     |  | Incorporated by reference to Exhibit A to the Prospectus of the
Registrant 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, 1999                                                                                                                                                                                                                                                                                                                                                                                  
|     
|***** |  | These two certifications, required by Section 906 of the Sarbanes-Oxley
Act of 2002, other than as required by Section 906, are not 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 (incorporated
by reference to Exhibit 99.1 and 99.2 to the Registrants Annual Report on
Form 10-K for the year ended December 31, 2002).