<PAGE>   1
                                     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 $ 250.00 

                  For the fiscal year ended December 31, 1996

                                          OR

[ ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

            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         (I.R.S. Employer Identification No.)
   incorporation or organization)

      444 Market 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 (Section 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

<TABLE>
<S>       <C>                     <C>
PART I
Item 1 -  Business                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)

                                  Certificate of Limited Partnership of IEA Income Fund XI, L.P., filed as
                                  Exhibit 3.2 to the Registration Statement on Form S-1 (No. 33-36701)

                                  Form of Leasing Agent Agreement with LPI Leasing Partners International N.V.,
                                  filed as Exhibit 10.2 to the Registration Statement on Form S-1 (No. 33-36701)
PART II
Item 9 -  Changes in and Dis-     Current Report on Form 8-K of IEA Income Fund XI, L.P., filed February 7, 1997 and
          agreements with         April 14, 1997, respectively, and Amendment No. 1 to Current Report on Form 8-K
          Accountants on          filed February 26, 1997.
          Accounting and
          Financial Disclosure
</TABLE>

<PAGE>   2

                         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:

<TABLE>
<CAPTION>
                                                                      Percentage of
                                                           Amount     Gross Proceeds
                                                         -----------  --------------
<S>                                                      <C>          <C>
      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%
                                                         ===========   ===========
</TABLE>


                                       2

<PAGE>   3

   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, which is in turn a wholly-owned subsidiary of The Cronos Group, a
Luxembourg company. These and other affiliated companies are ultimately
wholly-owned by The Cronos Group, a holding company registered in Luxembourg
("the Holding 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 or managed by the Group on its own behalf or on behalf of
third-party container owners, including all other programs organized by CCC.

   On January 1, 1991, Cronos Containers N.V., (formerly LPI Leasing Partners
International N.V.) entered into a Leasing Agent agreement with the Registrant
assuming the responsibility for all container leasing activities. On January 1,
1992, Cronos Containers N.V. entered into an Assignment of Leasing Agent
Agreement, whereby, Cronos Containers N.V. assigned and transferred to the
Leasing Company all of its rights, responsibilities and duties concerning the
Registrant's container leasing activities.

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

   (b) Financial Information About Industry Segments

   Inapplicable.

   (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 effectively 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 cargos ranging from heavy industrial raw materials to
light-weight finished goods. Specialized containers include, among others,
refrigerated containers for the transport of temperature-sensitive goods and
tank containers for the carriage of liquid cargo. Dry cargo containers
constitute approximately 87% of the worldwide container fleet. Refrigerated and
tank containers constitute approximately 6% of the worldwide container fleet,
with open-tops and other specialized containers constituting the remainder.

   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, railway 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.

   The logistical advantages and reduced freight rates brought about by
containerization have been a major catalyst for world trade growth during the
last twenty-five years, which in turn has generated increased demand for
containerization. The world container fleet has grown from an estimated 270
thousand TEU in 1969 to 10 million TEU in 1996, and according to industry data,
growth of containerized shipping since 1987 has generally averaged two to three
times that of average GDP growth in industrialized countries.

   The rapid growth of containerization began with the standardization of
equipment sizes by international agreement in the late 1960's. Initially
confined to the highly competitive trade routes among the industrialized
nations, containerization expanded into substantially all free-world trade
routes by the early 1970's.



                                       3
<PAGE>   4

   Throughout the decade of the 1970's, conversion from break bulk shipping
methods to containers gained momentum in an environment of generally robust
growth in world trade (except during the 1975-76 world-wide recession). Both
shipping lines and container leasing companies responded to this growing market
demand with major container purchases, while container manufacturers
substantially boosted production capacity.

   During the early and mid-1980's, the container industry encountered
alternating periods of slow trade growth, creating excess container capacity,
followed by periods of economic recovery. From the late 1980s to 1991, the
container industry generally experienced a balance in supply and demand for
equipment. In 1992, companies embarked on ambitious container production
programs encouraged by positive economic forecasts and the profitability of the
industry in previous years. This produced an oversupply of containers as some of
the major world economies slipped into recession and ocean carriers and leasing
companies built up large container inventories. During 1993, container
purchasing declined, generally helping to reduce the oversupply of containers.

   During 1994 and 1995, the world's major industrialized nations emerged from a
global economic recession. Consequently, excess equipment inventories that had
resulted from the sluggish growth in world trade during 1992 and 1993, as well
as increased production capacity, were absorbed. Since 1995, the container
industry's fleet grew from a size of approximately nine million TEU to
approximately ten million TEU, equivalent to a growth of almost 11%,
representing one of the industry's largest fleet expansions to date. The primary
factor driving demand during 1995 and 1996 has been the steady introduction of
new containership tonnage, which grew at a rate comparable to the container
industry's fleet. However, the growth in the container industry's fleet, as well
as containership tonnage, outpaced increases in worldwide containerized trade,
estimated to be approximately 8%-10% during 1995 and 6-7% during 1996. As a
result, a general surplus capacity arose, in both containership tonnage and
containers, contributing to the current recession that has impacted the
container leasing industry. Additionally, during 1995 and 1996, container prices
steadily declined to levels not seen in a decade, resulting in ocean carriers
purchasing boxes for their own account, further reducing the demand for leased
containers and since mid-1995, contributing to a decline in container
utilization and per-diem rental rates throughout the container leasing industry.

   The Registrant believes that growth of containerization will continue in
subsequent years for the following reasons:

   o Lower freight rates resulting from containerization are generating new
     cargos that previously were not economical to export. Containerization
     provides inexpensive, timely and secure transport to manufacturers allowing
     them to take advantage of regional opportunities in technology or labor,
     and to move products to different locations at various stages of
     production;

   o Intermodal traffic is expected to continue to grow, and industrialized
     countries are continuing to improve intermodal infrastructure (i.e.,
     railways, roads and ports);

   o Shippers continue to demand transportation of cargo by containers rather
     than break-bulk;

   o Countries with rapidly-growing economies in emerging markets are continuing
     to build new container port facilities that accommodate an increased flow
     of containerized trade; and

   o Recent trade agreements, such as the North American Free Trade Agreement
     ("NAFTA") and the General Agreement on Tariffs and Trade ("GATT"), should
     further stimulate world trade, and, therefore containerized trade.

   The container leasing industry has been a significant contributor to the
growth of containerization, and, in 1996, had an approximately 46% share of the
total world container fleet with ocean carriers holding most of the remainder.
To an ocean carrier, the primary benefits of leasing rather than owning
containers are the following:

   o Reduced Capital Expenditures. Leasing is an attractive option to ocean
     carriers because ownership of containers requires significant capital
     expenditures. Carriers constantly evaluate their investment strategy, with
     container purchasing competing directly with other expenditure
     requirements, such as ship purchases, ship conversions and terminal
     improvements. Container leasing allows ocean carriers to invest capital in
     assets that are more central to their business.



                                       4
<PAGE>   5

   o Improved Asset Management. Trade flow imbalances and seasonal demands
     frequently leave ocean carriers with regional surpluses or shortages of
     containers, requiring costly repositioning of empty containers. Leasing
     companies help ocean carriers manage these trade imbalances by providing
     the inventory to service demand, reducing the costs of maintaining local
     inventories and minimizing repositioning expenses. By matching different
     carriers' container needs, leasing companies can reduce their own risks of
     container inventory imbalances and seasonality through a portfolio of
     lessees as well as variations in lease terms.

   o Increased Container Fleet Flexibility. Ocean carriers benefit from the
     variety of lease types offered by leasing companies such as the master
     lease, long-term and short-term lease and direct financing lease. These
     various leases give ocean carriers flexibility in sizing their fleets while
     minimizing capital costs. For example, master lease agreements give ocean
     carriers the option of adjusting the size of their fleets, with the
     flexibility to pick-up and drop-off containers at various locations around
     the world.

   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(R) steel (Corten(R) roofs, walls, doors and undercarriage), 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
Registrant's 20-foot refrigerated containers have high-grade stainless steel
walls, while 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's refrigerated containers are
designed and manufactured to include the latest generation refrigeration
equipment, with modular microprocessors controlling and monitoring the
container.

   The Registrant's containers are leased primarily to ocean-going steamship
companies 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, primarily master leases, where 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 and, secondarily, term leases (1-5 years) and one-way or round-trip
leases. Special purpose containers acquired by the Registrant, including
refrigerated containers, are generally committed to term leases, where the high
cost of interchanging the higher value specialized container makes master lease
agreements less attractive to customers.

   Master lease agreements. A master lease is designed to provide 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 generally negotiated annually. Master
leases also define the number of containers that may be returned within each
calendar month and the return locations and applicable drop-off charges. Because
of 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.

   Term lease agreements. Term lease agreements include short-term and long-term
leases. Long-term lease agreements define the number of containers to be leased,
the pick-up and drop-off locations, the applicable per-diem rate for the
duration of the lease and the early termination penalties that may apply in the
event of early redelivery. Ocean carriers use long-term leases when they have a
need for identified containers for a specified term. Long-term leases usually
are not terminated early by the customer and provide stable and relatively
predictable sources of revenue, although per-diem rates and ancillary charges
are lower under long-term leases than under master lease agreements. Short-term
lease agreements have a duration of less than one year and include one-way,
repositioning and round-trip leases. They differ from master leases in that they
define the number and the term of containers to be leased. Ocean carriers 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 after one or more legs of a voyage. Except for direct
financing leases, lease rates typically are highest for short-term leases.



                                       5
<PAGE>   6

   Under these leases, 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 upon
redelivery, other than ordinary wear and tear. 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
has historically provided this service on a limited basis 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.

   All containers are inspected and repaired when redelivered by a customer, and
customers are obligated to pay for all damage repair, excluding wear and tear,
according to standardized industry guidelines. Depots in major port areas
perform repair and maintenance which is verified by 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 non-cancelable terms of the operating leases of the Registrant's
containers will not be sufficient to return to the Registrant as lessor the
purchase price of the equipment. In order to recover the original investment in
the equipment and achieve an adequate return thereon, it is necessary to renew
the lease, lease the equipment to another lessee at the end of the initial lease
term, or sell the equipment.

   The Registrant estimates that a dry cargo or refrigerated container may be
used as a leased marine cargo container for a period ranging from 10 to 15
years. The Registrant disposes of used containers in a worldwide market for used
containers in which buyers include wholesalers, mini-storage operators,
construction companies and others. The market for used refrigerated containers
is not as developed as the market for used dry cargo containers. Although a used
refrigerated container will command a higher price than a dry cargo container, a
dry cargo container will bring a higher percentage of its original price. As the
Registrant's fleet ages, a larger proportion of its revenues will be derived
from selling its containers.

   Of the 6,139 twenty-foot, 3,235 forty-foot and 198 forty-foot high-cube dry
cargo containers, 100 twenty-foot and 50 forty-foot refrigerated cargo
containers owned by the Registrant as of December 31, 1996, 4,477 twenty-foot
(or 73% thereof), 2,401 forty-foot (or 74% thereof) and 176 forty-foot high-cube
dry cargo containers (89% thereof), as well as 88 twenty-foot (or 88% thereof)
and 46 forty-foot refrigerated cargo containers (or 92% thereof) were on lease.
The following table sets forth the information on the lease terms with respect
to the containers on lease:

<TABLE>
<CAPTION>
                                                            Number of
                                                            Containers
                                                            ----------
<S>                                                         <C>
      20-Foot Dry Cargo Containers:
         Term Leases                                           568
         Master Leases                                       3,909

      40-Foot Dry Cargo Containers:
         Term Leases                                           287
         Master Leases                                       2,114

      40-Foot High-Cube Dry Cargo Containers:
         Term Leases                                             2
         Master Leases                                         174

      20-Foot Refrigerated Cargo Containers:
         Term Leases                                            59
         Master Leases                                          29

      40-Foot Refrigerated Cargo Containers:
         Term Leases                                            42
         Master Leases                                           4
</TABLE>




                                       6
<PAGE>   7

   The Leasing Company will make payments to the Registrant based upon rentals
collected from ocean carriers after deducting certain operating expenses
associated with the containers, such as the base management fee payable to the
Leasing Company, certain expense reimbursements to CCC, the Leasing Company, and
its affiliates, 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.

   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, California; Iselin, New Jersey;
Windsor, England; Hamburg; Antwerp; Auckland; Genoa; Singapore; Hong Kong;
Sydney; Tokyo; Taipei; Seoul; Rio de Janeiro; and Shanghai. Each of the Leasing
Company's area offices and dedicated agents is staffed with local people
familiar with the customers and language of the region. The Leasing Company's
marketing directors have been employed in the container industry in their
respective regions for an average of 16 years, building direct personal
relationships with the local ocean carriers and locally based representatives of
other ocean carriers.

   The Leasing Company also maintains agency relationships with over 40
independent agents around the world, who are generally paid a commission based
upon the amount of revenues they generate in the region or the number of
containers that are leased from their area on behalf of the Registrant. They 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. These 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 over 350
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
repair 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, and the point when the
Leasing Company's area offices report the container's movements onto the Leasing
Company's equipment tracking system. The Leasing Company's computer system has
the capability to accommodate future developments, such as allowing depots
access to record directly on the system the on-hire and off-hire activity of
containers delivered into the depot. It also has the capability of verifying the
terms of redelivery authorized by the area offices. These functions are
currently being performed by the Leasing Company's area offices.

   (c)(1)(ii)  Inapplicable.

   (c)(1)(iii)  Inapplicable.

   (c)(1)(iv)  Inapplicable.

   (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 a 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 receipt. 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.




                                       7
<PAGE>   8

   (c)(1)(vii) For the year ended December 31, 1996, no single lessee accounted
for 10% or more of the Registrant's rental income. 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 confidence in and professional relationship with 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. The Leasing Company believes
that it, on behalf of the Registrant, competes favorably on all of these
factors.

   The Leasing Company, on behalf of the Registrant, competes with various
container leasing companies in the markets in which it conducts business,
including Genstar Container Corp., Transamerica Leasing, Triton Container
International Ltd., Textainer Corp. and others. In a series of recent
consolidations, one of the major leasing companies, as well as some smaller
ones, have been acquired by competitors. It is estimated that at the end of
1996, the ten largest leasing companies (including the Leasing Company)
represented 93% of the global leased fleet. Genstar Container Corp. and
Transamerica Leasing, the two largest container leasing companies, had
approximately 47% of the worldwide leased container fleet at the end of 1996.
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. In addition, not all container leasing
companies compete in the same market, as some supply only dry cargo containers
and not specialized containers, while others offer only long-term leasing.

   (c)(1)(xi)  Inapplicable.

   (c)(1)(xii)  Environmental Matters

   A portion of the Registrant's equipment portfolio consists of special purpose
containers, primarily refrigerated containers. Historically, refrigerated
containers have utilized a refrigerant gas which is a chlorofluorocarbon ("CFC")
compound. It is generally assumed that CFCs are harmful to the Earth's ozone
layer when released into the atmosphere. Many nations, including the United
States, have taken action, both collectively and individually, to regulate CFCs.
These nations set various targets for the reduction in production and use of
CFCs starting as early as 1993, and their eventual elimination. There has been
substantial progress recently to determine a viable substitute for the
refrigerant used in containers, such that both the Leasing Company and the
container leasing industry association have selected a replacement refrigerant.
Production of new container refrigeration units operating with the replacement
refrigerant became generally available in 1993. All of the Registrant's
refrigerated containers use CFC refrigerated gas in the operation and insulation
of the containers. Depending on market pressures and future governmental
regulations, the Registrant's refrigerated containers may have to be retrofitted
with non-CFC refrigerants, the cost of which will be borne by the Registrant.
The Leasing Company's technical staff has cooperated with refrigeration
manufacturers in conducting investigations into the most effective and
economical retrofit plan. CCC and the Leasing Company believe that this expense,
should it be required, would not be material to the Registrant's financial
position or results of operations. In addition, refrigerated containers that are
not retrofitted may command lower prices in the used container market. Most of
the independent depot operators utilized by the Registrant currently have the
facilities to provide CFC recycling and disposal services to container owners
and lessors such as the Registrant.

   Under the state and Federal laws of the United States, and possibly under the
laws of other nations, the owner of a container may be liable for environmental
damage and/or cleanup and/or other sums in the event of actual or threatened
discharge or other contamination by material in a container. This liability may
be imposed on a container owner, such as the Registrant, even if the owner is
not at fault.

   (c)(1)(xiii) The Registrant, as a limited partnership, is managed by CCC, the
general partner, and accordingly does not itself have any employees. CCC has 27
employees, consisting of 4 officers, 5 other managers and 18 clerical and staff
personnel.



                                       8
<PAGE>   9

   (d) Financial Information about Foreign and Domestic Operations and Export
Sales

   The Registrant's business is not divided between foreign or domestic
operations. The Registrant's business is the leasing of containers worldwide to
ocean-going steamship companies. To this extent, the Registrant's operations are
subject to the fluctuations of worldwide economic and political conditions that
may affect the pattern and levels of world trade.

   Rental income from leases to foreign customers exceeded 90% of the
Registrant's total rental income for the years 1996, 1995 and 1994. 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.

Item 2.  Properties

   As of December 31, 1996 the Registrant owned 6,139 twenty-foot, 3,235
forty-foot and 198 forty-foot high-cube marine dry cargo containers, as well as
100 twenty-foot and 50 forty-foot refrigerated containers suitable for
transporting cargo by rail, sea or highway. The average useful life and
manufacturers' invoice cost of the containers in the Registrant's fleet as of
December 31, 1996 is as follows:

<TABLE>
<CAPTION>
                                          Estimated
                                         Useful Life  Average Age   Average Cost
                                         -----------  -----------   ------------
<S>                                      <C>            <C>           <C>     
20-Foot Dry Cargo Containers             10-15 years    6 years       $  2,782
40-Foot Dry Cargo Containers             10-15 years    6 years       $  4,583
40-Foot High-Cube Dry Cargo Containers   10-15 years    6 years       $  4,988
20-Foot Refrigerated Cargo Containers    10-15 years    6 years       $ 19,086
40-Foot Refrigerated Cargo Containers    10-15 years    6 years       $ 21,734
</TABLE>

   During 1996, the Registrant invested a portion of its cash from sales
proceeds through the purchase of 40 new twenty-foot and 15 new forty-foot marine
dry cargo containers, at an aggregate manufacturer's cost of $207,960, as
replacement for containers which had been lost or damaged beyond repair. At
December 31, 1996, the Registrant committed to purchase an additional 41
twenty-foot and 48 forty-foot marine dry cargo containers, at an aggregate cost
of approximately $260,000.

   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 1996, utilization averaged 79% and 94% for the
Registrant's dry cargo and refrigerated container fleet, respectively.

   During 1996, the Registrant disposed of 107 twenty-foot and nine forty-foot
marine dry cargo containers at an average book gain of $484 per container.



                                       9
<PAGE>   10

Item 3.    Legal Proceedings

   As reported by the Registrant in its Current Report on Form 8-K, filed with
the SEC on February 7, 1997, as amended February 26, 1997, on February 3, 1997,
Arthur Andersen, London, England, resigned as auditors of the Holding Company
(The Cronos Group). In its letter of resignation, Arthur Andersen states that it
was unable to obtain adequate information in response to inquiries it had made
in connection with its audit of the Holding Company for the year ended December
31, 1996. In connection with its resignation, Arthur Andersen also prepared a
report pursuant to the provisions of Section 10A(b)(2) of the Securities
Exchange Act of 1934, as amended, for filing by the Holding Company with the
SEC.

   Following the report of Arthur Andersen, the SEC, on February 10, 1997,
commenced a private investigation of the Holding Company for the purpose of
investigating the matters discussed in such report and related matters. CCC does
not believe that the focus of the SEC's investigation is upon the Registrant or
CCC. CCC is unable at this time to predict the outcome of the SEC's private
investigation of the Holding Company.

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

   Inapplicable.



                                       10
<PAGE>   11

                                     PART II


Item 5.  Market for the 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

<TABLE>
<CAPTION>
                                                       Number of Unit Holders
   (b)(1)  Title                                       as of December 31, 1996
           -----                                       -----------------------
   <S>     <C>                                         <C>
           Units of limited partnership
                    interests                                   3,290
</TABLE>

   (c) Dividends

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




                                       11
<PAGE>   12

Item 6.    Selected Financial Data

<TABLE>
<CAPTION>
                                                           Year Ended December 31,
                                    -------------------------------------------------------------------
                                       1996          1995          1994          1993          1992
                                    -----------   -----------   -----------   -----------   -----------
<S>                                 <C>           <C>           <C>           <C>           <C>        
   Net lease revenue                $ 3,781,622   $ 4,908,910   $ 4,802,127   $ 4,959,736   $ 5,982,173
   Net earnings                     $ 1,625,368   $ 2,758,007   $ 2,575,709   $ 2,686,507   $ 3,689,793
   Net earnings per unit of
     limited partnership interest   $      0.69   $      1.25   $      1.16   $      1.24   $      1.74

   Cash distributions per unit of
     limited partnership interest   $      2.12   $      2.22   $      2.04   $      2.23   $      2.29
   At year-end:
   Total assets                     $27,094,345   $30,040,568   $32,207,224   $34,276,395   $36,633,079
   Partners' capital                $27,019,345   $29,858,468   $31,784,230   $33,506,361   $35,521,166
</TABLE>

----------

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

Liquidity and Capital Resources

   The Registrant's primary objective is to generate cash flow from operations
for distribution to its limited partners and, during the initial years of
operation, reinvest excess cash flow in additional equipment. Aside from the
initial working capital reserve retained from gross subscription proceeds (equal
to approximately 1% of such proceeds), the Registrant relies 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.

   At December 31, 1996, the Registrant had $1,605,557 in cash and cash
equivalents, a decrease of $419,027 and an increase of $34,700 from the December
31, 1995 and 1994 cash balances, respectively. During 1996, the Registrant
expended $218,358 of cash generated from sales proceeds to pay for additional
containers. At December 31, 1996, the Registrant committed to purchase an
additional 89 dry cargo containers, replacing containers which have been lost or
damaged beyond repair, at an aggregate manufacturers invoice cost of
approximately $260,000. Approximately $247,000 in cash generated from equipment
sales, reserved as part of the Registrant's December 31, 1996 cash balances,
will be used to finance these purchases, in addition to cash generated from
equipment sales during the first quarter of 1997. Throughout the remainder of
1997, the Registrant may use cash generated from equipment sales to purchase and
replace containers which have been lost or damaged beyond repair. Amounts not
used to purchase and replace containers may be distributed to its partners.

   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 Partnership Agreement. Cash distribution 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, 1997, the Registrant has distributed
$23,032,457 in cash from operations to its limited partners, or 58% of the
Registrant's original limited partners' investment. 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.



                                       12
<PAGE>   13

   Indicative of the cyclical nature of the container leasing business, the
container lease market has followed a general downward trend since mid-1995.
This downturn can be attributed to a fall in growth of containerized export
trade from key markets in Asia and the impact resulting from a build-up of
surplus containers at former high-demand locations. Leasing companies purchased
record amounts of containers in 1994 and 1995, while purchasing a smaller number
than ocean carriers and transport companies in 1996. During 1996, ocean carriers
and other transport companies moved away from leasing containers outright, as
declining container prices, favorable interest rates and the abundance of
available capital resulted in ocean carriers and transport companies purchasing
a larger share of equipment for their own account. This situation has
characterized the latest industry downturn. These leasing market conditions are
expected to continue throughout 1997, impacting the Registrant's liquidity and
capital resources.

Results of Operations

1996 - 1995

   A fall in growth of containerized export trade from key Asian markets
contributed to the container leasing market's downward trend during 1996. Also
contributing to the sluggish container leasing market conditions were declining
container prices, favorable interest rates and an abundance of available capital
which resulted in ocean carriers and transport companies purchasing a larger
share of containers for their own account, reducing the demand for leased
containers. Once the demand for leased containers began to fall, per-diem rental
rates were also adversely affected. In order to counter these market conditions,
the Leasing Company implemented various marketing strategies during 1996,
including but not limited to, offering incentives to shipping companies,
repositioning containers to high demand locations and focusing towards term
leases and other leasing opportunities, including the leasing of containers for
local storage.

   As the leasing industry's equipment moved into surplus, ocean carriers and
transport companies became increasingly selective about the age and condition of
containers taken on-hire. Many have adopted a policy of only leasing containers
of a certain age or less. It has been the Registrant's experience that in
periods of weak demand, many lessees insist on equipment three to five years of
age. Such criteria currently serves as a barrier to older equipment being taken
on-hire, including those within the Registrant's fleet and contributed to the
decline in the Registrant's results of operations. 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 and is directly related
to the size, utilization and per-diem rental rates of the Registrant's fleet.
Net lease revenue declined by approximately 23%, when compared to 1995. The
Registrant expects net lease revenue to decline in subsequent periods as current
container leasing market conditions continue.

   Gross rental revenue, a component of net lease revenue, decreased from
$7,080,775 in 1995, to $6,026,486 in 1996. The Registrant's average fleet size
(as measured in twenty-foot equipment units ("TEU")) was 13,225 TEU, as compared
to 13,282 TEU in 1995. The Registrant's dry cargo container utilization rate
decreased from an average of 89% during 1995, to an average of 79% during 1996.
Refrigerated container utilization rates also decreased from an average of 99%
during 1995, to an average of 94% during 1996. Dry cargo container per-diem
rental rates decreased by 4% from 1995 levels. Refrigerated container per-diem
rental rates declined 1% from 1995 levels. In addition, rental equipment
operating expenses, when measured as a percentage of rental revenue, increased
due to higher storage and handling costs associated with the lower equipment
utilization and increased repositioning costs.

   The Registrant disposed of 107 twenty-foot and nine forty-foot marine dry
cargo containers during 1996, as compared to 77 twenty-foot and 22 forty-foot
and one forty-foot high-cube marine dry cargo containers during 1995. The
decision to repair or dispose of a container is made when it is returned by a
lessee. This decision is influenced by various factors including the age,
condition, suitability for continued leasing, as well as the geographical
location of the container when disposed. These factors also influence the amount
of sales proceeds received and the related gain on container disposals.


                                       13

<PAGE>   14

   As reported in the Registrant's Current Report on Form 8-K and Amendment No.
1 to Current Report on Form 8-K, filed with the Commission on February 7, 1997
and February 26, 1997, respectively, Arthur Andersen, London, England, resigned
as auditors of The Cronos Group, a Luxembourg Corporation headquartered in
Orchard Lea, England (the "Parent Company"), on February 3, 1997.

   The Parent Company is the indirect corporate parent of Cronos Capital Corp.,
the General Partner of the Registrant. In its letter of resignation to the
Parent Company, Arthur Andersen states that it resigned as auditors of the
Parent Company and all other entities affiliated with the Parent Company. While
its letter of resignation was not addressed to the General Partner of the
Registrant, Arthur Andersen confirmed to the General Partner that its
resignation as auditors of the entities referred to in its letter of resignation
included its resignation as auditors of Cronos Capital Corp. and the Registrant.

   The Registrant retained a new auditor, Moore Stephens, P.C., on April 10,
1997, as reported in its Current Report on Form 8-K, filed April 14, 1997.

   The Registrant does not, at this time, have sufficient information to respond
to the concerns raised by Arthur Andersen with respect to its 1996 audit of the
Parent Company or the impact, if any, these concerns may have on the future
operating results and financial condition of the Registrant or the General
Partner's and Leasing Company's ability to manage the Registrant's business and
fleet in subsequent periods. However, the General Partner of the Registrant does
not believe, based upon the information currently available to it, that Arthur
Andersen's resignation was triggered by any concern over the accounting policies
and procedures followed by the Registrant.

   Arthur Andersen's report on the financial statements of Cronos Capital Corp.
and the Registrant, for either of the past two years, has not contained an
adverse opinion or a disclaimer of opinion, nor was any such report qualified or
modified as to uncertainty, audit scope, or accounting principles.

   During the Registrant's two most recent fiscal years and the subsequent
interim period preceding Arthur Andersen's resignation, there have been no
disagreements between Cronos Capital Corp. or the Registrant and Arthur Andersen
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure.

1995 - 1994

   In 1995, the Registrant's operations were impacted by its declining fleet
size, increasingly competitive market conditions, including, but not limited to,
the container leasing market's resistance to higher per-diem rental rates, an
expanding supply of containers within the container industry, as well as
increased efficiencies in the shipping industry.

   Gross rental revenue, a component of net lease revenue, decreased from
$7,159,556 in 1994, to $7,080,775 in 1995. This decline was attributable to
declines in the Registrant's average fleet size, utilization and per-diem rental
rates. The Registrant's average fleet size (as measured in twenty-foot
equivalent units ("TEU")) was 13,282 TEU, as compared to 13,306 TEU in 1994. The
Registrant's dry cargo container utilization rates decreased slightly, from an
average of 90% during 1994, to an average of 89% during 1995. Refrigerated
container utilization rates averaged 99% in 1995, unchanged from 1994. Dry cargo
container per-diem rental rates decreased by less than 1% from 1994 levels.
Refrigerated container per-diem rental rates declined approximately 5% from 1994
levels, as many of the term leases originally entered into during the
Registrant's initial year of operations have since been renewed at lower market
rates. A 15% increase in ancillary revenue partially offset the decline in gross
rental revenue. Ancillary revenue contributed to approximately 13% and 11% of
the Registrant's total gross rental revenue in 1995 and 1994, respectively.

   Rental equipment operating expenses, when measured as a percentage of rental
revenue, declined primarily as a result of declines in the provision for
doubtful accounts, as well as the costs associated with the recovery actions
against the doubtful accounts of certain lessees, including legal and container
recovery expenses. Base management fees declined by $18,492, or approximately 4%
during 1995.

   The Registrant disposed of 77 twenty-foot, 22 forty-foot and one forty-foot
high-cube marine dry cargo containers during 1995, as compared to 24 twenty-foot
and 16 forty-foot marine dry cargo containers during 1994.




                                       14
<PAGE>   15

Cautionary Statement

   This Annual Report on Form 10-K contains statements relating to future
results of the Registrant, including certain projections and business trends,
that are "forward-looking statements" as defined in the Private Securities
Litigation Reform Act of 1995. Actual results may differ materially from those
projected as a result of certain risks and uncertainties, including but not
limited to changes in: economic conditions; trade policies; demand for and
market acceptance of leased marine cargo containers; competitive utilization and
per-diem rental rate pressures; as well as other risks and uncertainties,
including but not limited to those described in the above discussion of the
marine container leasing business under Item 7., Management's Discussion and
Analysis of Financial Condition and Results of Operations; and those detailed
from time to time in the filings of the Registrant with the Securities and
Exchange Commission.

Item 8.    Financial Statements and Supplementary Data



                                       15
<PAGE>   16

                     REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


The Partners
IEA Income Fund XI, L.P.:

We have audited the accompanying balance sheet of IEA Income Fund XI, L.P., as
of December 31, 1996, and the related statements of operations, partners'
capital, and cash flows for the year then ended. 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 audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of IEA Income Fund XI, L.P. as of
December 31, 1996, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information included in
Schedule 1, for the year ended December 31, 1996, is presented for purposes of
additional analysis and is not a required part of the basic financial
statements. Such information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.

                                      Moore Stephens, P.C.
                                      Certified Public Accountants


New York, New York,
  June 6, 1997



                                       16
<PAGE>   17

                     REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


The Partners
IEA Income Fund XI, L.P.:

We have audited the accompanying balance sheet of IEA Income Fund XI, L.P. as of
December 31, 1995, and the related statements of operations, partners' capital
and cash flows for each of the two years in the period ended December 31, 1995.
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 generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of IEA Income Fund XI, L.P. as of
December 31, 1995, and the results of its operations and its cash flows for each
of the two years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information included in
Schedule 1 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. This information has been
subjected to the auditing procedures applied in our audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.

                                       Arthur Andersen LLP


San Francisco, California,
  March 15, 1996



                                       17
<PAGE>   18

                            IEA INCOME FUND XI, L.P.

                                 BALANCE SHEETS

                           DECEMBER 31, 1996 AND 1995


<TABLE>
<CAPTION>
                               Assets                                         1996            1995
                               ------                                    ------------     ------------
<S>                                                                      <C>              <C>         
   Current assets:
      Cash and cash equivalents, includes $1,605,226 in 1996
        and $2,020,454 in 1995 in interest-bearing accounts (note 2)     $  1,605,557     $  2,024,584
      Net lease receivables due from Leasing Company
        (notes 1 and 4)                                                       738,235          969,993
                                                                         ------------     ------------

           Total current assets                                             2,343,792        2,994,577
                                                                         ------------     ------------

   Container rental equipment, at cost                                     35,888,165       36,036,469
      Less accumulated depreciation                                        11,163,236        9,156,748
                                                                         ------------     ------------
        Net container rental equipment                                     24,724,929       26,879,721
                                                                         ------------     ------------

   Organization costs, net (note 3)                                            25,624          166,270
                                                                         ------------     ------------

                                                                         $ 27,094,345     $ 30,040,568

   Liabilities and Partners' Capital

   Current liabilities:
      Accrued expenses (note 5)                                          $     75,000     $     75,000
      Due to general partner (notes 1 and 6)                                       --            5,100
      Container rental equipment purchases payable                                 --          102,000
                                                                         ------------     ------------

           Total current liabilities                                           75,000          182,100
                                                                         ------------     ------------

   Commitments (note 13)                                                           --               --

   Partners' capital (deficit):
      General partner                                                              24          (24,831)
      Limited partners (note 10)                                           27,019,321       29,883,299
                                                                         ------------     ------------

           Total partners' capital                                         27,019,345       29,858,468
                                                                         ------------     ------------

                                                                         $ 27,094,345     $ 30,040,568
                                                                         ============     ============
</TABLE>


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



                                       18
<PAGE>   19

                            IEA INCOME FUND XI, L.P.

                            STATEMENTS OF OPERATIONS

              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994


<TABLE>
<CAPTION>
                                                           1996           1995           1994
                                                        ----------     ----------     ----------
<S>                                                     <C>            <C>            <C>       
   Net lease revenue (notes 1 and 8)                    $3,781,622     $4,908,910     $4,802,127

   Other operating expenses:
      Depreciation and amortization (notes 1 and 3)      2,237,202      2,236,369      2,237,563
      Other general and administrative expenses             65,374         71,050        100,630
                                                        ----------     ----------     ----------
                                                         2,302,576      2,307,419      2,338,193
                                                        ----------     ----------     ----------

           Earnings from operations                      1,479,046      2,601,491      2,463,934

   Other income:
      Interest income                                       90,172        110,637         62,791
      Net gain on disposal of equipment                     56,150         45,879         48,984
                                                        ----------     ----------     ----------
                                                           146,322        156,516        111,775
                                                        ----------     ----------     ----------

           Net earnings                                 $1,625,368     $2,758,007     $2,575,709
                                                        ==========     ==========     ==========

   Allocation of net earnings:

      General partner                                   $  248,082     $  260,353     $  246,164
      Limited partners                                   1,377,286      2,497,654      2,329,545
                                                        ----------     ----------     ----------

                                                        $1,625,368     $2,758,007     $2,575,709
                                                        ==========     ==========     ==========

   Limited partners' per unit share of net earnings     $     0.69     $     1.25     $     1.16
                                                        ==========     ==========     ==========
</TABLE>


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



                                       19
<PAGE>   20

                            IEA INCOME FUND XI, L.P.

                         STATEMENTS OF PARTNERS' CAPITAL

              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994


<TABLE>
<CAPTION>
                                    Limited
                                    Partners          General
                                   (note 10)          Partner            Total
                                  ------------      ------------     ------------
<S>                               <C>               <C>              <C>         
Balances at December 31, 1993     $ 33,588,628      $    (82,267)    $ 33,506,361

Net earnings                         2,329,545           246,164        2,575,709

Cash distributions                  (4,082,949)         (214,891)      (4,297,840)
                                  ------------      ------------     ------------

Balances at December 31, 1994       31,835,224           (50,994)      31,784,230

Net earnings                         2,497,654           260,353        2,758,007

Cash distributions                  (4,449,579)         (234,190)      (4,683,769)
                                  ------------      ------------     ------------

Balances at December 31, 1995       29,883,299           (24,831)      29,858,468

Net earnings                         1,377,286           248,082        1,625,368

Cash distributions                  (4,241,264)         (223,227)      (4,464,491)
                                  ------------      ------------     ------------

Balances at December 31, 1996     $ 27,019,321      $         24     $ 27,019,345
                                  ============      ============     ============
</TABLE>



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


                                       20
<PAGE>   21

                            IEA INCOME FUND XI, L.P.

                            STATEMENTS OF CASH FLOWS

              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994


<TABLE>
<CAPTION>
                                                              1996             1995            1994
                                                         ------------     ------------    ------------
<S>                                                      <C>              <C>             <C>         
Cash flows from operating activities:
   Net earnings                                          $  1,625,368     $  2,758,007    $  2,575,709
   Adjustments to reconcile net earnings to net cash
     provided by (used in) operating activities:
       Depreciation and amortization                        2,237,202        2,236,369       2,237,563
       Net gain on disposal of equipment                      (56,150)         (45,879)        (48,984)
       Decrease (increase) in net lease receivables
         due from Leasing Company                             170,095          380,499        (190,807)
                                                         ------------     ------------    ------------

         Total adjustments                                  2,351,147        2,570,989       1,997,772
                                                         ------------     ------------    ------------

         Net cash provided by operating activities          3,976,515        5,328,996       4,573,481
                                                         ------------     ------------    ------------

Cash flows from (used in) investing activities:
   Proceeds from sale of container rental equipment           287,307          208,469         116,984
   Purchases of container rental equipment                   (207,960)         (51,975)       (119,350)
   Acquisition fees paid to general partner                   (10,398)        (347,994)       (351,452)
                                                         ------------     ------------    ------------

         Net cash from (used in) investing activities          68,949         (191,500)       (353,818)
                                                         ------------     ------------    ------------

Cash flows used in financing activities:
   Distributions to partners                               (4,464,491)      (4,683,769)     (4,297,840)
                                                         ------------     ------------    ------------

         Net cash used in financing activities             (4,464,491)      (4,683,769)     (4,297,840)
                                                         ------------     ------------    ------------

Net increase (decrease) in cash and cash equivalents         (419,027)         453,727         (78,177)

Cash and cash equivalents at beginning at year              2,024,584        1,570,857       1,649,034
                                                         ------------     ------------    ------------

Cash and cash equivalents at end of year                 $  1,605,557     $  2,024,584    $  1,570,857
                                                         ============     ============    ============
</TABLE>


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



                                       21
<PAGE>   22

                            IEA INCOME FUND XI, L.P.

                          NOTES TO FINANCIAL STATEMENTS

                        DECEMBER 31, 1996, 1995 AND 1994


(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. Cronos
        Capital Corp. ("CCC") is the general partner and, with its affiliate
        Cronos Containers Limited (the "Leasing Company"), manages the business
        of the Partnership. The Partnership shall continue until December 31,
        2010, unless sooner terminated 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. As of
        December 31, 1996, the Partnership operated 6,139 twenty-foot, 3,235
        forty-foot and 198 forty-foot high-cube marine dry cargo containers, as
        well as 100 twenty-foot and 50 forty-foot marine refrigerated cargo
        containers.

        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
        purchased.

    (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; 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.



                                       22
<PAGE>   23

                            IEA INCOME FUND XI, L.P.

                          NOTES TO FINANCIAL STATEMENTS


    (c) 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.

        The preparation of financial statements in conformity with generally
        accepted accounting principles (GAAP) 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 reporting period. Actual results could differ
        from those estimates.

    (d) Allocation of Net Earnings and Partnership Distributions

        Net earnings have been allocated between general and limited partners in
        accordance with the Partnership Agreement.

        Actual cash distributions differ from the allocations of net earnings
        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. 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 distribution 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.

    (e) Acquisition Fees

        Pursuant to Article IV Section 4.2 of 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. The fees are payable in two or more installments commencing
        in the year of purchase.

    (f) Container Rental Equipment

        In March 1995, the Financial Accounting Standards Board issued SFAS No.
        121, "Accounting for the Impairment of Long-Lived Assets and for Long
        -Lived Assets to Be Disposed Of." The Statement requires that long-lived
        assets and certain identifiable intangibles to be held and used by an
        entity be reviewed for impairment whenever events or changes in
        circumstances indicate that the carrying amount of an asset may not be
        fully recoverable. The Partnership adopted SFAS No. 121 during 1996. In
        accordance with SFAS 121, container rental equipment is carried at the
        lower of the container rental equipment's original equipment cost,
        including capitalized acquisition fees, or the estimated recoverable
        value of such equipment. There were no reductions to the carrying value
        of container rental equipment during 1996.

        Container rental equipment is depreciated over a twelve-year life on a
        straight line basis to its salvage value, estimated to be 30%.




                                       23
<PAGE>   24

                            IEA INCOME FUND XI, L.P.

                          NOTES TO FINANCIAL STATEMENTS


    (g) Amortization

        The Partnership's organization costs are being amortized over 60 months
        on a straight-line basis.

    (h) Income Taxes

        The Partnership is not subject to income taxes, consequently no
        provision for income taxes has been made. The Partnership files an
        annual information tax return, prepared on the accrual basis of
        accounting.

    (i) Foreign Operations

        The Partnership's business is not divided between foreign or domestic
        operations. The Partnership's business is the leasing of containers
        worldwide to ocean-going steamship companies and does not fit the
        definition of reportable foreign operations within Financial Accounting
        Standards Board Statement No. 14 "Financial Reporting for Segments of a
        Business Enterprise." 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.

    (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.

(2) Cash and Cash Equivalents

    Cash equivalents include highly liquid investments with a maturity of three
    months or less on their acquisition date. Accordingly, cash equivalents are
    carried at cost which approximates fair value. The Partnership maintains its
    cash and cash equivalents in accounts which, 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. The
    Partnership places its cash equivalents in investment grade, short term debt
    instruments and limits the amount of credit exposure to any one commercial
    issuer.

(3) Organization Costs

    The Partnership incurred $703,234 in offering and organizational costs
    during its offering period. Amortization of these costs was $140,647 for the
    years ended December 31, 1996, 1995 and 1994.





                                       24
<PAGE>   25

                            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 payable by the Leasing Company to the
    Partnership under operating leases to ocean carriers for the containers
    owned by the Partnership. Net lease receivables at December 31, 1996 and
    December 31, 1995 were as follows:

<TABLE>
<CAPTION>
                                                      December 31,  December 31,
                                                         1996           1995
                                                      -----------   ----------
<S>                                                    <C>          <C>       
      Lease receivables, net of  doubtful accounts
         of $166,016 in 1996 and $192,455 in 1995      $1,375,901   $1,619,922
      Less:
      Direct operating payables and accrued expenses      296,859      291,464
      Damage protection reserve (note 7)                  193,112      165,172
      Base management fees                                122,447      163,004
      Reimbursed administrative expenses                   25,248       30,289
                                                       ----------   ----------
                                                       $  738,235   $  969,993
                                                       ==========   ==========
</TABLE>

(5) Accrued Expenses

    Accrued expenses consist of $75,000 for the expected cost of retrofitting
    the Registrant's refrigerated containers with non-CFC refrigerants.

(6) Due to General Partner

    The amounts due to CCC at December 31, 1995 consist of acquisition fees.

(7) 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. A reserve has been
    established to provide for the estimated costs incurred by this service.
    This reserve 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.




                                       25
<PAGE>   26

                            IEA INCOME FUND XI, L.P.

                          NOTES TO FINANCIAL STATEMENTS


(8) 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 billed 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, 1996, 1995
    and 1994, was as follows:

<TABLE>
<CAPTION>
                                                       1996         1995         1994
                                                    ----------   ----------   ----------
<S>                                                 <C>          <C>          <C>       
      Rental revenue (note 12)                      $6,026,486   $7,080,775   $7,159,556
      Less:
      Rental equipment operating expenses            1,503,339    1,304,301    1,458,957
      Base management fees (note 9)                    411,235      482,563      501,055
      Reimbursed administrative expenses (note 9)      330,290      385,001      397,417
                                                    ----------   ----------   ----------
                                                    $3,781,622   $4,908,910   $4,802,127
                                                    ==========   ==========   ==========
</TABLE>

(9) Compensation to General Partner and its Affiliates

    Base management fees are equal to 7% of gross lease revenues attributable to
    operating leases pursuant to Section 4.3 of the Partnership Agreement.
    Reimbursed administrative expenses are equal to the costs expended by CCC
    and its affiliates for services necessary to the prudent operation of the
    Partnership pursuant to Section 4.4 of the Partnership Agreement. The
    following compensation was paid or will be paid by the Partnership to CCC or
    its affiliates:

<TABLE>
<CAPTION>
                                              1996         1995         1994
                                           ----------   ----------   ----------
<S>                                        <C>          <C>          <C>       
      Base management fees                 $  411,235   $  482,563   $  501,055
      Reimbursed administrative expenses      330,290      385,001      397,417
      Acquisition fees                          5,298        7,699        5,968
                                           ----------   ----------   ----------
                                           $  746,823   $  875,263   $  904,440
                                           ==========   ==========   ==========
</TABLE>

(10) Limited Partners' Capital

     The limited partners' per unit share of capital at December 31, 1996, 1995
     and 1994 was $14, $15 and $16, respectively. This is calculated by dividing
     the limited partners' capital at the end of the year by 1,999,812, the
     total number of limited partnership units.




                                       26
<PAGE>   27

                            IEA INCOME FUND XI, L.P.

                          NOTES TO FINANCIAL STATEMENTS


(11) Income Taxes

     The reconciliation of net earnings as reported in the statement of
     operations and as would be reported for federal tax purposes for the years
     ended December 31, 1996, 1995 and 1994 are as follows:

<TABLE>
<CAPTION>
                                                                      1996           1995           1994
                                                                  -----------    -----------    -----------
<S>                                                               <C>            <C>            <C>        
     Net earnings per statement of operations                     $ 1,625,368    $ 2,758,007    $ 2,575,709
     Depreciation for income tax purposes in excess of
        depreciation for financial statement purposes              (3,871,495)    (3,890,779)    (3,920,993)
     Gain on disposition of assets for tax purposes in excess
        of gain on disposition for financial statement purposes        36,659        216,447         41,878
     Amortization expense for tax purposes less than
        amortization for financial statement purposes                 140,646        140,646        140,647
     Rental income for tax purposes less than rental income
        for financial statement purposes                                   --             --       (110,684)
     Bad debt expense for tax purposes (in excess of) less than
         bad debt expense for financial statement purposes            (26,439)        11,193         28,262
                                                                  -----------    -----------    -----------

     Net loss for federal tax purposes                            $(2,095,261)   $  (764,486)   $(1,245,181)
                                                                  ===========    ===========    ===========
</TABLE>

    At December 31, 1996, the tax basis of total partners' capital was
$11,163,678.

(12) Major Lessees

     No single lessee contributed more than 10% of the rental revenue earned
     during 1996, 1995 and 1994. 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 operating lease
     agreements generally require all payments to be made in United States
     currency. The Partnership's operations are subject to the fluctuations of
     worldwide economic and political conditions that may affect the pattern and
     levels of world trade.

(13) Commitments

     At December 31, 1996, the Partnership committed to purchase an additional
     41 twenty-foot and 48 forty-foot marine dry cargo containers, at an
     aggregate manufacturers invoice cost of approximately $260,000.

(14) Subsequent Events

     As reported in the Partnership's Current Report on Form 8-K and Amendment
     No. 1 to Current Report on Form 8-K, filed with the Commission on February
     7, 1997 and February 26, 1997, respectively, Arthur Andersen, London,
     England, resigned as auditors of The Cronos Group (the "Holding Company")
     on February 3, 1997.

     The Cronos Group is the indirect corporate parent of CCC. In its letter of
     resignation to The Cronos Group, Arthur Andersen states that it resigned as
     auditors of The Cronos Group and all other entities affiliated with The
     Cronos Group. While its letter of resignation was not addressed to CCC,
     Arthur Andersen confirmed to CCC that its resignation as auditors of the
     entities referred to in its letter of resignation included its resignation
     as auditors of CCC and the Partnership. In its letter of resignation,
     Arthur Andersen states that it was unable to obtain adequate information in
     response to inquiries it had made in connection with its audit of the
     Holding Company for the year ended December 31, 1996.




                                       27
<PAGE>   28

                            IEA INCOME FUND XI, L.P.

                          Notes to Financial Statements


     Subsequent Events - (Continued)

     The Partnership does not, at this time, have sufficient information to
     determine the impact, if any, that the concerns expressed by Arthur
     Andersen in its letter of resignation may have on the future operating
     results and financial condition of the Partnership or the Leasing Company's
     ability to manage the Partnership's fleet in subsequent periods. However,
     CCC does not believe, based upon the information currently available to it,
     that Arthur Andersen's resignation was triggered by any concern over the
     accounting policies and procedures followed by the Partnership.

     Arthur Andersen's report on the financial statements of CCC and the
     Partnership, for the previous two years, has not contained an adverse
     opinion or a disclaimer of opinion, nor was any such report qualified or
     modified as to uncertainty, audit scope, or accounting principles.

     During the Partnership's previous two fiscal years and the subsequent
     interim period preceding Arthur Andersen's resignation, there have been no
     disagreements between CCC or the Partnership and Arthur Andersen on any
     matter of accounting principles or practices, financial statement
     disclosure, or auditing scope or procedure.

     The Partnership retained a new auditor, Moore Stephens, P.C., on April 10,
     1997, as reported in its current report on Form 8-K, filed April 14, 1997.

     In connection with its resignation, Arthur Andersen also prepared a report
     pursuant to the provisions of Section 10A(b)(2) of the Securities Exchange
     Act of 1934, as amended, for filing by the Holding Company with the
     Securities and Exchange Commission (the "SEC"). Following the report of
     Arthur Andersen, the SEC, on February 10, 1997, commenced a private
     investigation of the Holding Company for the purpose of investigating the
     matters discussed in such report and related matters. The Partnership does
     not believe that the focus of the SEC's investigation is upon the
     Partnership or CCC. CCC is unable to predict the outcome of the SEC's
     private investigation of the Holding Company.




                                       28
<PAGE>   29

                                                                    Schedule 1

                            IEA INCOME FUND XI, L.P.

                 SCHEDULE OF REIMBURSED ADMINISTRATIVE EXPENSES
                       PURSUANT TO ARTICLE IV SECTION 4.5
                          OF THE PARTNERSHIP AGREEMENT

              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994


<TABLE>
<CAPTION>
                                                     1996      1995       1994
                                                  --------   --------   --------
<S>                                               <C>        <C>        <C>     
Salaries                                          $157,490   $195,348   $186,055
Other payroll related expenses                      27,308     30,692     52,246
General and administrative expenses                145,491    158,961    159,116
                                                  --------   --------   --------

   Total reimbursed administrative expenses       $330,289   $385,001   $397,417
                                                  ========   ========   ========
</TABLE>



                  See report of independent public accountants


                                       29
<PAGE>   30

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

   The Registrant's discussion regarding the resignation of its certifying
accountant is included in the Registrant's Report on Form 8-K, dated February 3,
1997 and filed February 7, 1997 and Amendment No. 1 to the Registrant's Report
on Form 8-K, dated February 3, 1997 and filed February 26, 1997, incorporated
herein by reference.

   The Registrant retained a new auditor, Moore Stephens, P.C., on April 10,
1997, as reported in its Current Report on Form 8-K, filed April 14, 1997.



                                       30
<PAGE>   31

                                    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 June 4, 1997, are as
follows:

<TABLE>
<CAPTION>
        Name                                   Office
---------------------      ------------------------------------------------
<S>                        <C>
Dennis J. Tietz            President, Chief Executive Officer, and Director
John P. McDonald           Vice President/Sales
Elinor Wexler              Vice President/Administration and Secretary
John Kallas                Vice President/Treasurer, Principal Finance and
                           Accounting Officer
Laurence P. Sargent        Director
Stefan M. Palatin          Director
</TABLE>

   DENNIS J. TIETZ  Mr. Tietz, 44, as President and Chief Executive Officer, is
responsible for the general management of CCC. From 1986 until August 1992, Mr.
Tietz was responsible for the organization, marketing and after-market support
of CCC's investment programs. Mr. Tietz is also President and a director of
Cronos Securities Corp. 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 P. MCDONALD  Mr. McDonald, 35, was elected Vice President - National
Sales Manager of CCC in August 1992, with responsibility for marketing CCC's
investment programs. Since 1988, Mr. McDonald had been Regional Marketing
Manager for the Southwestern U.S. From 1983 to 1988, Mr. McDonald held a number
of container leasing positions with CCC, the most recent of which was as Area
Manager for Belgium and the Netherlands, based in Antwerp.

   Mr. McDonald holds a B.S. degree in Business Administration from Bryant
College, Rhode Island. Mr. McDonald is also a Vice President of Cronos
Securities Corp.

   ELINOR A. WEXLER  Ms. Wexler, 48, was elected Vice President - Administration
and Secretary of CCC in August 1992. Ms. Wexler has been employed by the General
Partner 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 KALLAS  Mr. Kallas, 34, was elected Vice President/Treasurer, Principal
Finance and Accounting Officer of CCC in December 1993 and is directly
responsible for CCC's accounting operations and reporting activities. Mr. Kallas
has held various accounting positions since joining CCC in 1989, including
Controller, Director of Accounting and Corporate Accounting Manager. From 1985
to 1989, Mr. Kallas was an accountant with KPMG Peat Marwick, San Francisco,
California.

   Mr. Kallas holds a B.S. degree in Business Administration from the University
of San Francisco and is a certified public accountant. Mr. Kallas is also
Treasurer of Cronos Securities Corp.


                                       31
<PAGE>   32

   LAURENCE P. SARGENT  Mr. Sargent, 67, joined the Board of Directors of CCC in
1991. Mr. Sargent was a founder of Leasing Partners International ("LPI") and
served as its Managing Director from 1983 until 1991. From 1977 to 1983, Mr.
Sargent held a number of positions with Trans Ocean Leasing Corporation, the
last of which was as a director of its refrigerated container leasing
activities. From 1971 to 1977, Mr. Sargent was employed by SSI Container
Corporation (later Itel Container International), ultimately serving as Vice
President / Far East. Prior to that, Mr. Sargent was a Vice President of Pacific
Intermountain Express, a major U.S. motor carrier, responsible for its bulk
container division. Mr. Sargent holds a B.A. degree from Stanford University.
Mr. Sargent also serves as a director of the Institute of International
Container Lessors ("IICL"), an industry trade association. Mr. Sargent is also a
director of Cronos Securities Corp.

   Mr. Sargent retired as Deputy Chairman of the Group as of January 1, 1996 .
He will remain a director of CCC, The Cronos Group, as well as other various
subsidiaries of The Cronos Group.

   STEFAN M. PALATIN  Mr. Palatin, 43, joined the Board of Directors of CCC in
January 1993. Mr. Palatin is Chairman and CEO of The Cronos Group, and was a
founder of LPI in 1983. From 1980 to 1991, Mr. Palatin was an executive director
of the Contrin Group, which has provided financing to the container leasing
industry, as well as other business ventures, and has sponsored limited
partnerships organized in Austria. From 1977 to 1980, Mr. Palatin was a
consultant to a number of companies in Austria, including Contrin. From 1973 to
1977, Mr. Palatin was a sales manager for Generali AG, the largest insurance
group in Austria.

   Mr. Palatin, who is based in Austria, holds a Doctorate in Business
Administration from the University of Economics and World Trade in Vienna. Mr.
Palatin is also a director of The Cronos Group.

   The key management personnel of the Leasing Company at June 4, 1997, were as
follows:

<TABLE>
<CAPTION>
        Name                                Title
---------------------      ---------------------------------------------
<S>                        <C>
Steve Brocato              President
Peter J. Younger           Vice President/Chief Financial Officer
John M. Foy                Vice President/Americas
Nico Sciacovelli           Vice President/Europe, Middle East and Africa
Harris H. T. Ho            Vice President/Asia Pacific
David Heather              Vice President/Technical Services
John C. Kirby              Vice President/Operations
J. Gordon Steel            Vice President/Tank Container Division
</TABLE>

   STEVE BROCATO  Mr. Brocato, 44, was elected President of the Leasing
Company's container division in June 1997, replacing Mr. Nigel J. Stribley, and
is based in the United Kingdom. Mr. Brocato has held various positions since
joining Cronos including, Vice president - Corporate Affairs and Director of
Marketing - Refrigerated Containers for Cronos in North and South America. Prior
to joining Cronos, Mr. Brocato was a Vice President for ICCU Containers from
1983 to 1985 and was responsible for dry cargo container marketing and
operations for the Americas. From 1981 to 1983, he was regional manager for
Trans Ocean leasing Ltd.

   PETER J. YOUNGER  Mr. Younger, 40, was elected Chief Financial Officer of The
Cronos Group in March, 1997, replacing Mr. A. Darrell Ponniah, and is based in
the United Kingdom. Mr. Younger was appointed Vice President and Controller of
Cronos in 1991. He joined IEA in 1987 and served as Director of Accounting and
the Vice President and Controller, based 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.



                                       32
<PAGE>   33

   JOHN M. FOY  Mr. Foy, 51, 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, 47, was elected Vice President - Europe,
Middle East and Africa in June 1997, replacing Mr. Geoffrey Mornard. 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.

   HARRIS H. T. HO  Mr. Ho, 39, was elected Vice President - Asia Pacific in
June 1997, replacing Mr. Danny Wong. Mr. Ho is directly responsible for the
Leasing Company's lease marketing and operations in Asia, Australia and the
Indian sub-continent and is based in Hong Kong. Since joining Cronos in 1990,
Mr. Ho served as Area Director, Hong Kong and China. Prior to joining Cronos,
Mr. Ho was a Manager at Sea Containers Pacific Ltd and Sea Containers Hong Kong
Limited from 1981 to 1990, responsible for container marketing within Asia. From
1978 to 1981, Mr. Ho was Senior Equipment Controller for Hong Kong Container
Line. Mr. Ho holds a Diploma of Management Studies in Marketing from The Hong
Kong Polytechnic and The Hong Kong Management Association.

   DAVID HEATHER  Mr. Heather, 49, is responsible for all technical and
engineering activities of the fleet managed by the Leasing Company. Mr. Heather
was Technical Director for LPI, based in the United Kingdom, from 1986 to 1991.
From 1980 to 1986, Mr. Heather was employed by ABC Containerline NV as Technical
Manager with technical responsibility for the shipping line's fleet of dry
cargo, refrigerated and other specialized container equipment. From 1974 to
1980, Mr. Heather was Technical Supervisor for ACT Services Ltd., a shipping
line, with responsibility for technical activities related to refrigerated
containers. Mr. Heather holds a Marine Engineering Certificate from Riversdale
Marine Technical College in England.

   JOHN C. KIRBY  Mr. Kirby, 43, 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 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.

   J. GORDON STEEL  Mr. Steel, 64, is directly responsible for the overall
lease marketing activity for the Leasing Company's Tank Container Division. From
1990 to 1992, Mr. Steel held the position of Director/General Manager for
Tiphook Container's Tank Division. From 1977 to 1990, Mr. Steel held various
managerial positions, involving manufacturing and transportation of hazardous
materials, with Laporte Industries and ICI, major chemical distribution
companies. Mr. Steel is a qualified Chemical Engineer and attended the Associate
Royal Technical College in Scotland.


                                       33
<PAGE>   34

Item 11.   Executive Compensation

   Beginning with the first quarter of 1991, the Registrant commenced monthly
distributions to its partners (general and limited) from distributable cash from
operations, allocated 95% to the limited partners and 5% to the general partner.
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 Registrant 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 Section 4.4 of 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, 1996.

<TABLE>
<CAPTION>
                                                                  Cash Fees and
  Name                        Description                         Distributions
  ----                        -----------                         -------------
<S>          <C>                                                 <C>     
1) CCC       Acquisition fee - equal to 5% of the purchase          $ 10,398
               price of containers acquired by the Registrant
               pursuant to Section 4.2 of the Limited
               Partnership Agreement

2) CCL       Base management fees - equal to 7% of gross            $ 451,792
               lease revenues attributable to operating
               leases pursuant to Section 4.3 of the
               Limited Partnership Agreement

3) CCC       Reimbursed administrative expenses - equal to          $  40,387
               the costs expended by CCC and its affiliates
   CCL         for services necessary to the prudent operation      $ 294,944
               of the Registrant pursuant to Section 4.4 of the
               Limited Partnership Agreement

4) CCC       Interest in Fund - 5% of distributions of              $ 223,227
               distributable cash for any quarter pursuant
               to Section 6.1 of the Limited Partnership
               Agreement
</TABLE>




                                       34
<PAGE>   35

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 1996 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.



                                       35
<PAGE>   36

                                     PART IV

Item 14.   Exhibits, Financial Statement Schedules and Reports on Form 8-K

   (a)1.   Financial Statements


<TABLE>
<CAPTION>
                                                                          Page
                                                                         -------
The following financial statements of the Registrant are 
included in Part II, Item 8:

<S>                                                                       <C>
   Reports of Independent Public Accountants                              16, 17

   Balance sheets - December 31, 1996 and 1995                                18

   Statements of operations - for the years ended
     December 31, 1996, 1995 and 1994                                         19

   Statements of partners' capital - for the years ended
     December 31, 1996, 1995 and 1994                                         20

   Statements of cash flows - for the years ended
     December 31, 1996, 1995 and 1994                                         21

   Notes to financial statements                                              22

   Schedule of Reimbursed Administrative Expenses                             29
</TABLE>



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




                                       36
<PAGE>   37

(a)3.    Exhibits

<TABLE>
<CAPTION>
Exhibit
   No.                       Description                                  Method of Filing
-------                      -----------                                  ----------------
<S>        <C>                                                            <C>
  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    Filed with this document
           between the Registrant, CCC (formerly Intermodal Equipment
           Associates), Cronos Containers N.V. (formerly LPI Leasing
           Partners International N.V.) and Cronos Containers Limited

  27       Financial Data Schedule                                        Filed with this document
</TABLE>

(b)        Reports on Form 8-K

           The Registrant filed a Report on Form 8-K, February 7, 1997 and
           Amendment No. 1 to Report on Form 8-K, February 26, 1997, reporting
           the resignation of the Registrant's certifying accountant.

           The Registrant filed a Report on Form 8-K, April 14, 1997, reporting
           the appointment of the Registrant's successor certifying accountant.

----------
*     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)




                                       37
<PAGE>   38

                                    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/  John Kallas
                                      ----------------------------------------
                                      John Kallas
                                      Vice President/Treasurer
                                      Principal Finance and Accounting Officer

Date:    June 16, 1997


   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 general partner of the Registrant, in the capacities and on
the dates indicated:

<TABLE>
<CAPTION>
        Signature                         Title                           Date
<S>                            <C>                                   <C> 
   /s/  Dennis J. Tietz          President and Director of           June 16, 1997
---------------------------        Cronos Capital Corp.
Dennis J. Tietz                ("CCC") (Principal Executive
                                     Officer of CCC)

   /s/  John Kallas              Vice President/Treasurer            June 16, 1997
---------------------------      (Principal Finance and
John Kallas                     Accounting Officer of CCC)

 /s/  Laurence P. Sargent            Director of CCC                 June 16, 1997
--------------------------
Laurence P. Sargent
</TABLE>

                             SUPPLEMENTAL INFORMATION

   The Registrant's annual report will be furnished to its limited partners on
or about July 18, 1997. 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.



<PAGE>   39

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit
   No.                       Description                                  Method of Filing
-------                      -----------                                  ----------------
<S>        <C>                                                            <C>
  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    Filed with this document
           between the Registrant, CCC (formerly Intermodal Equipment
           Associates), Cronos Containers N.V. (formerly LPI Leasing
           Partners International N.V.) and Cronos Containers Limited

  27       Financial Data Schedule                                        Filed with this document
</TABLE>
____________

1     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)

2     Incorporated by reference to Exhibit 3.2 to the Registration Statement on
      Form S-1 (No. 33-36701)

3     Incorporated by reference to Exhibit 10.2 to the Registration Statement on
      Form S-1 (No. 33-36701)

4     Incorporated by reference to Exhibit 10(b) to the Report on Form 10-K for
      the fiscal year ended December 31, 1995.