UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2005

OR

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
	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
(State or other jurisdiction of
incorporation or organization) 94-3122430
(I.R.S. Employer
Identification No.)

One Front Street, Suite 925, San Francisco, California 94111
(Address of principal executive offices)                               (Zip Code)

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

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 þ.  No o.         

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o.  No þ.

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule12b-2 of the Exchange Act). Yes o.  No þ.         

IEA INCOME FUND XI, L.P.

Report on Form 10-Q for the Quarterly Period
Ended September 30, 2005

TABLE OF CONTENTS

	PAGE
PART I — FINANCIAL INFORMATION		3
Item 1. Financial Statements		3
Condensed Balance Sheets – September 30, 2005 and December 31, 2004 (unaudited)		4
Condensed Statements of Operations for the three and nine months ended September 30, 2005 and 2004 (unaudited)		5
Condensed Statements of Cash Flows for the nine months ended September 30, 2005 and 2004 (unaudited)		6
Notes to Condensed Financial Statements (unaudited)		7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		13
Item 3. Quantitative and Qualitative Disclosures About Market Risk		18
Item 4. Controls and Procedures		18
PART II — OTHER INFORMATION		19
Item 1. Legal Proceedings		19
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		19
Item 3. Defaults Upon Senior Securities		19
Item 4. Submissions of Matters to a Vote of Securities Holders		19
Item 5. Other Information		19
Item 6. Exhibits		19
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32

2

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Presented herein are the condensed balance sheets as of September 30, 2005 and December 31, 2004, condensed statements of operations for the three and nine months ended September 30, 2005 and 2004, and condensed statements of cash flows for the nine months ended September 30, 2005 and 2004, (collectively the “Financial Statements”) for IEA Income Fund XI, L.P. (the “Partnership”) prepared by the Partnership without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations, although the Partnership believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these Financial Statements be read in conjunction with the financial statements and the notes thereto included in the Partnership’s December 31, 2004 Annual Report on Form 10-K. These Financial Statements reflect, in the opinion of the Partnership and Cronos Capital Corp. (“CCC”), the general partner, all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the results for the interim periods. The statements of operations for such interim periods are not necessarily indicative of the results for the full year.

The information in this Quarterly Report on Form 10-Q contains certain “forward-looking statements” within the meaning of the securities laws. These forward-looking statements reflect the current view of the Partnership with respect to future events and financial performance and are subject to a number of risks and uncertainties, many of which are beyond the Partnership’s control. All statements, other than statements of historical facts included in this report, including the statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” regarding the Partnership’s strategy, future operations, financial position, estimated revenues, projected costs, prospects, plans and objectives of the Partnership are forward-looking statements. When used in this report, the words “will”, “believe”, “anticipate”, “intend”, “estimate”, “expect”, “project”, and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. All forward-looking statements speak only as of the date of this report. The Partnership does not undertake any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Although the Partnership believes that its plans, intentions and expectations reflected in or suggested by the forward-looking statements made in this report are reasonable, the Partnership can give no assurance that these plans, intentions or expectations will be achieved. Future economic and industry trends that could potentially impact revenues and profitability are difficult to predict.

3

IEA INCOME FUND XI, L.P.

Condensed Balance Sheets

(Unaudited)

	September 30,			December 31,
	2005			2004
Assets
Current assets:
Cash and cash equivalents, includes $618,254 at September 30, 2005 and $760,239 at December 31, 2004 in interest-bearing accounts	$	633,254		$	775,239
Net lease receivables due from Leasing Company (notes 1 and 2)		190,374			290,032
Total current assets		823,628			1,065,271
Container rental equipment, at cost		4,733,848			6,213,647
Less accumulated depreciation		(3,748,404	)		(4,675,298	)
Net container rental equipment (note 1)		985,444			1,538,349
Total assets	$	1,809,072		$	2,603,620
Partners’ Capital
Partners’ capital (deficit):
General partner	$	(211,186	)	$	(331,842	)
Limited partners		2,020,258			2,935,462
Total partners’ capital	$	1,809,072		$	2,603,620

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

4

IEA INCOME FUND XI, L.P.

Condensed Statements of Operations

(Unaudited)

	Three Months Ended						Nine Months Ended
	September 30,			September 30,			September 30,			September 30,
	2005			2004			2005			2004
Net lease revenue (notes 1 and 4)	$	110,404		$	173,063		$	339,766		$	493,412
Other operating income (expenses):
Depreciation		(77,133	)		(154,002	)		(253,655	)		(511,522	)
Other general and administrative expenses		(25,584	)		(21,698	)		(77,301	)		(71,431	)
Net gain (loss) on disposal of equipment		32,859			(27,665	)		130,085			(116,635	)
Income (loss) from operations		40,546			(30,302	)		138,895			(206,176	)
Other income:
Interest income		4,256			1,159			10,821			2,080
Net income (loss)	$	44,802		$	(29,143	)	$	149,716		$	(204,096	)
Allocation of net income (loss):
General partner	$	43,427		$	(291	)	$	148,341		$	(2,041	)
Limited partners		1,375			(28,852	)		1,375			(202,055	)
	$	44,802		$	(29,143	)	$	149,716		$	(204,096	)
Limited partners’ per unit share of net income (loss)	$	0.00		$	(0.01	)	$	0.00		$	(0.10	)

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

5

IEA INCOME FUND XI, L.P.

Condensed Statements of Cash Flows

(Unaudited)

	Nine Months Ended
	September 30,			September 30,
	2005			2004
Net cash provided by operating activities	$	258,052		$	416,923
Cash flows provided by investing activities:
Proceeds from disposal of equipment		438,493			465,598
Payment received from sales-type lease for sale of rental equipment		105,734			—
		544,227			465,598
Cash flows used in financing activities:
Distribution to general partner		(27,685	)		(24,618	)
Distribution to limited partners		(916,579	)		(858,252	)
		(944,264	)		(882,870	)
Net decrease in cash and cash equivalents		(141,985	)		(349	)
Cash and cash equivalents at the beginning of the period		775,239			790,330
Cash and cash equivalents at the end of the period	$	633,254		$	789,981

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

6

IEA INCOME FUND XI, L.P.

Notes to Unaudited Condensed Financial Statements

(1) Summary of Significant Accounting Policies

(a)	Nature of Operations
	IEA Income Fund XI, L.P. (the “Partnership”) is a limited partnership organized under the laws of the State of California on July 30, 1990 for the purpose of owning and leasing marine cargo containers worldwide to ocean carriers. The Partnership’s operations are subject to the fluctuations of world economic and political conditions. The Partnership believes that the profitability of, and risks associated with, leases to foreign customers is generally the same as those of leases to domestic customers. The Partnership’s leases generally require all payments to be made in United States currency.
	Cronos Capital Corp. (“CCC”) is the general partner and, with its affiliate Cronos Containers Limited (the “Leasing Company”), manages the business of the Partnership. CCC and the Leasing Company also manage the container leasing business for other partnerships affiliated with CCC.
	The Partnership commenced operations on January 31, 1991, when the minimum subscription proceeds of $1,000,000 were obtained. The Partnership offered 2,000,000 units of limited partnership interest at $20 per unit, or $40,000,000. The offering terminated on November 30, 1991, at which time 1,999,812 limited partnership units had been sold.
	The decision to dispose of containers is influenced by various factors including age, condition, suitability for continued leasing as well as the geographical location when disposed. At September 30, 2005, approximately 22% of the original equipment remained in the Partnership’s fleet. Within the next twelve months, the Partnership is expected to enter the final phase of its liquidation and wind-up stage of operations by disposing of its remaining fleet and focusing on the collection of its lease receivables, a component of net lease receivables. The Partnership will thereafter undertake a final distribution to its partners, then cancel the Certificate of Limited Partnership, thus dissolving and terminating the Partnership.
(b)	Leasing Company and Leasing Agent Agreement
	A Leasing Agent Agreement exists between the Partnership and the Leasing Company, whereby the Leasing Company has the responsibility to manage the leasing operations of all equipment owned by the Partnership. Pursuant to the Agreement, the Leasing Company is responsible for leasing, managing and re-leasing the Partnership’s containers to ocean carriers, and has full discretion over which ocean carriers and suppliers of goods and services it may deal with. The Leasing Agent Agreement permits the Leasing Company to use the containers owned by the Partnership, together with other containers owned or managed by the Leasing Company and its affiliates, as part of a single fleet operated without regard to ownership. 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.

(Continued)

7

IEA INCOME FUND XI, L.P.

Notes to Unaudited Condensed Financial Statements

(b)	Leasing Company and Leasing Agent Agreement (continued)
	The Leasing Agent Agreement generally provides that the Leasing Company will make payments to the Partnership based upon rentals collected from ocean carriers after deducting direct operating expenses and management fees to CCC and the Leasing Company. The Leasing Company leases containers to ocean carriers, under operating leases which are either master leases or term leases (mostly one to five years) and sales-type leases. Master leases do not specify the exact number of containers to be leased or the term that each container will remain on hire but allow the ocean carrier to pick up and drop off containers at various locations, and rentals are based upon the number of containers used and the applicable per-diem rate. Accordingly, rentals under master leases are all variable and contingent upon the number of containers used. Sales-type leases have fixed payment terms and provide the lessee with a purchase option. The net investment in sales-type leases represents a receivable due from the Leasing Company, net of unearned income. Unearned income, when recognized, is reflected in the Partnership’s statements of operations, providing a constant return on capital over the lease term. Unearned income is recorded as part of the net lease receivable due from the Leasing Company.
(c)	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.
(d)	Use of Estimates
	The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which requires the Partnership to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.
	The most significant estimates included within the financial statements are the container rental equipment estimated useful lives and residual values, and the estimate of future cash flows from container rental equipment operations, used to determine the carrying value of container rental equipment in accordance with SFAS No. 144. Considerable judgment is required in estimating future cash flows from container rental equipment operations. Accordingly, the estimates may not be indicative of the amounts that may be realized in future periods. As additional information becomes available in subsequent periods, recognition of an impairment of the container rental equipment carrying values may be necessary based upon changes in market and economic conditions.

(Continued)

8

IEA INCOME FUND XI, L.P.

Notes to Unaudited Condensed Financial Statements

(e)	Container Rental Equipment
	Container rental equipment is depreciated using the straight-line basis. Depreciation policies are also evaluated to determine whether subsequent events and circumstances warrant revised estimates of useful lives.
	In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” container rental equipment is considered to be impaired if the carrying value of the asset exceeds the expected future cash flows from related operations (undiscounted and without interest charges). If impairment is deemed to exist, the assets are written down to fair value. An analysis is prepared each quarter projecting future cash flows from container rental equipment operations. Current and projected utilization rates, per-diem rental rates, direct operating expenses, fleet size and container disposals are the primary variables utilized by the analysis. Additionally, the Partnership evaluates future cash flows and potential impairment by container type rather than for each individual container, and as a result, future losses could result for individual container dispositions due to various factors, including age, condition, suitability for continued leasing, as well as the geographical location of containers when disposed. There were no impairment charges to the carrying value of container rental equipment for the three and nine-month periods ended September 30, 2005 and 2004.
(f)	Partners’ Capital Accounts
	Upon dissolution, the assets of the Partnership will be sold and the proceeds thereof distributed as follows: (i) all of the Partnership’s debts and liabilities to persons other than CCC or the limited partners shall be paid and discharged; (ii) all of the Partnership’s debts and liabilities to CCC and the limited partners shall be paid and discharged; and (iii) the balance of such proceeds shall be distributed to CCC and the limited partners in accordance with the positive balances of CCC and the limited partners’ capital accounts. CCC shall contribute to the Partnership, if necessary, an amount equal to the lesser of the deficit balance in its capital account at the time of such liquidation, or 1.01% of the excess of the Limited Partners’ capital contribution to the Partnership over the capital contributions previously made to the Partnership by CCC, after giving effect to the allocation of income or loss arising from the liquidation of the Partnership’s assets.
(g)	Financial Statement Presentation
	These financial statements have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted pursuant to such rules and regulations, although the Partnership believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these financial statements be read in conjunction with the financial statements and accompanying notes in the Partnership’s December 31, 2004 Annual Report on Form 10-K.
	The interim financial statements presented herewith reflect in the opinion of management, all adjustments of a normal recurring nature necessary to present fairly the results for the interim periods presented. The results of operations for such interim periods are not necessarily indicative of the results to be expected for the full year.

(Continued)

9

IEA INCOME FUND XI, L.P.

Notes to Unaudited Condensed Financial Statements

(2) Net Lease Receivables Due from Leasing Company

Net lease receivables due from the Leasing Company are determined by deducting direct operating payables and accrued expenses, base management fees payable, and reimbursed administrative expenses payable to CCC and its affiliates from the rental billings earned by the Leasing Company under operating leases to ocean carriers for the containers owned by the Partnership as well as proceeds earned from container disposals. Net lease receivables at September 30, 2005 and December 31, 2004 were as follows:

	September 30,		December 31,
	2005		2004
Gross lease receivables	$	302,883	$	285,162
Sales-type lease receivable, net of unearned income (see Note 3)		62,913		168,647
		365,796		453,809
Less:
Direct operating payables and accrued expenses		98,426		90,229
Base management fees payable		14,369		9,683
Reimbursed administrative expenses		2,954		4,646
Allowance for doubtful accounts		59,673		59,219
		175,422		163,777
Net lease receivables	$	190,374	$	290,032

(3) Sales-Type Lease Receivable

On December 1, 2004, the Leasing Company, on behalf of the Partnership, amended a term lease agreement with one lessee to include a bargain purchase option. As a result of the amendment, the Partnership reclassified the term lease agreement as a sales-type lease, recorded a sales-type lease receivable and recognized the sale of 943 on-hire containers that were subject to the amended term lease agreement. The sales-type lease expires March 31, 2006. At September 30, 2005, the minimum future lease rentals under this sales-type lease, net of unearned income are:

					Net Minimum Future
	Gross Sales-Type		Unearned Sales-Type		Sales-Type Lease
	Lease Receivable		Lease Income		Rentals
2005	$	31,896	$	808	$	31,088
2006		32,147		322		31,825
Total	$	64,043	$	1,130	$	62,913

(Continued)

10

IEA INCOME FUND XI, L.P.

Notes to Unaudited Condensed Financial Statements

(4)  Net Lease Revenue

Net lease revenue is determined by deducting direct operating expenses, base management fees and reimbursed administrative expenses to CCC and its affiliates from the rental revenue earned by the Leasing Company under operating leases to ocean carriers for the containers owned by the Partnership. Net lease revenue for the three and nine-month periods ended September 30, 2005 and 2004 was as follows:

	Three Months Ended				Nine Months Ended
	September 30,		September 30,		September 30,		September 30,
	2005		2004		2005		2004
Rental revenue	$	148,215	$	231,147	$	480,250	$	713,132
Interest income from sales-type lease		1,349		—		5,651		—
		149,564		231,147		485,901		713,132
Less:
Rental equipment operating expenses		16,836		26,893		70,819		123,540
Base management fees		12,555		16,404		39,915		48,850
Reimbursed administrative expenses
Salaries		7,294		9,278		25,545		32,349
Other payroll related expenses		658		1,836		3,486		4,150
General and administrative expenses		1,817		3,673		6,370		10,831
		39,160		58,084		146,135		219,720
Net lease revenue	$	110,404	$	173,063	$	339,766	$	493,412

(Continued)

11

IEA INCOME FUND XI, L.P.

Notes to Unaudited Condensed Financial Statements

(5) Operating Segment

An operating segment is a component of an enterprise that engages in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the enterprise’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and about which separate financial information is available. CCC and the Leasing Company operate the Partnership’s container fleet as a homogenous unit and have determined that as such it has a single reportable operating segment.

The Partnership derives its revenues from dry cargo and refrigerated containers used by its customers in global trade routes. As of September 30, 2005, the Partnership operated 1,579 twenty-foot 582 forty-foot and 21 forty-foot high-cube marine dry cargo containers, as well as 19 twenty-foot and 1 forty-foot marine refrigerated cargo containers. A summary of gross lease revenue, by product, for the three and nine-month periods ended September 30, 2005 and 2004 follows:

	Three Months Ended				Nine Months Ended
	September 30,		September 30,			September 30,		September 30,
	2005		2004			2005		2004
Dry cargo containers	$	136,071	$	203,589		$	435,578	$	623,824
Refrigerated containers		13,493		27,558			50,323		89,308
Total	$	149,564	$	231,147		$	485,901	$	713,132

Due to the Partnership’s lack of information regarding the physical location of its fleet of containers when on lease in the global shipping trade, the Partnership believes that it does not possess discernible geographic reporting segments as defined in SFAS No. 131 (“SFAS 131”), “Disclosures about Segments of an Enterprise and Related Information.”

12

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     The following discussion of the Partnership’s historical financial condition and results of operations should be read in conjunction with the Partnership’s December 31, 2004 Annual Report on Form 10-K and the financial statements and the notes thereto appearing elsewhere in this report.

Market Overview

     Commencing in 2001, the Partnership’s 11th year of operations, the Partnership began focusing its attention on the disposition of its fleet in accordance with another of its original investment objectives, realizing the residual value of its containers after the expiration of their economic useful lives, estimated to be between 12 to 15 years after placement in leased service. Accordingly, the Partnership’s financial condition and results from operations are affected by the impact of market conditions on its remaining on-hire containers, as well as market conditions affecting the Partnership’s off-hire containers, including those affecting the container resale market.

     The container leasing industry continues to operate under the most favorable market conditions in its 35-year-plus history. During 2003 and 2004, industry observers report that global container trade grew by an estimated 8% and 12%, respectively. In comparison, global container trade grew by a modest 3.7% during 2001, a recession year. These favorable conditions contributed to a strong container leasing market, resulting in high levels of demand for existing containers and a decline in off-hire container inventories. During 2005, demand for existing dry cargo containers eased from the levels experienced in 2004 when demand often exceeded supply, resulting in a more balanced leasing market. As a result, utilization of the Partnership’s combined fleet declined to approximately 92.7% at September 30, 2005 when compared to 93.5% at June 30, 2005, still a very favorable level of utilization when compared to historical levels. Forecasts for economic growth and global container trade remain strong and, while 2005 is expected to finish as one of the strongest years for the container leasing industry, growth in these indicators is expected to be at a more moderate pace than that experienced during 2004. This is due to a number of factors, including the effects of increased crude oil prices on the global economy.

     During the three and nine-month periods ending September 30, 2005, high utilization levels continued to contribute to low inventories of off-hire containers as shipping lines employed more leased containers to meet the growth in containerized trade. Declining inventories have also contributed to an increase in the amount of proceeds realized on the sale of used containers, as fewer containers are available at non-factory locations to meet the demand of buyers. The inventory levels experienced during the three and nine-month periods ended September 30, 2005 have generally resulted in substantial decreases in storage and other inventory-related operating expenses. A significant increase in container inventories in future periods may contribute to increases in the Partnership’s storage and related inventory expenses.

     The price of a new 20-foot dry cargo container increased to a peak of $2,300 during the first nine months of 2005 and has declined to approximately $1,700 at the end of September 2005 due to reduced demand for new dry cargo containers, a corresponding buildup of new container inventories at Chinese container factories and a recent decline in the price of Corten steel and other raw materials. The decline in orders for new dry cargo containers was further affected by increased efficiencies by the shipping lines, as well as the fact that ports have avoided the congestion problems that occurred in the U.S. and Europe during 2004. The recent decline in the cost of new dry cargo containers was the first to have occurred in over three years. Container prices continue to be tied to energy costs, steel prices and interest rates, and are subject to fluctuations based on these variables. Although the Partnership may no longer purchase new containers, the price of new containers has indirectly contributed to the Partnership’s results of operations, influencing the level of lease per-diems for existing older containers, as well as container sale prices realized upon their eventual disposal.

     The sale of the Partnership’s off-hire containers, in accordance with one of its aforementioned original investment objectives, has also positively affected the Partnership’s results from operations, contributing to the Partnership’s high utilization levels, minimizing storage and other inventory-related costs incurred for its off-hire containers, as well as realizing favorable sale proceeds from the sale of its containers. During the third quarter of 2005, buyers continued to demand existing, older containers. In many geographical markets, sales prices for used containers increased as inventories of off-hire containers at non-factory locations declined, reducing the available supply of containers eligible for sale. A significant increase in inventory levels in future periods, as well as significant declines in new container prices, could adversely impact sales proceeds realized on the sale of containers.

13

     The increased trade volumes of recent years have contributed to shortages of both containerships and tonnage capacity. As a result, shipping lines have embarked on a major new shipbuilding program. Industry analysts are expressing concern that the current program of new shipbuilding may create over-capacity within the shipping industry once the new containerships scheduled for delivery during 2006 and 2007 are placed in service. Based on current orders, industry analysts predict that the world’s containership fleet will exceed 10 million TEU by the end of 2007, compared to less than 7 million TEU at the beginning of 2004. Over-capacity may contribute to lower freight rates, resulting in reduced profitability for the shipping lines, that in turn could have adverse implications for container leasing companies.

Results of Operations

     Pursuant to the Limited Partnership Agreement of the Partnership, all authority to administer the business of the Partnership is vested in CCC. A Leasing Agent Agreement exists between CCC and the Leasing Company, whereby the Leasing Company has the responsibility to manage the leasing operations of all equipment owned by the Partnership. Pursuant to the Agreement, the Leasing Company is responsible for leasing, managing and re-leasing the Partnership’s containers to ocean carriers and has full discretion over which ocean carriers and suppliers of goods and services it may deal with. The Leasing Agent Agreement permits the Leasing Company to use the containers owned by the Partnership, together with other containers owned or managed by the Leasing Company and its affiliates, as part of a single fleet operated without regard to ownership.

     The primary component of the Partnership’s results of operations is net lease revenue. Net lease revenue is determined by deducting direct operating expenses, management fees and reimbursed administrative expenses from gross lease revenues billed by the Leasing Company from the leasing of the Partnership’s containers. Net lease revenue is directly related to the size, utilization and per-diem rental rates of the Partnership’s fleet. Direct operating expenses are direct costs associated with the Partnership’s containers. Direct operating expenses may be categorized as follows:

• Activity-related expenses including agent and depot costs such as repairs, maintenance and handling.

• Inventory-related expenses for off-hire containers, comprising storage and repositioning costs. These costs are sensitive to the quantity of off-hire containers as well as the frequency at which containers are re-delivered.

• Legal and other expenses including legal costs related to the recovery of containers and doubtful accounts, insurance and provisions for doubtful accounts.

14

     At September 30, 2005, approximately 22% of the original equipment remained in the Partnership’s fleet, as compared to approximately 26% at December 31, 2004. The following table summarizes the composition of the Partnership’s fleet (based on container type) at September 30, 2005.

	Dry Cargo						Refrigerated
	Containers						Containers
					40-Foot
	20-Foot		40-Foot		High-Cube		20-Foot		40-Foot
Containers on lease:
Master lease		441		224		12		14		—
Term lease
Short term1		219		146		4		—		1
Long term 2		80		45		3		—		—
Sales-type lease		744		110		—		—		—
Subtotal		1,484		525		19		14		1
Containers off lease		95		57		2		5		—
Total container fleet		1,579		582		21		19		1

	Dry Cargo															Refrigerated
	Containers															Containers
											40-Foot
	20-Foot					40-Foot					High-Cube					20-Foot					40-Foot
	Units		%			Units		%			Units		%			Units		%			Units		%
Total purchases		6,411		100	%		3,342		100	%		200		100	%		103		100	%		50		100	%
Less disposals		4,832		75	%		2,760		83	%		179		90	%		84		82	%		49		98	%
Remaining fleet at September 30, 2005		1,579		25	%		582		17	%		21		10	%		19		18	%		1		2	%

1.	Short term leases represent term leases that are either scheduled for renegotiation or that may expire on or before September 30, 2006.
2.	Long term leases represent term leases, the majority of which will expire between October 2006 and December 2010.

     Within the next twelve months, the Partnership is expected to enter the final phase of its liquidation and wind-up stage of operations by disposing of its remaining fleet and focusing on the collection of its lease receivables, a component of net lease receivables. The Partnership will thereafter undertake a final distribution to its partners, then cancel the Certificate of Limited Partnership, thus dissolving and terminating the Partnership.

Three Months Ended September 30, 2005 Compared to the Three Months Ended September 30, 2004

Net lease revenue was $110,404 for the three months ended September 30, 2005, compared to $173,063 for the same period in the prior year. The decrease was primarily due to a $82,932 decline in gross rental revenue (a component of net lease revenue). Gross rental revenue was impacted by the Partnership’s smaller fleet size, as well as a decrease in dry cargo container utilization rates, when compared to the same three-month period in the prior year. The Partnership’s average fleet size and utilization rates for the three-month periods ended September 30, 2005 and 2004 were as follows:

	Three Months Ended
	September 30,			September 30,
	2005			2004
Fleet size (measured in twenty-foot equivalent units (TEU))
Dry cargo containers		2,885			3,656
Refrigerated containers		37			72
Average utilization rates
Dry cargo containers		94	%		95	%
Refrigerated containers		83	%		76	%

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     Other components of net lease revenue, including rental equipment operating expenses, management fees, and reimbursed administrative expenses, were lower by a combined $18,924 when compared to the same period in 2004, and partially offset the decline in gross lease revenue. The $10,057 decrease in direct operating expenses was largely attributable to the reduction in the provision for doubtful accounts during the three-month period ended September 30, 2005 compared to the same period of the prior year.

     Depreciation expense of $77,133 for the three months ended September 30, 2005 declined by $76,869 when compared to the corresponding period in 2004, a direct result of the Partnership’s aging and declining fleet size.

     Other general and administrative expenses amounted to $25,584 for the three-month period ended September 30, 2005, an increase of $3,886 or 18% when compared with the same period in 2004, due to increased costs associated with investor communications.

     Net gain on disposal of equipment for the three months ended September 30, 2005 was $32,859, as compared to a net loss of $27,665 for the corresponding period in 2004. The Partnership disposed of 151 containers during the third quarter of 2005, compared to 170 containers during the same three-month period in 2004. The Partnership believes that the net gain on container disposals in the three-month period ended September 30, 2005 was a result of various factors, including the volume of disposed containers, the age, condition, suitability for continued leasing, as well as the geographical location of the containers when disposed. In subsequent periods, net gain on disposal of equipment will be primarily influenced by the agreements entered into for the final sale of the Partnership’s containers. There were no reductions to the carrying value of container rental equipment due to impairment during the three-month periods ended September 30, 2005 and 2004.

Nine Months Ended September 30, 2005 Compared to the Nine Months Ended September 30, 2004

Net lease revenue was $339,766 for the nine months ended September 30, 2005, compared to $493,412 for the same period in the prior year. The decrease was primarily due to a $232,882 decline in gross rental revenue (a component of net lease revenue). Gross rental revenue was impacted by the Partnership’s smaller fleet size and a 5% decrease in the average per-diem rental rate for refrigerated cargo containers, partially offset by an increase in fleet utilization rates, when compared to the same nine-month period in the prior year. The Partnership’s average fleet size and utilization rates for the nine-month periods ended September 30, 2005 and 2004 were as follows:

	Nine Months Ended
	September 30,			September 30,
	2005			2004
Fleet size (measured in twenty-foot equivalent units (TEU))
Dry cargo containers		3,074			3,969
Refrigerated containers		43			84
Average utilization rates
Dry cargo containers		95	%		92	%
Refrigerated containers		86	%		72	%

     Other components of net lease revenue, including rental equipment operating expenses, management fees, and reimbursed administrative expenses, were lower by a combined $73,585 when compared to the same period in 2004, and partially offset the decline in gross lease revenue. The $52,721 decrease in direct operating expenses was largely attributable to the Partnership’s higher fleet utilization rates during the nine-month period ended September 30, 2005 compared to the same period of the prior year, and its positive impact on inventory-related expenses such as storage and repositioning, as well as activity-related expenses such as repair, maintenance and handling expenses. The Partnership also recognized a reduction in the provision for doubtful accounts for the nine months ended September 30, 2005, compared to the same period in the prior year.

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     Depreciation expense of $253,655 for the nine months ended September 30, 2005 declined by $257,867 when compared to the corresponding period in 2004, a direct result of the Partnership’s aging and declining fleet size.

     Other general and administrative expenses amounted to $77,301 for the nine-month period ended September 30, 2005, an increase of $5,870 or 8% when compared with the same period in 2004.

     Net gain on disposal of equipment for the nine months ended September 30, 2005 was $130,085, as compared to a net loss of $116,635 for the corresponding period in 2004. The Partnership disposed of 408 containers during the first nine months of 2005, compared to 578 containers during the same nine-month period in 2004. The Partnership believes that the net gain on container disposals in the nine-month period ended September 30, 2005 was a result of various factors, including the volume of disposed containers, the age, condition, suitability for continued leasing, as well as the geographical location of the containers when disposed. In subsequent periods, net gain on disposal of equipment will be primarily influenced by the agreements entered into for the final sale of the Partnership’s containers.

Liquidity and Capital Resources

     During the Partnership’s first 10 years of operations, the Partnership’s primary objective was to generate cash flow from operations for distribution to its limited partners. Aside from the initial working capital reserve retained from the gross subscription proceeds (equal to approximately 1% of such proceeds), the Partnership relied primarily on container rental receipts to meet this objective as well as to finance current operating needs. No credit lines are maintained to finance working capital. Commencing in 2001, the Partnership’s 11th year of operations, the Partnership began focusing its attention on the disposition of its fleet in accordance with another of its original investment objectives, realizing the residual value of its containers after the expiration of their economic useful lives, estimated to be between 12 to 15 years after placement in leased service. Since that time, the Partnership has been actively disposing of its fleet, with cash proceeds from equipment disposals, in addition to cash from operations, providing the cash flow for distributions to the limited partners. The decision to dispose of containers is influenced by various factors including age, condition, suitability for continued leasing as well as the geographical location when disposed. At September 30, 2005, approximately 22% of the original equipment remained in the Partnership’s fleet. Within the next twelve months, the Partnership is expected to enter the final phase of its liquidation and wind-up stage of operations by disposing of its remaining fleet and focusing on the collection of its lease receivables, a component of net lease receivables. The Partnership will thereafter undertake a final distribution to its partners, then cancel the Certificate of Limited Partnership, thus dissolving and terminating the Partnership. Upon the liquidation of CCC’s interest in the Partnership, CCC shall contribute to the Partnership, if necessary, an aggregate amount equal to the lesser of the deficit balance in its capital account at the time of such liquidation, or 1.01% of the excess of the Limited Partners’ capital contribution to the Partnership over the capital contributions previously made to the Partnership by CCC, after giving effect to the allocation of income or loss arising from the liquidation of the Partnership’s assets.

     Distributions are paid monthly, based primarily on each quarter’s cash flow from operations. Monthly distributions are also affected by periodic increases or decreases to working capital reserves, as deemed appropriate by the general partner.

     At September 30, 2005, the Partnership had $633,254 in cash and cash equivalents, a decrease of $141,985 from the cash balances at December 31, 2004. The Partnership invests its working capital, as well as cash flows from operations and the sale of containers that have not yet been distributed to CCC or its limited partners, in money market funds. At September 30, 2005, the Partnership had an additional $45,000 as part of its working capital for expenses related to its final liquidation and subsequent dissolution. The liquidation of the Partnership’s remaining containers will be the primary factor influencing the future level of cash from operating, investing and financing activities.

     Cash from Operating Activities: Net cash provided by operating activities, primarily generated from the billing and collection of net lease revenue, was $258,052 during the nine months ended September 30, 2005, compared to $416,923 for the same nine month period in 2004.

     Cash from Investing Activities: Net cash provided by investing activities was $544,227 during the nine months ended September 30, 2005, compared to $465,598 in the corresponding period of 2004. These amounts represent sales proceeds generated from the sale of container equipment and payment received from the sales-type lease for the sale of rental equipment.

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     Cash from Financing Activities: Net cash used in financing activities was $944,264 during the nine months ended September 30, 2005 compared to $882,870 during the nine months ended September 30, 2004. These amounts represent distributions to the Partnership’s general and limited partners.

Critical Accounting Policies

The Partnership’s accounting policies are fundamental to understanding management’s discussion and analysis of results of operations and financial condition. The Partnership has identified three policies as being significant because they require the Partnership to make subjective and/or complex judgments about matters that are inherently uncertain. These policies include the following:

• Container equipment – depreciable lives

• Container equipment – valuation

• Allowance for doubtful accounts

     The Partnership, in consultation with its audit committee, has reviewed and approved these significant accounting policies which are further described in the Partnership’s 2004 Annual Report on Form 10-K.

Inflation

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Exchange rate risk: Substantially all of the Partnership’s revenues are billed and paid in US dollars and a significant portion of costs are billed and paid in US dollars. The Leasing Company believes that the proportion of US dollar revenues may decrease in future years, reflecting a more diversified customer base and lease portfolio. Of the non-US dollar direct operating expenses, the majority are individually small, unpredictable and incurred in various denominations. Thus, the Leasing Company determined such amounts are not suitable for cost effective hedging. As exchange rates are outside of the control of the Partnership and Leasing Company, there can be no assurance that such fluctuations will not adversely affect the Partnership’s results of operations and financial condition.

Item 4. Controls and Procedures

The principal executive and principal financial officers of CCC have evaluated the disclosure controls and procedures of the Partnership as of the end of the period covered by this quarterly report. As used herein, the term “disclosure controls and procedures” has the meaning given to the term by Rule 13a-15 under the Securities Exchange Act of 1934, as amended (“Exchange Act”), and includes the controls and other procedures of the Partnership that are designed to ensure that information required to be disclosed by the Partnership in the reports that it files with the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Based upon their evaluation, the principal executive and principal financial officers of CCC have concluded that the Partnership’s disclosure controls and procedures were effective such that the information required to be disclosed by the Partnership in this quarterly report is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms applicable to the preparation of this report and is accumulated and communicated to CCC’s management, including CCC’s principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.

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

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings

     Not applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

     Not applicable.

Item 3. Defaults Upon Senior Securities

     Not applicable.

Item 4. Submissions of Matters to a Vote of Securities Holders

     Not applicable.

Item 5. Other Information

     Not applicable.

Item 6. Exhibits

(a) Exhibits

Exhibit
No	Description	Method of Filing
3(a)	Limited Partnership Agreement, amended and restated as of December 14, 1990	*
3(b)	Certificate of Limited Partnership	**
10(a)	Form of Leasing Agent Agreement with LPI Leasing Partners International N.V.	***
10(b)	Assignment of Leasing Agent Agreement dated January 1, 1992 between the Partnership, CCC (formerly Intermodal Equipment Associates), Cronos Containers N.V. (formerly LPI Leasing Partners International N.V.) and Cronos Containers Limited	****
31.1	Rule 13a-14 Certification	Filed with this document
31.2	Rule 13a-14 Certification	Filed with this document
32	Section 1350 Certification	Filed with this document *****

*	Incorporated by reference to Exhibit “A” to the Prospectus of the Partnership dated December 14, 1990, included as part of Registration Statement on Form S-1 (No. 33-36701)
**	Incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 (No. 33-36701)
***	Incorporated by reference to Exhibit 10.2 to the Registration Statement on Form S-1 (No. 33-36701)
****	Incorporated by reference to Exhibit 10(b) to the Report on Form 10-K for the fiscal year ended December 31, 1999.
*****	This certification, required by Section 906 of the Sarbanes-Oxley Act of 2002, other than as required by Section 906, is not to be deemed “filed” with the Commission or subject to the rules and regulations promulgated by the Commission under the Securities Exchange Act of 1934, as amended, or to the liabilities of Section 18 of said Act.

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Partnership has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

IEA INCOME FUND XI, L.P.
By	Cronos Capital Corp.
	The General Partner
By	/s/ Dennis J. Tietz Dennis J. Tietz
	President and Director of Cronos Capital Corp. (“CCC”) Principal Executive Officer of CCC
By	/s/ John Kallas John Kallas
	Chief Financial Officer and Director of Cronos Capital Corp. (“CCC”) Principal Financial and Accounting Officer of CCC

Date: November 11, 2005

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EXHIBIT INDEX

Exhibit
No.	Description	Method of Filing
3(a)	Limited Partnership Agreement, amended and restated as of December 14, 1990	*
3(b)	Certificate of Limited Partnership	**
10(a)	Form of Leasing Agent Agreement with LPI Leasing Partners International N.V.	***
10(b)	Leasing Partners International N.V. Assignment of Leasing Agent Agreement dated January 1, 1992 between the Partnership, CCC (formerly Intermodal Equipment Associates), Cronos Containers N.V. (formerly LPI Leasing Partners International N.V.) and Cronos Containers Limited	****
31.1	Rule 13a-14 Certification	Filed with this document
31.2	Rule 13a-14 Certification	Filed with this document
32	Section 1350 Certification	Filed with this document *****

*	Incorporated by reference to Exhibit “A” to the Prospectus of the Partnership dated December 14, 1990, included as part of Registration Statement on Form S-1 (No. 33-36701)
**	Incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 (No. 33-36701)
***	Incorporated by reference to Exhibit 10.2 to the Registration Statement on Form S-1 (No. 33-36701)
****	Incorporated by reference to Exhibit 10(b) to the Report on Form 10-K for the fiscal year ended December 31, 1999.
*****	This certification, required by Section 906 of the Sarbanes-Oxley Act of 2002, other than as required by Section 906, is not to be deemed “filed” with the Commission or subject to the rules and regulations promulgated by the Commission under the Securities Exchange Act of 1934, as amended, or to the liabilities of Section 18 of said Act.