1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________ TO ____________ Commission file number 0-19770 IEA INCOME FUND XI, L.P. (Exact name of registrant as specified in its charter) California 94-3122430 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 444 Market Street, 15th Floor, 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 X . No . ---- ---- 2 IEA INCOME FUND XI, L.P. REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998 TABLE OF CONTENTS PAGE PART I - FINANCIAL INFORMATION Item 1. Financial Statements Balance Sheets - June 30, 1998 (unaudited) and December 31, 1997 4 Statements of Operations for the three and six months ended June 30, 1998 and 1997 (unaudited) 5 Statements of Cash Flows for the six months ended June 30, 1998 and 1997 (unaudited) 6 Notes to Financial Statements (unaudited) 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Item 3. Quantitative and Qualitative Disclosures About Market Risk 12 PART II - OTHER INFORMATION Item 1. Legal Proceedings 13 Item 3. Defaults Upon Senior Securities 14 Item 5. Other Information 14 Item 6. Exhibits and Reports on Form 8-K 16 2 3 PART I - FINANCIAL INFORMATION Item 1. Financial Statements Presented herein are the Registrant's balance sheets as of June 30, 1998 and December 31, 1997, statements of operations for the three and six months ended June 30, 1998 and 1997, and statements of cash flows for the six months ended June 30, 1998 and 1997. 3 4 IEA INCOME FUND XI, L.P. BALANCE SHEETS (UNAUDITED) June 30, December 31, 1998 1997 ------------ ------------ Assets Current assets: Cash and cash equivalents, includes $1,432,466 at June 30, 1998 and $1,394,472 at December 31, 1997 in interest-bearing accounts $ 1,432,566 $ 1,394,672 Net lease receivables due from Leasing Company (notes 1 and 2) 619,712 556,611 ------------ ------------ Total current assets 2,052,278 1,951,283 ------------ ------------ Container rental equipment, at cost 35,491,517 35,812,722 Less accumulated depreciation 14,025,962 13,113,676 ------------ ------------ Net container rental equipment 21,465,555 22,699,046 ------------ ------------ $ 23,517,833 $ 24,650,329 ============ ============ Liabilities and Partners' Capital Current liabilities: Accrued expenses $ 75,000 $ 75,000 ------------ ------------ Total current liabilities 75,000 75,000 ------------ ------------ Partners' capital (deficit): General partner (35,742) (24,417) Limited partners 23,478,575 24,599,746 ------------ ------------ Total partners' capital 23,442,833 24,575,329 ------------ ------------ $ 23,517,833 $ 24,650,329 ============ ============ The accompanying notes are an integral part of these financial statements. 4 5 IEA INCOME FUND XI, L.P. STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended Six Months Ended -------------------------- -------------------------- June 30, June 30, June 30, June 30, 1998 1997 1998 1997 ----------- ----------- ----------- ----------- Net lease revenue (notes 1 and 3) $ 741,651 $ 780,603 $ 1,557,174 $ 1,522,874 Other operating expenses: Depreciation 520,768 529,648 1,042,390 1,078,088 Other general and administrative expenses 16,038 24,298 35,311 36,951 ----------- ----------- ----------- ----------- 536,806 553,946 1,077,701 1,115,039 ----------- ----------- ----------- ----------- Earnings from operations 204,845 226,657 479,473 407,835 Other income (loss): Interest income 18,544 15,265 36,954 33,596 Net gain (loss) on disposal of equipment (25,519) (5,530) (17,499) 3,274 ----------- ----------- ----------- ----------- (6,975) 9,735 19,455 36,870 ----------- ----------- ----------- ----------- Net earnings $ 197,870 $ 236,392 $ 498,928 $ 444,705 =========== =========== =========== =========== Allocation of net earnings: General partner $ 26,667 $ 32,167 $ 70,245 $ 78,208 Limited partners 171,203 204,225 428,683 366,497 ----------- ----------- ----------- ----------- $ 197,870 $ 236,392 $ 498,928 $ 444,705 =========== =========== =========== =========== Limited partners' per unit share of net earnings $ 0.08 $ 0.10 $ 0.21 $ 0.18 =========== =========== =========== =========== The accompanying notes are an integral part of these financial statements. 5 6 IEA INCOME FUND XI, L.P. STATEMENTS OF CASH FLOWS (UNAUDITED) Six Months Ended -------------------------- June 30, June 30, 1998 1997 ----------- ----------- Net cash provided by operating activities $ 1,454,303 $ 1,647,678 Cash flows provided by (used in) investing activities: Proceeds from disposal of equipment 215,015 80,852 Purchase of container rental equipment -- (260,247) Acquisition fees paid to general partner -- (13,012) ----------- ----------- Net cash provided by (used in) investing activities 215,015 (192,407) ----------- ----------- Cash flows used in financing activities: Distribution to partners (1,631,424) (1,762,996) ----------- ----------- Net increase (decrease) in cash and cash equivalents 37,894 (307,725) Cash and cash equivalents at January 1 1,394,672 1,605,557 ----------- ----------- Cash and cash equivalents at June 30 $ 1,432,566 $ 1,297,832 =========== =========== The accompanying notes are an integral part of these financial statements. 6 7 IEA INCOME FUND XI, L.P. NOTES TO UNAUDITED 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. 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 June 30, 1998, the Partnership operated 6,072 twenty-foot, 3,209 forty-foot and 194 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 two 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. 7 (Continued) 8 IEA INCOME FUND XI, L.P. NOTES TO UNAUDITED 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. (d) Financial Statement Presentation These financial statements have been prepared without audit. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting procedures have been omitted. It is suggested that these financial statements be read in conjunction with the financial statements and accompanying notes in the Partnership's latest annual report on Form 10-K. 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 reported period. Actual results could differ from those estimates. The interim financial statements presented herewith reflect all adjustments of a normal recurring nature which are, in the opinion of management, necessary to a fair statement of the financial condition and results of operations for the interim periods presented. (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 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 June 30, 1998 and December 31, 1997 were as follows: June 30, December 31, 1998 1997 ---------- ---------- Lease receivables, net of doubtful accounts of $43,963 at June 30, 1998 and $83,363 at December 31, 1997 $1,143,339 $1,150,909 Less: Direct operating payables and accrued expenses 293,012 335,684 Damage protection reserve 94,188 124,216 Base management fees 115,046 112,209 Reimbursed administrative expenses 21,381 22,189 ---------- ---------- $ 619,712 $ 556,611 ========== ========== (Continued) 8 9 IEA INCOME FUND XI, L.P. NOTES TO UNAUDITED FINANCIAL STATEMENTS (3) 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 three and six-month periods ended June 30, 1998 and 1997 was as follows: Three Months Ended Six Months Ended ----------------------- ----------------------- June 30, June 30, June 30, June 30, 1998 1997 1998 1997 ---------- ---------- ---------- ---------- Rental revenue $1,178,950 $1,294,688 $2,432,320 $2,593,554 Less: Rental equipment operating expenses 292,412 354,781 554,796 751,185 Base management fees 80,119 90,754 166,132 180,457 Reimbursed administrative expenses 64,768 68,550 154,218 139,038 ---------- ---------- ---------- ---------- $ 741,651 $ 780,603 $1,557,174 $1,522,874 ========== ========== ========== ========== 9 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations It is suggested that the following discussion be read in conjunction with the Registrant's most recent annual report on Form 10-K. 1) Material changes in financial condition between June 30, 1998 and December 31, 1997. At June 30, 1998, the Registrant had $1,432,566 in cash and cash equivalents, an increase of $37,894 from the December 31, 1997 cash balances. At June 30, 1998, the Registrant had approximately $346,000 in cash generated from equipment sales reserved as part of its cash balances. Throughout the remainder of 1998, the Registrant expects to continue using cash generated from equipment sales to purchase and replace containers which have been lost or damaged beyond repair. Net lease receivables at June 30, 1998 increased 11% when compared to December 31, 1997. Contributing to this change was a decrease in direct operating payables and accrued expenses, a component of net lease receivables. Direct operating payables and accrued expenses decreased 13% from December 31, 1997 due to the decrease in costs associated with higher utilization levels, including handling, storage and repositioning. The Registrant's cash distribution from operations for the second quarter of 1998 was 7.75% (annualized) of the limited partners' original capital contributions, unchanged from the first quarter of 1998. These distributions are directly related to the Registrant's results from operations and may fluctuate accordingly. Imbalances and reductions in trade volumes, fueled by the economic crisis in Asia, continue to affect the container leasing market and Partnership operations. Containerships leaving Asia are operating at full capacity. Yet, on the return eastbound trip they are going back to Asia with only a fraction of their holds utilized. This results in a shortage of containers available for exporting cargo from Asia and a surplus of containers in locations of low demand. As a consequence of this imbalance, container leasing companies are repositioning empty containers from low-demand locations back to Asian ports in order to keep equipment at the source of cargo and, at the same time, reduce the effects of additional depot charges for idle equipment and lost revenue. While there is a cost incurred when repositioning an empty container, revenue is lost while it is in transit. In spite of these market pressures, strong trade with other parts of the world is compensating for the imbalances with Asia. There is renewed demand for leased containers in locations such as Mexico, Canada, China, and areas of Europe where trade volumes of containerized goods are prospering. In light of the current market conditions, the Registrant's focus remains centered on strategic planning in order to reduce equipment imbalances and on improving collections to maximize returns. 2) Material changes in the results of operations between the three and six-month periods ended June 30, 1998 and the three and six-month periods ended June 30, 1997. Net lease revenue for the three and six-month periods ended June 30, 1998 was $741,651 and $1,557,174, respectively, a decrease of approximately 5% and an increase of 2% from the same respective periods in the prior year. Gross rental revenue (a component of net lease revenue) for the three and six-month periods ended June 30, 1998 was $1,178,950 and $2,432,320, respectively, reflecting a decline of 9% and 6%, respectively, from the same periods in the prior year. Gross lease revenue was primarily impacted by lower per-diem rental rates and utilization levels. Average dry cargo container per-diem rental rates for the three and six-month periods ended June 30, 1998 declined 8% and 10%, respectively, when compared to the same periods in the prior year. Average refrigerated container per-diem rental rates for the three and six-month periods ended June 30, 1998 declined 17% and 12%, respectively, when compared to the same periods in the prior year. 10 11 The Registrant's average fleet size and utilization rates for the three and six-month periods ended June 30, 1998 and June 30, 1997 were as follows: Three Months Ended Six Months Ended ------------------ ------------------ June 30, June 30, June 30, June 30, 1998 1997 1998 1997 ------ ------ ------ ------ Average fleet size (measured in twenty-foot equivalent units (TEU)) Dry cargo containers 12,900 13,084 12,946 13,049 Refrigerated containers 200 200 200 200 Average Utilization Dry cargo containers 79% 75% 78% 74% Refrigerated containers 75% 80% 79% 84% Rental equipment operating expenses were 25% and 23%, respectively, of the Registrant's gross lease revenue during the three and six-month periods ended June 30, 1998, as compared to 27% and 29%, respectively, of the Registrant's gross lease revenue during the three and six-month periods ended June 30, 1997. This decline was largely attributable to a decrease in costs associated with higher utilization levels, including handling and storage. The Registrant's operating results contributed to a decline in base management fees during the three and six-month periods ended June 30, 1998 when compared to the same periods in the prior year. The Registrant disposed of 31 twenty-foot, 22 forty-foot, and one high-cube marine dry cargo containers during the second quarter of 1998, as compared to 17 twenty-foot and 13 forty-foot marine dry cargo containers during the same period in the prior year. 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. Year 2000 The Registrant relies upon the financial and operational systems provided by the Leasing company and its affiliates, as well as the systems provided by other independent third parties to service the three primary areas of its business: investor processing/maintenance; container leasing/asset tracking; and accounting finance. The Registrant has received confirmation from its third-party investor processing/maintenance vendor that their system is Year 2000 compliant. The Registrant does not expect a material increase in its vendor servicing fee to reimburse Year 2000 costs. Container leasing/asset tracking and accounting/finance services are provided to the Registrant by CCC and its affiliate, Cronos Containers Limited (the "Leasing Company"), pursuant to the respective Limited Partnership Agreement and Leasing Agent Agreement. CCC and the Leasing Company have initiated a program to prepare their systems and applications for the Year 2000. Preliminary studies indicate that testing, conversion and upgrading of system applications is expected to cost CCC and the Leasing Company less than $500,000. Pursuant to the Limited Partnership Agreement, CCC or the Leasing Company, may not seek reimbursement of data processing costs associated with the Year 2000 program. The financial impact of making these required system changes is not expected to be material to the Registrant's financial position, results of operations or cash flows. 11 12 Cautionary Statement This Quarterly Report on Form 10-Q 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 2., Management's Discussion and Analysis of Financial Condition and Results of Operations; and those detailed from time to time in the filings of Registrant with the Securities and Exchange Commission. Item 3. Quantitative and Qualitative Disclosures About Market Risk Not applicable. 12 13 PART II - OTHER INFORMATION Item 1. Legal Proceedings 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 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. In connection with its resignation, Arthur Andersen also prepared a report pursuant to Section 10A(b)(2) of the Securities Exchange Act of 1934 as amended, for filing by the Parent Company with the Securities and Exchange Commission ("SEC") citing its inability to obtain what it considered to be adequate responses to its inquiries primarily regarding the payment of $1.5 million purportedly in respect of professional fees relating to a proposed strategic alliance. This sum was returned to the Parent Company in January 1997. Following the report of Arthur Andersen, the SEC, on February 10, 1997, commenced a private investigation of the Parent Company for the purpose of investigating the matters discussed in such report and related matters. The SEC's investigation can result in several types of civil or administrative sanctions against the Parent Company and individuals associated with the Parent Company, including the assessment of monetary penalties. Actions taken by the SEC do not preclude additional actions by any other federal, civil or criminal authorities or by other regulatory organizations or by third parties. The SEC's investigation is continuing, and some of the Parent Company's present and former officers and directors and others associated with the Parent Company have given testimony. However, no conclusion of any alleged wrongdoing by the Parent Company or any individual has been communicated to the Parent Company by the SEC. The Registrant does not believe that the focus of the SEC's investigation is upon the Registrant or CCC. CCC is unable to predict the outcome of the SEC's ongoing private investigation of the Parent Company. As reported in the Registrant's Current Report on Form 8-K, filed with the SEC on May 21, 1998, the Parent Company reported that its Chairman and CEO, Stefan M. Palatin, was suspended from his duties pending the investigation of fraud charges against him by Austrian government authorities. On June 8, 1998, the Parent Company's Board of Directors removed Mr. Palatin as Managing Director and Chief Executive Officer. Mr. Palatin resigned from the Board of Directors of the Parent Company on July 6, 1998. Mr. Rudolf J. Weissenberger has been appointed to replace Mr. Palatin as an executive director and Chief Executive Officer. Also, on June 8, 1998, the Board approved a proposal to add two independent directors to the Board. The Board engaged legal counsel to provide legal advice and commence legal action, if appropriate, against former officers or directors of the Parent Company (including Mr. Palatin) if it is determined that they engaged in any misfeasance or improper self-dealing. Mr. Palatin had been a director of CCC; he resigned from his position as director on April 23, 1998. CCC further understands that Austrian authorities have initiated investigations of persons in addition to Mr. Palatin, including Mr. Weissenberger and Dr. Axel Friedberg. Dr. Friedberg has been a non-executive director of the Parent Company since 1997. Such investigations, which are still pending, have not resulted in any action being taken against Messrs. Weissenberger or Friedberg, and each has informed the Parent Company that they do not believe that there is any basis for any action to be taken against them. 13 14 Item 3. Defaults Upon Senior Securities See Item 5. Other Information. Item 5. Other Information In 1993, the Parent Company negotiated a credit facility (hereinafter, the "Credit Facility") with several banks for the use of the Parent Company and its affiliates, including CCC. At December 31, 1996, approximately $73,500,000 in principal indebtedness was outstanding under the Credit Facility. As a party to the Credit Facility, CCC is jointly and severally liable for the repayment of all principal and interest owed under the Credit Facility. The obligations of CCC, and the five other subsidiaries of the Parent Company that are borrowers under the Credit Facility, are guaranteed by the Parent Company. Following negotiations in 1997 with the banks providing the Credit Facility, an Amended and Restated Credit Agreement was executed in June 1997, subject to various actions being taken by the Parent Company and its subsidiaries, primarily relating to the provision of additional collateral. This Agreement was further amended in July 1997 and the provisions of the Agreement and its Amendment converted the facility to a term loan, payable in installments, with a final maturity date of May 31, 1998. The terms of the Agreement and its Amendment also provided for additional security over shares in the subsidiary of the Parent Company that owns the head office of the Parent Company's container leasing operations. They also provided for the loans to the former Chairman of $5,900,000 and $3,700,000 to be restructured as obligations of the former Chairman to another subsidiary of the Parent Company (not CCC), together with the pledge to this subsidiary company of 2,030,303 Common Shares beneficially owned by him in the Parent Company as security for these loans. They further provided for the assignment of these loans to the lending banks, together with the pledge of 1,000,000 shares and the assignment of the rights of the Parent Company in respect of the other 1,030,303 shares. Additionally, CCC granted the lending banks a security interest in the fees to which it is entitled for the services it renders to the container leasing partnerships of which it acts as general partner, including its fee income payable by the Registrant. The Parent Company did not repay the Credit Facility at the amended maturity date of May 31, 1998. On June 30, 1998, the Parent Company entered into a third amendment (the "Third Amendment") to the Credit Facility. The Third Amendment became effective as of that date, subject to the satisfaction thereafter of various conditions, including: the Parent Company must deliver its audited financial statements for 1997 by a specified date and; on or prior to July 30, 1998, the Parent Company must furnish proof that any defaults under any other indebtedness have been waived and must also furnish various legal opinions, officers' certificates and other loan documentation. Under the Third Amendment, the remaining principal amount of $36,800,000 will be amortized in varying monthly amounts commencing on July 31, 1998 with $26,950,000 due on September 30 and a final maturity date of January 8, 1999. All of these conditions will be fulfilled by August 14, 1998. The directors of the Parent Company are pursuing alternative sources of financing to meet the amended repayment obligations under the Third Amendment. Failure to meet revised lending terms would constitute an event of default with the lenders. The declaration of an event of default would result in further defaults with other lenders under loan agreement cross-default provisions. Should a default of the term loans be enforced, the Parent Company and CCC may be unable to continue as going concerns. CCC is currently in discussions with the management of the Parent Company to provide assurance that the management of the container leasing partnerships managed by CCC, including the Registrant, is not disrupted pending a refinancing or reorganization of the indebtedness of the Parent Company and its affiliates. 14 15 The Registrant is not a borrower under the Credit Facility, and neither the containers nor the other assets of the Registrant have been pledged as collateral under the Credit Facility. CCC is unable to determine the impact, if any, these concerns may have on the future operating results and financial condition of the Registrant or CCC and the Leasing Company's ability to manage the Registrant's fleet in subsequent periods. 15 16 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit No. Description Method of Filing ------- ---------------------------------------------------------- ---------------- 3(a) Limited Partnership Agreement of the Registrant, amended * and restated as of December 14, 1990 3(b) Certificate of Limited Partnership of the Registrant ** 10(a) Form of Leasing Agent Agreement with LPI Leasing Partners *** International N.V. 10(b) Assignment of Leasing Agent Agreement dated January 1, 1992 **** between the Registrant, CCC (formerly Intermodal Equipment Associates), Cronos Containers N.V. (formerly LPI Leasing Partners International N.V.) and Cronos Containers Limited 27 Financial Data Schedule Filed with this document (b) Report on Form 8-K On May 21, 1998, the Registrant filed a Report on Form 8-K reporting changes on the board of directors of the Parent Company. - ---------------- * Incorporated by reference to Exhibit "A" to the Prospectus of the Registrant dated December 14, 1990, included as part of Registration Statement on Form S-1 (No. 33-36701) ** Incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 (No. 33-36701) *** Incorporated by reference to Exhibit 10.2 to the Registration Statement on Form S-1 (No. 33-36701) **** Incorporated by reference to Exhibit 10(b) to the Report on Form 10-K for the fiscal year ended December 31, 1997. 16 17 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. IEA INCOME FUND XI, L.P. By Cronos Capital Corp. The General Partner By /s/ Dennis J. Tietz ---------------------------------- Dennis J. Tietz President and Director of Cronos Capital Corp. ("CCC") Principal Executive Officer of CCC Date: August 14, 1998 17 18 EXHIBIT INDEX Exhibit No. Description Method of Filing ------- ---------------------------------------------------------- ---------------- 3(a) Limited Partnership Agreement of the Registrant, amended * and restated as of December 14, 1990 3(b) Certificate of Limited Partnership of the Registrant ** 10(a) Form of Leasing Agent Agreement with LPI Leasing Partners *** International N.V. 10(b) Assignment of Leasing Agent Agreement dated January 1, 1992 **** between the Registrant, CCC (formerly Intermodal Equipment Associates), Cronos Containers N.V. (formerly LPI Leasing Partners International N.V.) and Cronos Containers Limited 27 Financial Data Schedule Filed with this document - ---------------- * Incorporated by reference to Exhibit "A" to the Prospectus of the Registrant dated December 14, 1990, included as part of Registration Statement on Form S-1 (No. 33-36701) ** Incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 (No. 33-36701) *** Incorporated by reference to Exhibit 10.2 to the Registration Statement on Form S-1 (No. 33-36701) **** Incorporated by reference to Exhibit 10(b) to the Report on Form 10-K for the fiscal year ended December 31, 1997.