##### Table of Contents



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, 2007
 OR
 o
    
    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 0-21518
 IEA INCOME FUND XII, L.P.
  California
(State or other jurisdiction of 
incorporation or organization)
    
    94-3143940
(I.R.S. Employer
Identification No.)
 
 
 þ o
  o o þ
 o þ




---



##### 



IEA INCOME FUND XII, L.P.
 Report on Form 10-Q for the Quarterly Period
Ended September 30, 2007
 TABLE OF CONTENTS
 PAGEPART I  FINANCIAL INFORMATION
    
    
    3Item 1. Financial Statements
    
    
    3Condensed Balance Sheets  September 30, 2007 and December 31, 2006 (unaudited)
    
    
    4Condensed Statements of Operations for the three and nine months ended September 30, 2007 and 2006 (unaudited)
    
    
    5Condensed Statements of Cash Flows for the nine months ended September 30, 2007 and 2006 (unaudited)
    
    
    6Notes to Condensed Financial Statements (unaudited)
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    13Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    19Item 4. Controls and Procedures
    
    
    19Item 4T. Controls and Procedures
    
    
    19PART II  OTHER INFORMATION
    
    
    20Item 1. Legal Proceedings
    
    
    20Item 1A. Risk Factors
    
    
    20Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    20Item 3. Defaults Upon Senior Securities
    
    
    20Item 4. Submissions of Matters to a Vote of Securities Holders
    
    
    20Item 5. Other Information
    
    
    20Item 6. Exhibits
    
    
    20EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32
  2




---



##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Financial Statements
   3




---



##### Table of Contents



IEA INCOME FUND XII, L.P.
 
 Condensed Balance Sheets
 (Unaudited)
 September 30,
    
    
    December 31,2007
    
    
    2006AssetsCurrent assets:Cash and cash equivalents, includes $681,715 at September 30, 2007
and $826,991 at December 31, 2006 in interest-bearing accounts
    
    $
    696,715
    
    
    $
    841,991Net lease and other receivables due from Leasing Company
    
    
    195,707
    
    
    
    195,786Total current assets
    
    
    892,422
    
    
    
    1,037,777Container rental equipment, at cost
    
    
    12,499,669
    
    
    
    15,591,314Less accumulated depreciation
    
    
    (10,893,882
    )
    
    
    (12,958,733
    )Net container rental equipment
    
    
    1,605,787
    
    
    
    2,632,581Total assets
    
    $
    2,498,209
    
    
    $
    3,670,358Partners CapitalPartners capital (deficit):General partner
    
    $
    1,249
    
    
    $
    (225,462
    )Limited partners
    
    
    2,496,960
    
    
    
    3,895,820Total partners capital
    
    $
    2,498,209
    
    
    $
    3,670,358
  4




---



##### Table of Contents



IEA INCOME FUND XII, L.P.
 
 Condensed Statements of Operations
 (Unaudited)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net lease revenue
    
    $
    174,177
    
    
    $
    299,777
    
    
    $
    587,049
    
    
    $
    928,399Other operating income (expenses):Depreciation
    
    
    (142,419
    )
    
    
    (265,193
    )
    
    
    (573,335
    )
    
    
    (871,497
    )Other general and administrative expenses
    
    
    (32,684
    )
    
    
    (50,344
    )
    
    
    (128,357
    )
    
    
    (133,058
    )Net gain on disposal of equipment
    
    
    135,673
    
    
    
    100,080
    
    
    
    391,296
    
    
    
    271,136(39,430
    )
    
    
    (215,457
    )
    
    
    (310,396
    )
    
    
    (733,419
    )Income from operations
    
    
    134,747
    
    
    
    84,320
    
    
    
    276,653
    
    
    
    194,980Other income:Interest income
    
    
    7,555
    
    
    
    12,631
    
    
    
    25,941
    
    
    
    38,580Net income
    
    $
    142,302
    
    
    $
    96,951
    
    
    $
    302,594
    
    
    $
    233,560Allocation of net income (loss):General partner
    
    $
    12,384
    
    
    $
    100,048
    
    
    $
    266,733
    
    
    $
    270,760Limited partners
    
    
    129,918
    
    
    
    (3,097
    )
    
    
    35,861
    
    
    
    (37,200
    )$
    142,302
    
    
    $
    96,951
    
    
    $
    302,594
    
    
    $
    233,560Limited partners per unit share of net
income (loss)
    
    $
    0.04
    
    
    $
    
    
    
    
    0.01
    
    
    
    (0.01
    )
  5




---



##### Table of Contents



IEA INCOME FUND XII, L.P.
 
 Condensed Statements of Cash Flows
 (Unaudited)
 Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006Net cash provided by operating activities
    
    $
    534,677
    
    
    $
    880,703Cash flows from investing activities:Proceeds from sale of container rental equipment
    
    
    794,789
    
    
    
    1,265,875Proceeds collected on sales-type lease receivable
    
    
    
    
    
    
    18,342Net cash provided by investing activities
    
    
    794,789
    
    
    
    1,284,217Cash flows from financing activities:Distributions to general partner
    
    
    (40,022
    )
    
    
    (74,711
    )Distributions to limited partners
    
    
    (1,434,720
    )
    
    
    (2,649,836
    )Net cash used in financing activities
    
    
    (1,474,742
    )
    
    
    (2,724,547
    )Net decrease in cash and cash equivalents
    
    
    (145,276
    )
    
    
    (559,627
    )Cash and cash equivalents at the beginning of the period
    
    
    841,991
    
    
    
    1,478,829Cash and cash equivalents at the end of the period
    
    $
    696,715
    
    
    $
    919,202
  6




---



##### Table of Contents



IEA INCOME FUND XII, L.P.
 
 Notes to Unaudited Condensed Financial Statements
 Summary of Significant Accounting Policies
 (a)
    
    Nature of OperationsIEA Income Fund XII, L.P. (the Partnership) is a limited partnership organized under the
laws of the State of California on August 28, 1991 for the purpose of owning and leasing
marine cargo containers worldwide to ocean carriers. 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, 1992, when the minimum subscription
proceeds of $2,000,000 were obtained. The Partnership offered 3,750,000 units of limited
partnership interest at $20 per unit, or $75,000,000. The offering terminated on November
30, 1992, at which time 3,513,594 limited partnership units (Units) had been sold.One of the principal investment objectives of the Partnership was to lease its
containers for ten to fifteen years, and then to dispose of them and liquidate. The
Partnership has been in operation for over fifteen years. Through occasional sales,
retirements and casualty losses, the Partnership had sold or disposed of approximately
78% of its container fleet (measured on a TEU-basis) as of September 30, 2007. With
the reduction in the size of the Partnerships container fleet, the administrative
expenses incurred by the Partnership, as a percent of its gross revenues, has
increased. For these reasons, CCC, as the general partner, concluded that it would be
in the best interest of the Partnership and its limited partners to sell its remaining
containers in bulk.CCC distributed a request for proposal (RFP) on September 7, 2007 to various
third parties seeking their interest in purchasing the Partnerships remaining
containers. As of August 31, 2007 (the date of the data in the RFP), the Partnership
owned 2,466 twenty-foot, 1,054 forty-foot and 61 forty-foot high-cube marine dry cargo
containers as well as 44 twenty-foot and 2 forty-foot refrigerated cargo containers.On October 12, 2007, CCC, on behalf of the Partnership, resolved to sell 3,306 of
the Partnerships remaining containers on November 1, 2007 (the Container Sale) to
the high bidder for the Partnerships containers, Dr. John Gayner, a resident of the
United Kingdom for $3,390,000 (see Note 6). An affiliate of CCC currently manages 437
TEUs of marine cargo containers for Dr. Gayner. With the completion of this sale of
containers, the Partnership has now resolved to wind up and dissolve. CCC will proceed
with the orderly liquidation of the Partnership, the payment of its remaining
liabilities, and the distribution of the net proceeds of the Partnerships liquidation
to the general and limited partners.The Partnership will make one liquidating distribution to the limited partners of
the Partnership, representing the net proceeds generated from the sale of the
Partnerships containers and the Partnerships remaining assets, after payment or
reservation for payment of the Partnerships remaining liabilities, in the amount CCC
estimates to be $1.19 per Unit. The liquidating distribution is expected to be made on
or about November 30, 2007 to limited partners of record on November 1, 2007.CCC anticipates that the Partnership will complete its liquidation no later than
December 31, 2007 and de-register the Partnerships outstanding limited partnership
units under the Securities Exchange Act of 1934, as amended, thereby terminating the
Partnerships obligation to file periodic reports under the Exchange Act with the SEC.
  7




---



##### Table of Contents



IEA INCOME FUND XII, L.P.
 Notes to Unaudited Condensed Financial Statements
 Summary of Significant Accounting Policies (continued)
 (b)
    
    Leasing Company and Leasing Agent AgreementA 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 Accounting for Lease, 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 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. 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.(c)
    
    Basis of PresentationThese unaudited consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America (GAAP) and
regulation S-X, Article 10 under the Securities Exchange Act of 1934 for interim financial
information. Certain information and footnote disclosures normally included in annual
financial statements prepared in accordance with 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, 2006
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.
  8




---



##### Table of Contents



IEA INCOME FUND XII, L.P.
 Notes to Unaudited Condensed Financial Statements
 Summary of Significant Accounting Policies (continued)
 (d)
    
    Use of EstimatesThe preparation of financial statements in conformity with 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 significant estimates included within the financial statements are the container
rental equipments estimated useful lives and residual values, and the estimate of future
cash flows from container rental equipment operations, used to evaluate the carrying value
of container rental equipment in accordance with SFAS No. 144 Accounting for the Impairment
or Disposal of Long Lived Assets (SFAS No. 144).(e)
    
    Container Rental EquipmentContainer rental equipment is depreciated over a 15-year period using the straight-line
basis to its salvage value, estimated to be 10% of its original equipment cost.
Depreciation policies are also evaluated to determine whether subsequent events and
circumstances warrant revised estimates of useful lives and residual values.In accordance with SFAS No. 144, container rental equipment is considered to be impaired if
the carrying value of the asset exceeds the expected future cash flows from related
operations (undiscounted and without interest charges). If impairment is deemed to exist,
the assets are written down to fair value. An analysis projecting future cash flows from
container rental equipment operations is prepared annually, or upon material changes in
market conditions. Current and projected utilization rates, per-diem rental rates, direct
operating expenses, fleet size and container disposals are the primary variables utilized in
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,
2007 and 2006.(f)
    
    Allocation of Net Income or Loss, Partnership Distributions and Partners Capital
AccountsNet income or loss has been allocated between the general and limited partners in accordance
with the Partnership Agreement. The Partnership Agreement generally provides that CCC shall
at all times maintain at least a 1% interest in each item of income or loss, including the
gain arising from the sale of containers. The Partnership Agreement further provides that
the gain arising from the sale of containers be allocated first to the partners with capital
account deficit balances in an amount sufficient to eliminate any deficit capital account
balance. Thereafter, the Partnerships gains arising from the sale of containers are
allocated to the partners in accordance with their share of sale proceeds distributed. The
Partnership Agreement also provides for income (excluding the gain arising from the sale of
containers) for any period, be allocated to CCC in an amount equal to that portion of CCCs
distributions in excess of 1% of the total distributions made to both CCC and the limited
partners of the Partnership for such period, as well as other allocation adjustments.
  9




---



##### Table of Contents



IEA INCOME FUND XII, L.P.
 Notes to Unaudited Condensed Financial Statements
 (1)
    
    Summary of Significant Accounting Policies (continued)
 (f)
    
    Allocation of Net Income or Loss, Partnership Distributions and Partners Capital
Accounts (continued)Actual cash distributions differ from the allocations of net income or loss between the
general and limited partners as presented in these financial statements. Partnership
distributions are paid to its partners (general and limited) from distributable cash from
operations, allocated 95% to the limited partners and 5% to CCC. Distributions of sales
proceeds are allocated 99% to the limited partners and 1% to CCC. The allocations remain in
effect until such time as the limited partners have received from the Partnership aggregate
distributions in an amount equal to their capital contributions plus a 10% cumulative,
compounded (daily), annual return on their adjusted capital contributions.Thereafter, all Partnership distributions will be allocated 85% to the limited partners and
15% to CCC. Cash distributions from operations to CCC in excess of 5% of distributable cash
will be considered an incentive fee and will be recorded as compensation to CCC, with the
remaining distributions from operations charged to partners capital.Upon dissolution, the assets of the Partnership will be sold and the proceeds thereof
distributed as follows: (i) all of the Partnerships debts and liabilities to persons 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.
 (2)
    
    Net Lease and Other Receivables Due from Leasing CompanyNet lease and other receivables due from the Leasing Company are determined by deducting direct
operating payables and accrued expenses, base management fees payable, and reimbursed
administrative expenses payable to CCC and its affiliates from the rental billings earned by
the Leasing Company under operating leases and sales-type leases to ocean carriers for the
containers owned by the Partnership as well as proceeds earned from container disposals. Net
lease and other receivables at September 30, 2007 and December 31, 2006 were as follows:
 September 30,
    
    
    December 31,2007
    
    
    2006Gross lease and other receivables
    
    $
    514,712
    
    
    $
    523,929Less:Direct operating payables and accrued expenses
    
    
    143,262
    
    
    
    180,112Base management fees payable
    
    
    12,840
    
    
    
    208Reimbursed administrative expenses
    
    
    5,348
    
    
    
    6,310Allowance for doubtful accounts
    
    
    157,555
    
    
    
    141,513319,005
    
    
    
    328,143Net lease and other receivables
    
    $
    195,707
    
    
    $
    195,786
  10




---



##### Table of Contents



IEA INCOME FUND XII, L.P.
 Notes to Unaudited Condensed Financial Statements
 (3)
    
    Net Lease RevenueNet 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 and sales-type lease agreements between
the Leasing Company and its various lessees, less direct operating expenses, management fees
and reimbursed administrative expenses incurred in respect of the containers specified in each
operating lease agreement. Net lease revenue for the nine-month periods ended September 30,
2007 and 2006 were as follows:
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Rental revenue
    
    $
    253,963
    
    
    $
    348,598
    
    
    $
    819,071
    
    
    $
    1,194,736Interest income from sales-type lease
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    185253,963
    
    
    
    348,598
    
    
    
    819,071
    
    
    
    1,194,921Less:Rental equipment operating expenses
    
    
    50,234
    
    
    
    4,262
    
    
    
    131,435
    
    
    
    106,614Base management fees
    
    
    15,757
    
    
    
    25,647
    
    
    
    54,614
    
    
    
    85,031Reimbursed administrative expensesSalaries
    
    
    10,211
    
    
    
    13,965
    
    
    
    32,008
    
    
    
    54,044Other payroll related expenses
    
    
    1,018
    
    
    
    962
    
    
    
    4,711
    
    
    
    6,827General and administrative expenses
    
    
    2,566
    
    
    
    3,985
    
    
    
    9,254
    
    
    
    14,006Total
reimbursed administrative expenses
    
    
    13,795
    
    
    
    18,912
    
    
    
    45,973
    
    
    
    74,87779,786
    
    
    
    48,821
    
    
    
    232,022
    
    
    
    266,522Net lease revenue
    
    $
    174,177
    
    
    $
    299,777
    
    
    $
    587,049
    
    
    $
    928,399
  (4)
    
    Operating SegmentAn operating segment is a component of an enterprise that engages in business activities from
which it may earn revenues and incur expenses, whose operating results are regularly reviewed
by the enterprises chief operating decision maker to make decisions about resources to be
allocated to the segment and assess its performance, and about which separate financial
information is available. Management operates the Partnerships container fleet as a
homogenous unit and has determined that as such, it has a single reportable operating segment.
  11




---



##### Table of Contents



IEA INCOME FUND XII, L.P.
 Notes to Unaudited Condensed Financial Statements
 (4)
    
    Operating Segment (continued)The Partnership derives revenues from marine dry cargo and refrigerated containers used by its
customers in global trade routes. As of September 30, 2007, the Partnership operated 2,428
twenty-foot, 1,032 forty-foot and 61 forty-foot high-cube marine dry cargo containers, as well
as 41 twenty-foot and two forty-foot marine refrigerated containers. A summary of gross lease
revenue earned by the Leasing Company on behalf of the Partnership, by product, for the three
and nine-month periods ended September 30, 2007 and 2006 follows:
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Dry cargo containers
    
    $
    229,133
    
    
    $
    301,752
    
    
    $
    734,485
    
    
    $
    1,041,779Refrigerated containers
    
    
    24,830
    
    
    
    46,846
    
    
    
    84,586
    
    
    
    153,142Total
    
    $
    253,963
    
    
    $
    348,598
    
    
    $
    819,071
    
    
    $
    1,194,921
  (5)
    
    The Cronos GroupAt a special meeting held August 1, 2007, the shareholders of The Cronos Group (CGH), a
Luxembourg holding company, approved the Asset Purchase Agreement with CRX Acquisition Ltd., a
Bermuda exempted company (CRX) and FB Transportation Capital LLC, a Delaware limited
liability company (FB Transportation) and the transactions contemplated thereunder, including
CGHs dissolution and liquidation. Under the terms of the Asset Purchase Agreement, and
subject to the conditions stated therein, CGH agreed to sell all of its assets to CRX and CRX
agreed to assume all of CGHs liabilities. Closing of the sale of CGHs assets and liabilities
to CRX occurred later that same day. The container leasing business of CGH will be continued
by CRX as a private company. Management of CGH, which includes members of the management of
CCC, are continuing as management of CRX and acquired an equity interest in CRX. CCC is now an
indirect subsidiary of CRX.(6)
    
    Subsequent EventOn October 12, 2007, CCC, on behalf of the Partnership, resolved to sell 3,306 of the
Partnerships remaining containers on November 1, 2007 to a third party for the amount of
$3,390,000. At September 30, 2007, the net book value of these containers was $1,518,375. The
Partnership reported this sale and the related purchase agreement as part of its November 1,
2007 Report on Form 8-K to the SEC.With the completion of this sale of containers, the Partnership has now resolved to wind up and
dissolve. See Note 1(a), herein, for further discussions.
 12




---



##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
  Market Overview
      13




---



##### Table of Contents



Results of Operations
   
    
    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




---



##### Table of Contents



Dry Cargo
    
    RefrigeratedContainers
    
    Containers40-Foot20-Foot
    
    40-Foot
    
    High-Cube
    
    20-Foot
    
    40-FootContainers on lease:Master lease
    
    
    1,348
    
    
    
    491
    
    
    
    41
    
    
    
    27
    
    
    
    2Term leaseShort
term1
    
    
    423
    
    
    
    120
    
    
    
    7
    
    
    
    5
    
    
    
    Long
term2
    
    
    566
    
    
    
    350
    
    
    
    8
    
    
    
    
    
    
    
    Sales-type lease
    
    
    1
    
    
    
    8
    
    
    
    
    
    
    
    7
    
    
    
    Subtotal
    
    
    2,338
    
    
    
    969
    
    
    
    56
    
    
    
    39
    
    
    
    2Containers off lease
    
    
    90
    
    
    
    63
    
    
    
    5
    
    
    
    2
    
    
    
    Total container fleet
    
    
    2,428
    
    
    
    1,032
    
    
    
    61
    
    
    
    41
    
    
    
    2
 
 1.
    
    Short term leases represent term leases that are either scheduled for renegotiation or
that may expire on or before September 2008.2.
    
    Long term leases represent term leases, the majority of which will expire between
October 2008 and December 2011. Dry Cargo
    
    RefrigeratedContainers
    
    Containers40-Foot20-Foot
    
    40-Foot
    
    High-Cube
    
    20-Foot
    
    40-FootUnits
    
    %
    
    Units
    
    %
    
    Units
    
    %
    
    Units
    
    %
    
    Units
    
    %Total purchases
    
    
    9,743
    
    
    
    100
    %
    
    
    5,426
    
    
    
    100
    %
    
    
    213
    
    
    
    100
    %
    
    
    248
    
    
    
    100
    %
    
    
    309
    
    
    
    100
    %Less disposals
    
    
    7,315
    
    
    
    75
    %
    
    
    4,394
    
    
    
    81
    %
    
    
    152
    
    
    
    71
    %
    
    
    207
    
    
    
    83
    %
    
    
    307
    
    
    
    99
    %Remaining fleet at
September 30, 2007
    
    
    2,428
    
    
    
    25
    %
    
    
    1,032
    
    
    
    19
    %
    
    
    61
    
    
    
    29
    %
    
    
    41
    
    
    
    17
    %
    
    
    2
    
    
    
    1
    %
 Three Months Ended September 30, 2007 Compared to the Three Months Ended September 30, 2006
 Net lease revenue
 Three Months EndedSeptember 30,
    
    September 30,2007
    
    2006Fleet size (measured in twenty-foot equivalent units (TEU))Dry cargo containers
    
    
    4,770
    
    
    
    6,210Refrigerated containers
    
    
    50
    
    
    
    90Average utilization ratesDry cargo containers
    
    
    97
    %
    
    
    96
    %Refrigerated containers
    
    
    88
    %
    
    
    82
    %
 Depreciation expense
 Other general and administrative expenses
 15




---



##### Table of Contents



Net gain on disposal of equipment
  Nine Months Ended September 30, 2007 Compared to the Nine Months Ended September 30, 2006
 Net lease revenue
 Nine Months EndedSeptember 30,
    
    September 30,2007
    
    2006Fleet size (measured in twenty-foot equivalent units (TEU))Dry cargo containers
    
    
    5,117
    
    
    
    7,034Refrigerated containers
    
    
    61
    
    
    
    103Average utilization ratesDry cargo containers
    
    
    96
    %
    
    
    93
    %Refrigerated containers
    
    
    80
    %
    
    
    80
    %
 Depreciation expense
 Other general and administrative expenses
 Net gain on disposal of equipment
 16




---



##### Table of Contents



Liquidity and Capital Resources
      17




---



##### Table of Contents



Cash from Operating Activities:
 Cash from Investing Activities:
 Cash from Financing Activities
 Critical Accounting Policies
  
    
    Container equipment  depreciable lives and residual values
    
    Container equipment  recoverability and valuation in accordance with SFAS 144
Accounting for the Impairment or Disposal of Long Lived Assets
    
    Allowance for doubtful accounts
  Inflation
  The Cronos Group
  18




---



##### Table of Contents



Quantitative and Qualitative Disclosures About Market Risk
 Exchange rate risk:
 
 Controls and Procedures
   
 Controls and Procedures
  19




---



##### Table of Contents



PART II  OTHER INFORMATION
 
 Legal Proceedings
  
 Risk Factors
  
 Unregistered Sales of Equity Securities and Use of Proceeds
  
 Defaults Upon Senior Securities
  
 Submissions of Matters to a Vote of Securities Holders
  
 Other Information
  
 Exhibits
  ExhibitNo
    
    Description
    
    Method of Filing3(a)
    
    Limited Partnership Agreement, amended and
restated as of December 2, 1991
    
    *3(b)
    
    Certificate of Limited Partnership
    
    **10
    
    Form of Leasing Agent Agreement with
Cronos Containers Limited
    
    ***31.1
    
    Rule 13a-14 Certification
    
    Filed with this document31.2
    
    Rule 13a-14 Certification
    
    Filed with this document32
    
    Section 1350 Certification
    
    Filed with this document****
 
 *
    
    Incorporated by reference to Exhibit A to the Prospectus of the Partnership dated December 2,
1991, included as part of Registration Statement on Form S-1 (No. 33-42697)**
    
    Incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 (No.
33-42697)***
    
    Incorporated by reference to Exhibit 10.2 to the Registration Statement on Form S-1 (No.
33-42697)****
    
    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. 20




---



##### Table of Contents



SIGNATURES
  IEA INCOME FUND XII, L.P.By
    Cronos Capital Corp.The General PartnerBy
    /s/ Dennis J. TietzDennis J. TietzPresident and Director of Cronos Capital Corp. (CCC)
Principal Executive Officer of CCCBy
    /s/ John KallasJohn KallasChief Financial Officer andDirector of Cronos Capital Corp. (CCC)Principal Financial and Accounting Officer of CCC  21




---



##### Table of Contents



EXHIBIT INDEX
 ExhibitNo
    
    Description
    
    Method of Filing3(a)
    
    Limited Partnership Agreement, amended and
restated as of December 2, 1991
    
    *3(b)
    
    Certificate of Limited Partnership
    
    **10
    
    Form of Leasing Agent Agreement with
Cronos Containers Limited
    
    ***31.1
    
    Rule 13a-14 Certification
    
    Filed with this document31.2
    
    Rule 13a-14 Certification
    
    Filed with this document32
    
    Section 1350 Certification
    
    Filed with this document****
 
 *
    
    Incorporated by reference to Exhibit A to the Prospectus of the Partnership dated December
2, 1991, included as part of Registration Statement on Form S-1 (No. 33-42697)**
    
    Incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 (No.
33-42697)***
    
    Incorporated by reference to Exhibit 10.2 to the Registration Statement on Form S-1 (No.
33-42697)****
    
    This certification, required by Section 906 of the Sarbanes-Oxley Act of 2002, other than as
required by Section 906, is not deemed to be filed with the Commission or subject to the
rules and regulations promulgated by the Commission under the Securities Exchange Act of 1934,
as amended, or to the liabilities of Section 18 of said Act.