##### Table of Contents



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, 2001   
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|OR   
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|(BOX) |  | 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.(Exact name of registrant as specified in its charter)

|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|California                                                     |  | 94-3143940                          
|                                                              
|                                                              
|                                                              
|                                                              
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification No.)

|                                                        |  |           
|------------------------------------------------------- |  | ----------
|One Front Street, 15th Floor, San Francisco, California |  | 94111     
|                                                       
|                                                       
|                                                       
|                                                       
|(Address of principal executive offices)                |  | (Zip Code)

(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 ü. No .





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TABLE OF CONTENTS



|                                                                                              |                                         |  |  |  |  |  |  | 
|--------------------------------------------------------------------------------------------- | --------------------------------------- |  |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION                                                               
|Item 1. Financial Statements                                                                 
|                                                                                              | Balance Sheets                         
|                                                                                              | Statements of Operations               
|                                                                                              | Statements of Cash Flows               
|                                                                                              | Notes to Unaudited Financial Statements
|Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|PART II  OTHER INFORMATION                                                                  
|Item 6. Exhibits and Reports on Form 8-K                                                     



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##### Table of Contents



IEA INCOME FUND XII, L.P.

Report on Form 10-Q for the Quarterly Period
Ended September 30, 2001

TABLE OF CONTENTS

|                               |  |                                                                                                      |  |     
|------------------------------ |  | ---------------------------------------------------------------------------------------------------- |  | ----
|                               |  |                                                                                                      |  | PAGE
|PART I  FINANCIAL INFORMATION |  |                                                                                                     
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|Item 1.                        |  | Financial Statements                                                                                 |  |     
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|                               |  | Balance Sheets  September 30, 2001 and December 31, 2000 (unaudited)                                |  | 4   
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|                               |  | Statements of Operations for the three and nine months ended September 30, 2001 and 2000 (unaudited) |  | 5   
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|                               |  | Statements of Cash Flows for the nine months ended September 30, 2001 and 2000 (unaudited)           |  | 6   
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|                               |  | Notes to Financial Statements (unaudited)                                                            |  | 7   
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|Item 2.                        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                |  | 12  
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|Item 3.                        |  | Quantitative and Qualitative Disclosures About Market Risk                                           |  | 15  
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|PART II  OTHER INFORMATION    |  |                                                                                                     
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|Item 6.                        |  | Exhibits and Reports on Form 8-K                                                                     |  | 16  

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##### Table of Contents






PART I  FINANCIAL INFORMATION




|        |  |                                                                                                                                                                                                                                                                                   
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Item 1. |  | Financial Statements                                                                                                                                                                                                                                                              
|       
|       
|       
|       
|        |  | Presented herein are the Registrants balance sheets as of September 30,
2001 and December 31, 2000, statements of operations for the three and
nine months ended September 30, 2001 and 2000, and statements of cash
flows for the nine months ended September 30, 2001 and 2000.

3



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##### Table of Contents






IEA INCOME FUND XII, L.P.

Balance Sheets

(Unaudited)

|                                    |                                                                                                                                       |                                |                         |                   |            |               |            |              |            |            |  | 
|----------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------ | ----------------------- | ----------------- | ---------- | ------------- | ---------- | ------------ | ---------- | ---------- |  | 
|                                    |                                                                                                                                       |                                |                         |                   |            | September 30, |            | December 31,
|                                    |                                                                                                                                       |                                |                         |                   |            | 2001          |            | 2000        
|                                    |                                                                                                                                       |                                |                         |                   |            |               |            |             
|                                    |                                                                                                                                       |                                |                         | Assets            |            |               |            |              |            |            |  | 
|                                   
|                                   
|                                   
|                                   
|Current assets:                     |                                                                                                                                       |                                |                         |                   |            |               |            |             
|                                   
|                                   
|                                   
|                                   
|                                    | Cash and cash equivalents, includes $1,406,687 at September
30, 2001 and $1,287,792 at December 31, 2000 in
interest-bearing accounts |                                | $                       | 1,421,687         |            |               | $          | 1,512,512    |           
|                                   
|                                   
|                                   
|                                   
|                                    | Net lease receivables due from Leasing Company (notes 1 and 2)                                                                        |                                |                         | 214,646           |            |               |            | 517,461      |           
|                                    |                                                                                                                                       |                                |                         |                   |            |               |            |             
|                                    |                                                                                                                                       |                                | Total current assets    |                   |            | 1,636,333     |            |              |            | 2,029,973  | 
|                                    |                                                                                                                                       |                                |                         |                   |            |               |            |             
|                                    |                                                                                                                                       |                                |                         |                   |            |               |            |             
|                                   
|                                   
|                                   
|                                   
|Container rental equipment, at cost |                                                                                                                                       |                                | 55,820,246              |                   |            |               | 59,984,866 |             
|                                   
|                                   
|                                   
|                                   
|                                    | Less accumulated depreciation                                                                                                         |                                |                         | 29,650,380        |            |               |            | 28,750,701   |           
|                                    |                                                                                                                                       |                                |                         |                   |            |               |            |             
|                                    |                                                                                                                                       | Net container rental equipment |                         |                   | 26,169,866 |               |            |              | 31,234,165 |           
|                                    |                                                                                                                                       |                                |                         |                   |            |               |            |             
|                                    |                                                                                                                                       |                                | Total assets            |                   | $          | 27,806,199    |            |              | $          | 33,264,138 | 
|                                    |                                                                                                                                       |                                |                         |                   |            |               |            |             
|                                    |                                                                                                                                       |                                |                         |                   |            |               |            |             
|                                   
|                                   
|                                   
|                                   
|                                    |                                                                                                                                       |                                |                         | Partners Capital |            |               |            |              |            |            |  | 
|                                   
|                                   
|                                   
|                                   
|                                    |                                                                                                                                       |                                |                         |                   |            |               |            |             
|                                   
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|                                   
|Partners capital (deficit):        |                                                                                                                                       |                                |                         |                   |            |               |            |             
|                                   
|                                   
|                                   
|                                   
|                                    | General partner                                                                                                                       |                                |                         | (209,204          | )          |               |            | (154,625     | )         
|                                   
|                                   
|                                   
|                                   
|                                    | Limited partners                                                                                                                      |                                |                         | 28,015,403        |            |               |            | 33,418,763   |           
|                                    |                                                                                                                                       |                                |                         |                   |            |               |            |             
|                                    |                                                                                                                                       |                                | Total partners capital |                   | $          | 27,806,199    |            |              | $          | 33,264,138 | 
|                                    |                                                                                                                                       |                                |                         |                   |            |               |            |             

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

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IEA INCOME FUND XII, L.P.Statements of Operations

(Unaudited)

|                                                      |                                           |                               |          |                    |          |                   |           |               |         |               |            |            |            |   |           |           |         | 
|----------------------------------------------------- | ----------------------------------------- | ----------------------------- | -------- | ------------------ | -------- | ----------------- | --------- | ------------- | ------- | ------------- | ---------- | ---------- | ---------- | - | --------- | --------- | ------- | 
|                                                      |                                           |                               |          | Three Months Ended |          | Nine Months Ended
|                                                      |                                           |                               |          |                    |          |                  
|                                                      |                                           |                               |          | September 30,      |          | September 30,     |           | September 30, |         | September 30,
|                                                      |                                           |                               |          | 2001               |          | 2000              |           | 2001          |         | 2000         
|                                                      |                                           |                               |          |                    |          |                   |           |               |         |              
|Net lease revenue (notes 1 and 3)                     |                                           | $                             | 614,245  |                    |          | $                 | 1,108,294 |               |         | $             | 2,268,423  |            |            | $ | 3,173,258 |          
|                                                     
|                                                     
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|                                                      |                                           |                               |          |                    |          |                   |           |               |         |               |            |            |            |   |           |          
|                                                     
|                                                     
|                                                     
|                                                     
|Other operating expenses:                             |                                           |                               |          |                    |          |                   |           |               |         |               |            |            |            |   |           |          
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Depreciation                              |                               |          | 859,974            |          |                   |           | 894,484       |         |               |            | 2,611,487  |            |   |           | 2,703,653 |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Other general and administrative expenses |                               |          | 38,954             |          |                   |           | 29,317        |         |               |            | 141,655    |            |   |           | 88,786    |        
|                                                      |                                           |                               |          |                    |          |                   |           |               |         |               |            |            |            |   |           |          
|                                                      |                                           |                               | 898,928  |                    |          |                   | 923,801   |               |         |               | 2,753,142  |            |            |   | 2,792,439 |          
|                                                      |                                           |                               |          |                    |          |                   |           |               |         |               |            |            |            |   |           |          
|                                                      |                                           | Income (loss) from operations |          |                    | (284,683 | )                 |           |               | 184,493 |               |            |            | (484,719   | ) |           |           | 380,819 | 
|                                                     
|                                                     
|                                                     
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|                                                      |                                           |                               |          |                    |          |                   |           |               |         |               |            |            |            |   |           |          
|                                                     
|                                                     
|                                                     
|                                                     
|Other income (loss):                                  |                                           |                               |          |                    |          |                   |           |               |         |               |            |            |            |   |           |          
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Interest income                           |                               |          | 10,062             |          |                   |           | 15,587        |         |               |            | 42,277     |            |   |           | 43,797    |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Net loss on disposal of equipment         |                               |          | (101,090           | )        |                   |           | (13,682       | )       |               |            | (349,348   | )          |   |           | (180,703  | )      
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Impairment losses                         |                               |          |                   |          |                   |           |              |         |               |            | (1,617,363 | )          |   |           |          |        
|                                                      |                                           |                               |          |                    |          |                   |           |               |         |               |            |            |            |   |           |          
|                                                      |                                           |                               | (91,028  | )                  |          |                   | 1,905     |               |         |               | (1,924,434 | )          |            |   | (136,906  | )        
|                                                      |                                           |                               |          |                    |          |                   |           |               |         |               |            |            |            |   |           |          
|                                                      |                                           | Net (loss) income             |          | $                  | (375,711 | )                 |           | $             | 186,398 |               |            | $          | (2,409,153 | ) |           | $         | 243,913 | 
|                                                      |                                           |                               |          |                    |          |                   |           |               |         |               |            |            |            |   |           |          
|                                                      |                                           |                               |          |                    |          |                   |           |               |         |               |            |            |            |   |           |          
|                                                     
|                                                     
|                                                     
|                                                     
|Allocation of net income (loss):                      |                                           |                               |          |                    |          |                   |           |               |         |               |            |            |            |   |           |          
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | General partner                           |                               | $        | 23,365             |          |                   | $         | 38,850        |         |               | $          | 72,070     |            |   | $         | 115,243   |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Limited partners                          |                               |          | (399,076           | )        |                   |           | 147,548       |         |               |            | (2,481,223 | )          |   |           | 128,670   |        
|                                                      |                                           |                               |          |                    |          |                   |           |               |         |               |            |            |            |   |           |          
|                                                      |                                           | $                             | (375,711 | )                  |          | $                 | 186,398   |               |         | $             | (2,409,153 | )          |            | $ | 243,913   |          
|                                                      |                                           |                               |          |                    |          |                   |           |               |         |               |            |            |            |   |           |          
|                                                      |                                           |                               |          |                    |          |                   |           |               |         |               |            |            |            |   |           |          
|                                                     
|                                                     
|                                                     
|                                                     
|Limited partners per unit share of net
(loss) income |                                           | $                             | (0.11    | )                  |          | $                 | 0.05      |               |         | $             | (0.71      | )          |            | $ | 0.04      |          
|                                                      |                                           |                               |          |                    |          |                   |           |               |         |               |            |            |            |   |           |          

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

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IEA INCOME FUND XII, L.P.

Statements of Cash Flows

(Unaudited)

|                                                     |                                     |   |                   |            |               |   |           |            |  
|---------------------------------------------------- | ----------------------------------- | - | ----------------- | ---------- | ------------- | - | --------- | ---------- | -
|                                                     |                                     |   | Nine Months Ended
|                                                     |                                     |   |                  
|                                                     |                                     |   | September 30,     |            | September 30,
|                                                     |                                     |   | 2001              |            | 2000         
|                                                     |                                     |   |                   |            |              
|Net cash provided by operating activities            |                                     | $ | 2,330,210         |            |               | $ | 3,307,528 |           
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                     |   |                   |            |               |   |           |           
|                                                    
|                                                    
|                                                    
|                                                    
|Cash provided by investing activities:               |                                     |   |                   |            |               |   |           |           
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Proceeds from disposal of equipment |   |                   | 627,751    |               |   |           | 323,736    |  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                     |   |                   |            |               |   |           |           
|                                                    
|                                                    
|                                                    
|                                                    
|Cash used in financing activities:                   |                                     |   |                   |            |               |   |           |           
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Distribution to partners            |   |                   | (3,048,786 | )             |   |           | (3,293,330 | )
|                                                     |                                     |   |                   |            |               |   |           |           
|                                                     |                                     |   |                   |            |               |   |           |           
|                                                    
|                                                    
|                                                    
|                                                    
|Net increase (decrease) in cash and cash equivalents |                                     |   | (90,825           | )          |               |   | 337,934   |           
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                     |   |                   |            |               |   |           |           
|                                                    
|                                                    
|                                                    
|                                                    
|Cash and cash equivalents at January 1               |                                     |   | 1,512,512         |            |               |   | 1,111,425 |           
|                                                     |                                     |   |                   |            |               |   |           |           
|                                                     |                                     |   |                   |            |               |   |           |           
|                                                    
|                                                    
|                                                    
|                                                    
|Cash and cash equivalents at September 30            |                                     | $ | 1,421,687         |            |               | $ | 1,449,359 |           
|                                                     |                                     |   |                   |            |               |   |           |           

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

6



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##### Table of Contents






IEA INCOME FUND XII, L.P.

Notes to Unaudited Financial Statements



|(1) |  | Summary of Significant Accounting Policies
|--- |  | ------------------------------------------



| | (a) |  | Nature of Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | IEA 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. To this extent, the Partnerships operations are
subject to the fluctuations of world economic and political conditions.
Such factors may affect the pattern and levels of world trade. The
Partnership believes that the profitability of, and risks associated
with, leases to foreign customers is generally the same as those of
leases to domestic customers. The Partnerships leases generally require
all payments to be made in United States currency.                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |     |  | Cronos Capital Corp. (CCC) is the general partner and, with its
affiliate Cronos Containers Limited (the Leasing Company), manages the
business of the Partnership. CCC and the Leasing Company also manage the
container leasing business for other partnerships affiliated with the
general partner. The Partnership shall continue until December 31, 2011,
unless sooner terminated upon the occurrence of certain events.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |     |  | 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 had been sold.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| | (b) |  | Leasing Company and Leasing Agent Agreement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |     |  | The Partnership has entered into a Leasing Agent Agreement whereby
the Leasing Company has the responsibility to manage the leasing
operations of all equipment owned by the Partnership. Pursuant to the
Agreement, the Leasing Company is responsible for leasing, managing and
re-leasing the Partnerships containers to ocean carriers, and has full
discretion over which ocean carriers and suppliers of goods and services
it may deal with. The Leasing Agent Agreement permits the Leasing
Company to use the containers owned by the Partnership, together with
other containers owned or managed by the Leasing Company and its
affiliates, as part of a single fleet operated without regard to
ownership. Since the Leasing Agent Agreement meets the definition of an
operating lease in Statement of Financial Accounting Standards (SFAS) No.
13, it is accounted for as a lease under which the Partnership is lessor
and the Leasing Company is lessee.                                                                                                                                                                                 
|
| |     |  | The Leasing Agent Agreement generally provides that the Leasing
Company will make payments to the Partnership based upon rentals
collected from ocean carriers after deducting direct operating expenses
and management fees to CCC and the Leasing Company. The Leasing Company
leases containers to ocean carriers, generally under operating leases
which are either master leases or term leases (mostly one to five years).
Master leases do not specify the exact number of containers to be leased
or the term that each container will remain on hire but allow the ocean
carrier to pick up and drop off containers at various locations, and
rentals are based upon the number of containers used and the applicable
per-diem rate. Accordingly, rentals under master leases are all variable
and contingent upon the number of containers used. Most containers are
leased to ocean carriers under master leases; leasing agreements with
fixed payment terms are not material to the financial statements. Since
there are no material minimum lease rentals, no disclosure of minimum
lease rentals is provided in these financial statements.

(Continued)

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IEA INCOME FUND XII, 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) |  | Depreciation of Rental Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |     |  | Effective June 1, 2001, the estimated depreciable life has been changed
from a twelve-year life to a fifteen-year life and the estimated
salvage value has been changed from 30% to 10% of the original
equipment cost. The effect of these changes is an increase to
depreciation expense of approximately $54,800 from June 1 to
September 30, 2001.                                                                                                                                 
|
| | (e) |  | Container Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |     |  | In June 2001, the Partnership recorded impairment charges relating to
refrigerated container equipment which reduced net income by $1,617,363
or $0.46 per limited partnership unit.                                                                                                                                                                                                                                                                                                   
|
| |     |  | In the second quarter of 2001, the Leasing Company undertook a review of
the Partnerships refrigerated container equipment. The purpose of the
review was to consider recent changes in the marketplace and economic
environment and to identify the consequences, if any, from an accounting
perspective. The Leasing Company identified a number of issues that have
had an impact on the carrying value of certain equipment at June 30,
2001.                                     



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



| |  |  | The Leasing Company has considered the impact of these factors in June
2001 and decided to change the current marketing strategy for R12
Containers. The Leasing Company concluded that effective July 1, 2001,
inventories of R12 Containers would be targeted for immediate sale. The
Leasing Company also conducted a review of R12 Containers that were on
lease at June 30, 2001.
| |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(Continued)

8



---



##### Table of Contents



IEA INCOME FUND XII, L.P.

Notes to Unaudited Financial Statements



| | (e) |  | Container Equipment (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | Assets to be disposed of:In June 2001 the Leasing Company committed to a
plan to dispose of 60 R12 Containers with a carrying value of $633,513.
It was concluded that the carrying value of these R12 containers exceeded
fair value and accordingly, an impairment charge of $472,513 was recorded
to operations under impairment losses. It is expected that these R12
Containers will be will be disposed of over the next several quarters.
During the three-month period ended September 30, 2001, the Partnership
sold five refrigerated containers which were targeted for sale as of June
30, 2001. The Partnership recognized a gain of $8,606 on these
containers.
|
| |     |  | Assets to be held and used:The Leasing Company conducted a review of 186
R12 Containers with a carrying value of $2,010,716 that were on lease at
June 30, 2001. It was concluded that the carrying value of these R12
Containers exceeded the future cash flows expected to result from the use
of these containers and their eventual disposition, and therefore was not
recoverable. Accordingly, a charge of $1,144,850 was recorded to
operations under impairment losses. Fair value was determined by
discounting future expected cash flows.                                                                                                                         
|
| | (f) |  | 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 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 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. The results of
operations for such interim periods are not necessarily indicative of the
results to be expected for the full year.                                                                                                                                                                                                                                                                   

(Continued)

9



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##### Table of Contents



IEA INCOME FUND XII, L.P.

Notes to Unaudited 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. Net lease receivables at September 30, 2001 and December 31,
2000 were as follows:

|                                               |  |               |           |              |  |   |           | 
|---------------------------------------------- |  | ------------- | --------- | ------------ |  | - | --------- | 
|                                               |  | September 30, |           | December 31,
|                                               |  | 2001          |           | 2000        
|                                               |  |               |           |             
|Gross lease receivables                        |  | $             | 1,179,599 |              |  | $ | 1,601,580 | 
|                                              
|                                              
|                                              
|                                              
|Less:                                          |  |               |           |              |  |   |           | 
|                                              
|                                              
|                                              
|                                              
|Direct operating payables and accrued expenses |  |               | 555,994   |              |  |   | 428,702   | 
|                                              
|                                              
|                                              
|                                              
|Damage protection reserve                      |  |               | 48,277    |              |  |   | 138,819   | 
|                                              
|                                              
|                                              
|                                              
|Base management fees payable                   |  |               | 214,400   |              |  |   | 268,241   | 
|                                              
|                                              
|                                              
|                                              
|Reimbursed administrative expenses             |  |               | 35,503    |              |  |   | 76,784    | 
|                                              
|                                              
|                                              
|                                              
|Allowance for doubtful accounts                |  |               | 110,779   |              |  |   | 171,573   | 
|                                               |  |               |           |              |  |   |           | 
|Net lease receivables                          |  | $             | 214,646   |              |  | $ | 517,461   | 
|                                               |  |               |           |              |  |   |           | 



|(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 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, 2001 and 2000 were as follows:

|                                    |  |                    |           |                   |  |               |           |               |  |   |           |  |  |   |           | 
|----------------------------------- |  | ------------------ | --------- | ----------------- |  | ------------- | --------- | ------------- |  | - | --------- |  |  | - | --------- | 
|                                    |  | Three Months Ended |           | Nine Months Ended
|                                    |  |                    |           |                  
|                                    |  | September 30,      |           | September 30,     |  | September 30, |           | September 30,
|                                    |  | 2001               |           | 2000              |  | 2001          |           | 2000         
|                                    |  |                    |           |                   |  |               |           |              
|Rental revenue (note 4)             |  | $                  | 1,286,313 |                   |  | $             | 1,660,004 |               |  | $ | 4,082,835 |  |  | $ | 5,133,532 | 
|                                   
|                                   
|                                   
|                                   
|Less:                               |  |                    |           |                   |  |               |           |               |  |   |           |  |  |   |           | 
|                                   
|                                   
|                                   
|                                   
|Rental equipment operating expenses |  |                    | 510,252   |                   |  |               | 370,231   |               |  |   | 1,307,759 |  |  |   | 1,318,177 | 
|                                   
|                                   
|                                   
|                                   
|Base management fees                |  |                    | 88,697    |                   |  |               | 114,444   |               |  |   | 281,458   |  |  |   | 347,428   | 
|                                   
|                                   
|                                   
|                                   
|Reimbursed administrative expenses  |  |                    | 73,119    |                   |  |               | 67,035    |               |  |   | 225,195   |  |  |   | 294,669   | 
|                                    |  |                    |           |                   |  |               |           |               |  |   |           |  |  |   |           | 
|                                    |  | $                  | 614,245   |                   |  | $             | 1,108,294 |               |  | $ | 2,268,423 |  |  | $ | 3,173,258 | 
|                                    |  |                    |           |                   |  |               |           |               |  |   |           |  |  |   |           | 

(Continued)

10



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##### Table of Contents



IEA INCOME FUND XII, L.P.

Notes to Unaudited Financial Statements



|(4) |  | Operating Segment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The Financial Accounting Standards Board has issued SFAS No. 131,
Disclosures about Segments of an Enterprise and Related Information, which
changes the way public business enterprises report financial and descriptive
information about reportable operating segments. An operating segment is a
component of an enterprise that engages in business activities from which it
may earn revenues and incur expenses, whose operating results are regularly
reviewed by the enterprises chief operating decision maker to make
decisions about resources to be allocated to the segment and assess its
performance, and about which separate financial information is available.
Management operates the Partnerships container fleet as a homogenous unit
and has determined, after considering the requirements of SFAS No. 131, that
as such it has a single reportable operating segment.
|   
|    |  | The Partnership derives its revenues from leasing marine cargo containers.
As of September 30, 2001, the Partnership operated 8,467 twenty-foot, 4,914
forty-foot and 199 forty-foot high-cube marine dry cargo containers, as well
as 240 twenty-foot and 256 forty-foot marine refrigerated cargo containers.
A summary of gross lease revenue, by product, for the three and nine-month
periods ended September 30, 2001 and 2000 follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                      

|                        |  |                    |           |                   |  |               |           |               |  |   |           |  |  |   |           | 
|----------------------- |  | ------------------ | --------- | ----------------- |  | ------------- | --------- | ------------- |  | - | --------- |  |  | - | --------- | 
|                        |  | Three Months Ended |           | Nine Months Ended
|                        |  |                    |           |                  
|                        |  | September 30,      |           | September 30,     |  | September 30, |           | September 30,
|                        |  | 2001               |           | 2000              |  | 2001          |           | 2000         
|                        |  |                    |           |                   |  |               |           |              
|Dry cargo containers    |  | $                  | 1,022,993 |                   |  | $             | 1,358,437 |               |  | $ | 3,284,308 |  |  | $ | 4,161,338 | 
|                       
|                       
|                       
|                       
|Refrigerated containers |  |                    | 263,320   |                   |  |               | 301,567   |               |  |   | 798,527   |  |  |   | 972,194   | 
|                        |  |                    |           |                   |  |               |           |               |  |   |           |  |  |   |           | 
|Total                   |  | $                  | 1,286,313 |                   |  | $             | 1,660,004 |               |  | $ | 4,082,835 |  |  | $ | 5,133,532 | 
|                        |  |                    |           |                   |  |               |           |               |  |   |           |  |  |   |           | 



|    |  | Due to the Partnerships lack of information regarding the physical location
of its fleet of containers when on lease in the global shipping trade, it is
impracticable to provide the geographic area information required by SFAS
No. 131.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(5) |  | New Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|    |  | In August 2001, the Financial Accounting Standards Board issued SFAS No.
143, Accounting for Asset Retirement Obligations, which is effective for
all fiscal years beginning after June 15, 2002. This standard requires a
company to record the fair value of a liability for an asset retirement
obligation in the period in which it is incurred, and a corresponding
increase in the carrying value of the related long-lived asset. During
October 2001, the Financial Accounting Standards Board issued SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets, which is
effective for all fiscal years beginning after December 15, 2001. SFAS No.
144 supersedes SFAS No. 121, but retains its fundamental provisions relating
to the recognition and measurement of the impairment of long-lived assets to
be held and used, and the measurement of long lived assets to be disposed of
by sale. The Registrant has not yet determined the effect of adoption of
either SFAS 143 or SFAS 144 on its financial position and results of
operations.

******

11



---



##### Table of Contents






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.

General

The Registrant 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 Registrant. Pursuant to the Agreement, the Leasing
Company is responsible for leasing, managing and re-leasing the Registrants
containers to ocean carriers, and has full discretion over which ocean carriers
and suppliers of goods and services it may deal with. The Leasing Agent
Agreement permits the Leasing Company to use the containers owned by the
Registrant, together with other containers owned or managed by the Leasing
Company and its affiliates, as part of a single fleet operated without regard
to ownership.

The demand for dry cargo containers has continued to be adversely affected by
the slowdown in the global economy and the resulting excess supply of
containers. The terrorist attacks of September 11, 2001 resulted in further
disruptions of global business activities and raised further questions as to
the short-term direction of the global economy. Transpacific trade, a large
proportion of which consists of technology-related goods, has been largely
affected by the slowdown of the US economy. For the first time in many years,
the aggregate GDP growth rates of the United States, Europe, and Japan have
decelerated, contributing to lower utilization rates and higher container
inventories throughout the world. Container imbalances for all trade routes
involving Asia are expected to continue throughout the remainder of the year
and through the first half of 2002. As a result of the increasing container
inventories worldwide, the production of new containers has declined. Although
a slowdown in new container production could have positive short and long-term
effects for the container leasing industry, a reduction in new containers will
not have a significant impact without an easing of current market constraints
and a strengthening of the worlds economies. In response to the foregoing, the
Leasing Company continues to implement a number of marketing initiatives which
are designed to target identified leasing opportunities and enhance inventory
management of the Registrants fleet.

The Registrants average fleet size and utilization rates for the three and
nine-month periods ended September 30, 2001 and September 30, 2000 were as
follows:

|                                                                    |                         |  |                    |        |                   |  |               |        |               |  |  |        |   |  |  |        |  
|------------------------------------------------------------------- | ----------------------- |  | ------------------ | ------ | ----------------- |  | ------------- | ------ | ------------- |  |  | ------ | - |  |  | ------ | -
|                                                                    |                         |  | Three Months Ended |        | Nine Months Ended
|                                                                    |                         |  |                    |        |                  
|                                                                    |                         |  | September 30,      |        | September 30,     |  | September 30, |        | September 30,
|                                                                    |                         |  | 2001               |        | 2000              |  | 2001          |        | 2000         
|                                                                    |                         |  |                    |        |                   |  |               |        |              
|Average fleet size (measured in
twenty-foot equivalent units
(TEU)) |                         |  |                    |        |                   |  |               |        |               |  |  |        |   |  |  |       
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Dry cargo containers    |  |                    | 18,804 |                   |  |               | 19,620 |               |  |  | 19,050 |   |  |  | 19,797 |  
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Refrigerated containers |  |                    | 678    |                   |  |               | 761    |               |  |  | 727    |   |  |  | 771    |  
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Average Utilization                                                 |                         |  |                    |        |                   |  |               |        |               |  |  |        |   |  |  |       
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Dry cargo containers    |  |                    | 65     | %                 |  |               | 76     | %             |  |  | 67     | % |  |  | 75     | %
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Refrigerated containers |  |                    | 83     | %                 |  |               | 79     | %             |  |  | 76     | % |  |  | 83     | %

Average dry cargo container per-diem rental rates for the three and nine-month
periods ended September 30, 2001 declined approximately 11% and 6%,
respectively, when compared to the same periods in the prior year. Average
refrigerated container per-diem rental rates for the three and nine-month
periods ended September 30, 2001 declined approximately 9% and 5%,
respectively, when compared to the same periods in the prior year.

(Continued)

12



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##### Table of Contents



Three Months Ended September 30, 2001 Compared to the Three Months Ended
September 30, 2000

Income (loss) from operationsfor the three months ended September 30, 2001 was
a loss of $284,683, as compared to income of $184,493 during the corresponding
period of 2000. The loss was primarily due to the impact of current market
constraints on utilization and per-diem rental rates, as well as the
Registrants smaller fleet size, and their cumulative effect on net lease
revenue.

Net lease revenueof $614,245 for the three months ended September 30, 2001 was
$494,049 lower than in the corresponding period of 2000. The decrease was due
to a $373,691 decline in gross rental revenue (a component of net lease
revenue) from the same period in 2000. Gross rental revenue was impacted by the
Registrants smaller fleet size, lower per-diem rental rates, and lower
utilization rates. Other components of net lease revenue, including management
fees, were lower by $25,747 when compared to the corresponding period in 2000,
and partially offset the decline in gross lease revenue. Direct operating
expenses increased by $151,206 when compared to the corresponding period in
2000. Contributing to the increase in direct operating expenses were increases
in storage and repositioning expenses.

Depreciation expenseof $859,974 for the three months ended September 30, 2001
was $34,510 lower than the same period in 2000 due to a declining fleet size.
Effective June 1, 2001, the Registrant changed the estimated life of its rental
container equipment from an estimated 12 year life to a 15 year life, and its
estimated salvage value from 30% to 10% of original equipment cost. The effect
of these changes was an increase in depreciation expense of approximately
$36,100 for the three months ended September 30, 2001.

Other general and administrative expensesincreased to $38,954 in the third
quarter of 2001, from $29,317 in the corresponding period of 2000, representing
an increase of $9,637 from the same period in 2000. Contributing to this
increase were professional fees, costs related to investor communications and
exchange rate losses.

Net loss on disposal of equipmentwas a result of the Registrant disposing of
186 containers during the three-month period ended September 30, 2001, as
compared to 155 containers during the same period in 2000. These disposals
resulted in a loss of $101,090 for the three-month period ended September 30,
2001, as compared to a loss of $13,682 for the three-month period ended
September 30, 2000. The Registrant believes that the net loss on container
disposals in the three-month period ended September 30, 2001 was a result of
various factors including the age, condition, suitability for continued
leasing, as well as the geographical location of the containers when disposed.
These factors will continue to influence the decision to repair or dispose of a
container when it is returned by a lessee, as well as the amount of sales
proceeds received and the related gain or loss on container disposals. The
level of the Registrants container disposals in subsequent periods will also
contribute to fluctuations in the net gain or loss on disposals. As a result
of current world events and market conditions, the Registrant is re-evaluating
its asset impairment criteria.

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



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Assets to be disposed of:In June 2001 the Leasing Company committed to a
plan to dispose of 60 R12 Containers with a carrying value of $633,513.
It was concluded that the carrying value of these R12 containers exceeded
fair value and accordingly, an impairment charge of $472,513 was recorded
to operations under impairment losses. It is expected that these R12
Containers will be will be disposed of over the next several quarters.
Included in the net loss on the disposal of equipment for the three-month
period ended September 30, 2001 is a gain of $8,606 on the sale of five
refrigerated containers which were targeted for sale as of June 30, 2001.
|
| | Assets to be held and used:The Leasing Company conducted a review of 186
R12 Containers with a carrying value of $2,010,716 that were on lease at
June 30, 2001. It was concluded that the carrying value of these R12
Containers exceeded the future cash flows expected to result from the use
of these containers and their eventual disposition, and therefore was not
recoverable. Accordingly, a charge of $1,144,850 was recorded to
operations under impairment losses. Fair value was determined by
discounting future expected cash flows.                                                                                                                        

(Continued)

13



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##### Table of Contents



Nine Months Ended September 30, 2001 Compared to the Nine Months Ended
September 30, 2000

Income (loss) from operationsfor the nine-month period ended September 30,
2001 was a loss of $484,719, as compared to income of $380,819 during the
corresponding period of 2000. The decrease was primarily due to the impact of
current market constraints on utilization and per-diem rental rates, as well as
the Registrants smaller fleet size, and their cumulative effect on net lease
revenue.

Net lease revenueof $2,268,423 for the nine-month period ended September 30,
2001 was $904,835 lower than in the corresponding period of 2000. The decrease
was due to a $1,050,697 decline in gross rental revenue (a component of net
lease revenue) from the same period in 2000. Gross rental revenue was impacted
by the Registrants smaller fleet size, lower per-diem rental rates, and lower
utilization rates. Other components of net lease revenue, including rental
equipment operating expenses, management fees, and reimbursed administrative
expenses, were lower by a combined $145,862 when compared to the corresponding
period in 2000, and partially offset the decline in gross lease revenue.
Contributing to the decline in direct operating expenses was a decline in the
provision for doubtful accounts.

Depreciation expenseof $2,611,487 for the nine-month period ended September
30, 2001 was $92,166 lower than the same period in 2000 due to a declining
fleet size. Effective June 1, 2001, the Registrant changed the estimated life
of its rental container equipment from an estimated 12 year life to a 15 year
life and its estimated salvage value from 30% to 10% of original equipment
cost. The effect of these depreciation changes is an increase in depreciation
expense of approximately $54,800 from June 1 to September 30, 2001.

Other general and administrative expensesincreased to $141,655 during the
nine-month period ended September 30, 2001, from $88,786 in the corresponding
period of 2000, representing an increase of $52,869 from the same period in
2000. Contributing to this increase were costs related to investor
communications.

Net loss on disposal of equipmentwas a result of the Registrant disposing of
549 containers during the first nine months of 2001, as compared to 357
containers during the first nine months of 2000. These disposals resulted in a
loss of $349,348 for the nine-month period ended September 30, 2001, as
compared to a loss of $180,703 for the nine-month period ended September 30,
2000.

Impairment chargeswere incurred by the Registrant relating to refrigerated
container equipment with R12 refrigerant gas (the R12 Containers). In the
second quarter of 2001, the Leasing Company undertook a review of the
Registrants refrigerated container equipment. Due to the environmental impact
of the R12 refrigerant gas and other R12 Container marketing considerations,
the Leasing Company concluded that effective July 1, 2001, inventories of the
Registrants R12 Containers would be targeted for immediate sale. It was
concluded that the carrying value of the R12 Containers to be disposed of
exceeded fair value and accordingly, an impairment charge of $472,513 was
recorded to operations under impairment losses. Included in the net loss on
the disposal of equipment for the nine-month period ended September 30, 2001 is
a gain of $8,606 on the sale of five refrigerated containers which were
targeted for sale as of June 30, 2001.

The Leasing Company also conducted a review of the Registrants R12 Containers
that were on lease at June 30, 2001. It was concluded that the carrying value
of the R12 Containers to be held and used exceeded the future cash flows
expected to result from the use of these containers and their eventual
disposition, and therefore was not recoverable. Accordingly, a charge of
$1,144,850 was recorded to operations under impairment losses

The total impairment charge for the Registrants R12 Containers was $1,617,363.
This charge was recorded during the second quarter of 2001.

Liquidity and Capital Resources

Cash from Operating Activities:Net cash provided by operating activities was
$2,330,210 and $3,307,528 during the first nine months of 2001 and 2000,
respectively. The net cash generated in 2001 included earnings from operations
and $212,844 in net lease receivables due from the Leasing Company. The net
cash generated in 2000 primarily reflected earnings from operations and $44,359
in net lease receivables due from the Leasing Company.

(Continued)

14



---



##### Table of Contents



Cash from Investing Activities:Net cash provided by investing activities was
$627,751 and $323,736 in the first nine months of 2001 and 2000, respectively.
These amounts represent sales proceeds generated from the sale of container
equipment.

Cash from Financing Activities:Net cash used in financing activities was
$3,048,786 during the first nine months of 2001 compared to $3,293,330 in the
corresponding period of 2000. These amounts represent distributions to the
Registrants general and limited partners. The Registrants fleet size, as
well as current market conditions, may produce lower operating results and,
consequently, lower distributions to its partners in subsequent periods. Sales
proceeds distributed to its partners may fluctuate in subsequent periods,
reflecting the level of container disposals.

Capital Resources

Aside from the initial working capital reserve retained from the gross
subscription proceeds (equal to approximately 1% of such proceeds), the
Registrant relied primarily on container rental receipts to generate
distributions to its general and limited partners, as well as to finance
current operating needs. No credit lines are maintained to finance working
capital.




Item 3. Quantitative and Qualitative Disclosures About Market Risk

Exchange rate risk:Substantially all of the Registrants revenues are billed
and paid in US dollars and a significant portion of costs are billed and paid
in US dollars. Of the remaining costs, the majority are individually small,
unpredictable and incurred in various denominations and thus are not suitable
for cost effective hedging. From time to time, the Leasing Company hedges a
portion of the expenses that are predictable and are principally in UK pounds
sterling. As exchange rates are outside of the control of the Company, there
can be no assurance that such fluctuations will not adversely effect its
results of operations and financial condition.

15



---



##### Table of Contents






PART II  OTHER INFORMATION




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 2, 1991 |  | *               
|       
|       
|       
|       
|        |  |                                                                                              |  |                 
|       
|       
|       
|       
|3(b)    |  | Certificate of Limited Partnership of the Registrant                                         |  | **              
|       
|       
|       
|       
|        |  |                                                                                              |  |                 
|       
|       
|       
|       
|10      |  | Form of Leasing Agent Agreement with Cronos Containers
Limited                               |  | ***             



|(b) |  | Reports on Form 8-K                                                                             
|--- |  | ------------------------------------------------------------------------------------------------
|   
|    |  | No reports on Form 8-K were filed by the Registrant during the quarter ended
September 30, 2001.



---

|*   |  | Incorporated by reference to Exhibit A to the Prospectus of the
Registrant 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)                                                                        

16



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##### Table of Contents



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 XII, 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 14, 2001

17



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##### Table of Contents



EXHIBIT INDEX

|        |  |                                                                                              |  |                 
|------- |  | -------------------------------------------------------------------------------------------- |  | ----------------
|Exhibit |  |                                                                                              |  |                 
|No.     |  | Description                                                                                  |  | Method of Filing
|        |  |                                                                                              |  |                 
|3(a)    |  | Limited Partnership Agreement of the Registrant, amended
and restated as of December 2, 1991 |  | *               
|       
|       
|       
|       
|        |  |                                                                                              |  |                 
|       
|       
|       
|       
|3(b)    |  | Certificate of Limited Partnership of the Registrant                                         |  | **              
|       
|       
|       
|       
|        |  |                                                                                              |  |                 
|       
|       
|       
|       
|10      |  | Form of Leasing Agent Agreement with Cronos Containers
Limited                               |  | ***             



---

|*   |  | Incorporated by reference to Exhibit A to the Prospectus of the
Registrant 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)