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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 For
the transition period from

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




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IEA INCOME FUND XII, L.P.
 Report on Form 10-Q for the Quarterly Period
Ended March 31, 2006
 TABLE OF CONTENTS
  PART I  FINANCIAL INFORMATION
    
    
    3Item 1. Financial Statements
    
    
    3Condensed Balance Sheets  March 31, 2006 and December 31, 2005 (unaudited)
    
    
    4Condensed Statements of Operations for the three months ended March 31, 2006 and 2005 (unaudited)
    
    
    5Condensed Statements of Cash Flows for the three months ended March 31, 2006 and 2005 (unaudited)
    
    
    6Notes to Condensed Financial Statements (unaudited)
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    12Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    17Item 4. Controls and Procedures
    
    
    17PART II  OTHER INFORMATION
    
    
    18Item 1. Legal Proceedings
    
    
    18Item 1A. Risk Factors
    
    
    18Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    18Item 3. Defaults Upon Senior Securities
    
    
    18Item 4. Submissions of Matters to a Vote of Securities Holders
    
    
    18Item 5. Other Information
    
    
    18Item 6. Exhibits
    
    
    18EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32
  2




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PART I  FINANCIAL INFORMATION
 
 Financial Statements
   3




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IEA INCOME FUND XII, L.P.
 
 Condensed Balance Sheets
 (Unaudited)
 March 31,
    
    
    December 31,2006
    
    
    2005AssetsCurrent assets:Cash and cash equivalents, includes $1,246,548 at March 31, 2006 and
$1,463,829 at December 31, 2005 in interest-bearing accounts
    
    $
    1,261,548
    
    
    $
    1,478,829Net lease and other receivables due from Leasing Company
    
    
    279,104
    
    
    
    305,183Total current assets
    
    
    1,540,652
    
    
    
    1,784,012Container rental equipment, at cost
    
    
    19,650,826
    
    
    
    21,441,062Less accumulated depreciation
    
    
    (15,454,047
    )
    
    
    (16,531,634
    )Net container rental equipment
    
    
    4,196,779
    
    
    
    4,909,428Total assets
    
    $
    5,737,431
    
    
    $
    6,693,440Partners CapitalPartners capital (deficit):General partner
    
    $
    (477,828
    )
    
    $
    (507,340
    )Limited partners
    
    
    6,215,259
    
    
    
    7,200,780Total partners capital
    
    $
    5,737,431
    
    
    $
    6,693,440
  4




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IEA INCOME FUND XII, L.P.
 
 Condensed Statements of Operations
 (Unaudited)
 Three Months EndedMarch 31,
    
    
    March 31,2006
    
    
    2005Net lease revenue
    
    $
    340,765
    
    
    $
    482,659Other operating income (expenses):Depreciation
    
    
    (319,059
    )
    
    
    (428,724
    )Other general and administrative expenses
    
    
    (39,104
    )
    
    
    (33,656
    )Net gain (loss) on disposal of equipment
    
    
    58,146
    
    
    
    (8,089
    )(300,017
    )
    
    
    (470,469
    )Income from operations
    
    
    40,748
    
    
    
    12,190Other income:Interest income
    
    
    12,707
    
    
    
    8,751Net income
    
    $
    53,455
    
    
    $
    20,941Allocation of net income (loss):General partner
    
    $
    58,099
    
    
    $
    26,449Limited partners
    
    
    (4,644
    )
    
    
    (5,508
    )$
    53,455
    
    
    $
    20,941Limited partners per unit share of net income (loss)
    
    $
    
    
    
    $
    
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IEA INCOME FUND XII, L.P.
 
 Condensed Statements of Cash Flows
 (Unaudited)
 Three Months EndedMarch 31,
    
    
    March 31,2006
    
    
    2005Net cash provided by operating activities
    
    $
    391,097
    
    
    $
    392,712Cash flows from investing activities:Proceeds from sale of container rental equipment
    
    
    382,744
    
    
    
    643,245Proceeds collected on sales-type lease receivable
    
    
    18,342
    
    
    
    19,551Net cash provided by investing activities
    
    
    401,086
    
    
    
    662,796Cash flows from financing activities:Distributions to general partner
    
    
    (28,587
    )
    
    
    (38,455
    )Distributions to limited partners
    
    
    (980,877
    )
    
    
    (1,156,557
    )Net cash used in financing activities
    
    
    (1,009,464
    )
    
    
    (1,195,012
    )Net decrease in cash and cash equivalents
    
    
    (217,281
    )
    
    
    (139,504
    )Cash and cash equivalents at the beginning of the period
    
    
    1,478,829
    
    
    
    2,122,594Cash and cash equivalents at the end of the period
    
    $
    1,261,548
    
    
    $
    1,983,080
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IEA INCOME FUND XII, L.P.
 
 Notes to Unaudited Condensed Financial Statements
 Summary of Significant Accounting Policies
 Nature of Operations
     Leasing Company and Leasing Agent Agreement
    7




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IEA INCOME FUND XII, L.P.
 Notes to Unaudited Condensed Financial Statements
 Leasing Company and Leasing Agent Agreement (continued)
  Basis of Accounting
  Use of Estimates
   Container Rental Equipment
    8




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IEA INCOME FUND XII, L.P.
 Notes to Unaudited Condensed Financial Statements
 Allocation of Net Income or Loss, Partnership Distributions and Partners Capital
Accounts
    Financial Statement Presentation
   9




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IEA INCOME FUND XII, L.P.
 Notes to Unaudited Condensed Financial Statements
 Net Lease and Other Receivables Due from Leasing Company
  March 31,
    
    
    December 31,2006
    
    
    2005Gross lease and other receivables
    
    $
    778,813
    
    
    $
    733,378Sales-type lease receivable (net of unearned income)
    
    
    
    
    
    
    18,342778,813
    
    
    
    751,720Less:Direct operating payables and accrued expenses
    
    
    271,797
    
    
    
    199,406Damage protection reserve
    
    
    51,686
    
    
    
    68,340Base management fees (receivable) payable
    
    
    (656
    )
    
    
    820Reimbursed administrative expenses
    
    
    12,933
    
    
    
    11,667Allowance for doubtful accounts
    
    
    163,949
    
    
    
    166,304499,709
    
    
    
    446,537Net lease and other receivables
    
    $
    279,104
    
    
    $
    305,183
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IEA INCOME FUND XII, L.P.
 Notes to Unaudited Condensed Financial Statements
 Net Lease Revenue
  Three Months EndedMarch 31,
    
    
    March 31,2006
    
    
    2005Rental revenue
    
    $
    460,493
    
    
    $
    664,777Interest income from sales-type lease
    
    
    185
    
    
    
    1,360460,678
    
    
    
    666,137Less:Rental equipment operating expenses
    
    
    55,066
    
    
    
    92,010Base management fees
    
    
    32,426
    
    
    
    46,908Reimbursed administrative expensesSalaries
    
    
    23,724
    
    
    
    30,603Other payroll related expenses
    
    
    3,288
    
    
    
    5,982General and administrative expenses
    
    
    5,409
    
    
    
    7,975Total reimbursed administrative expenses
    
    
    32,421
    
    
    
    44,560119,913
    
    
    
    183,478Net lease revenue
    
    $
    340,765
    
    
    $
    482,659
 Operating Segment
   Three Months EndedMarch 31,
    
    
    March 31,2006
    
    
    2005Dry cargo containers
    
    $
    402,331
    
    
    $
    569,797Refrigerated containers
    
    
    58,347
    
    
    
    96,340Total
    
    $
    460,678
    
    
    $
    666,137
  11




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Managements Discussion and Analysis of Financial Condition and Results of
Operations
  Market Overview
      12




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Results of Operations
   
    
    Activity-related expenses, including agent and depot costs such as repairs,
maintenance and handling.
    
    Inventory-related expenses for off-hire containers, comprising storage and
repositioning costs. These costs are sensitive to the quantity of off-hire containers
as well as the frequency at which containers are re-delivered.
    
    Legal and other expenses, including legal costs related to the recovery of containers
and doubtful accounts, insurance and provisions for doubtful accounts.
 13




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Dry Cargo
    
    
    RefrigeratedContainers
    
    
    Containers40-Foot
    
    
    
    
    
    
    40-Foot20-Foot
    
    
    40-Foot
    
    
    High-Cube
    
    
    20-Foot
    
    
    High-CubeContainers on lease:Master lease
    
    
    1,846
    
    
    
    802
    
    
    
    58
    
    
    
    61
    
    
    
    6Term lease
Short term1
    
    
    1,102
    
    
    
    689
    
    
    
    20
    
    
    
    8
    
    
    
    Long term2
    
    
    166
    
    
    
    56
    
    
    
    
    
    
    
    
    
    
    
    Sales-type lease
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Subtotal
    
    
    3,114
    
    
    
    1,547
    
    
    
    78
    
    
    
    69
    
    
    
    6Containers off lease
    
    
    266
    
    
    
    217
    
    
    
    10
    
    
    
    23
    
    
    
    Total container fleet
    
    
    3,380
    
    
    
    1,764
    
    
    
    88
    
    
    
    92
    
    
    
    6
 
 1.
    
    Short term leases represent term leases that are either scheduled for renegotiation or
that may expire on or before March 2007.2.
    
    Long term leases represent term leases, the majority of which will expire between April
2007 and December 2010. Dry Cargo
    
    
    RefrigeratedContainers
    
    
    Containers40-Foot20-Foot
    
    
    40-Foot
    
    
    High-Cube
    
    
    20-Foot
    
    
    40-FootUnits
    
    
    %
    
    
    Units
    
    
    %
    
    
    Units
    
    
    %
    
    
    Units
    
    
    %
    
    
    Units
    
    
    %Total purchases
    
    
    9,743
    
    
    
    100
    %
    
    
    5,426
    
    
    
    100
    %
    
    
    213
    
    
    
    100
    %
    
    
    248
    
    
    
    100
    %
    
    
    309
    
    
    
    100
    %Less disposals
    
    
    6,363
    
    
    
    65
    %
    
    
    3,662
    
    
    
    67
    %
    
    
    125
    
    
    
    59
    %
    
    
    156
    
    
    
    63
    %
    
    
    303
    
    
    
    98
    %Remaining fleet at March 31, 2006
    
    
    3,380
    
    
    
    35
    %
    
    
    1,764
    
    
    
    33
    %
    
    
    88
    
    
    
    41
    %
    
    
    92
    
    
    
    37
    %
    
    
    6
    
    
    
    2
    %
 Three Months Ended March 31, 2006 Compared to the Three Months Ended March 31, 2005
 Net lease revenue
 Three Months EndedMarch 31,
    
    
    March 31,2006
    
    
    2005Fleet size (measured in
twenty-foot equivalent units (TEU))Dry cargo containers
    
    
    7,993
    
    
    
    10,452Refrigerated containers
    
    
    117
    
    
    
    243Average utilization ratesDry cargo containers
    
    
    91
    %
    
    
    95
    %Refrigerated containers
    
    
    78
    %
    
    
    83
    %
  Depreciation expense
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Other general and administrative expenses
 Net gain on disposal of equipment
  Liquidity and Capital Resources
    15




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Cash from Operating Activities
 Cash from Investing Activities
 Cash from Financing Activities
 Critical Accounting Policies
  
    
    Container equipment  depreciable lives
    
    Container equipment  valuation
    
    Allowance for doubtful accounts
  Inflation
  16




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Quantitative and Qualitative Disclosures About Market Risk
 Exchange rate risk:
 
 Controls and Procedures
   17




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PART II  OTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings
  
 Item 1A.
    
    Risk Factors
  
 Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3.
    
    Defaults Upon Senior Securities
  
 Item 4.
    
    Submissions of Matters to a Vote of Securities Holders
  
 Item 5.
    
    Other Information
  
 Item 6.
    
    Exhibits
  ExhibitNo
    
    Description
    
    Method of Filing3(a)
    
    Limited Partnership Agreement, amended and
restated as of December 2, 1991
    
    *3(b)
    
    Certificate of Limited Partnership
    
    **10
    
    Form of Leasing Agent Agreement with
Cronos Containers Limited
    
    ***31.1
    
    Rule 13a-14 Certification
    
    Filed with this document31.2
    
    Rule 13a-14 Certification
    
    Filed with this document32
    
    Section 1350 Certification
    
    Filed with this document
****
 
 *
    
    Incorporated by reference to Exhibit A to the Prospectus of the Partnership dated December 2,
1991, included as part of Registration Statement on Form S-1 (No. 33-42697)**
    
    Incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 (No.
33-42697)***
    
    Incorporated by reference to Exhibit 10.2 to the Registration Statement on Form S-1 (No.
33-42697)****
    
    This certification, required by Section 906 of the Sarbanes-Oxley Act of 2002, other than as
required by Section 906, is not to be deemed filed with the Commission or subject to the
rules and regulations promulgated by the Commission under the Securities Exchange Act of 1934,
as amended, or to the liabilities of Section 18 of said Act. 18




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SIGNATURES
  IEA INCOME FUND XII, L.P.By
    
    Cronos Capital Corp.The General PartnerBy
    
    /s/ Dennis J. TietzDennis J. TietzPresident and Director of Cronos Capital Corp. (CCC)Principal Executive Officer of CCCBy
    
    /s/ John KallasJohn KallasChief Financial Officer andDirector of Cronos Capital Corp. (CCC)Principal Financial and Accounting Officer of CCC
  19




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