ICON LEASING FUND TWELVE, LLC - FORM 10-Q

Attached files

file	filename
EXCEL - IDEA: XBRL DOCUMENT - ICON LEASING FUND TWELVE, LLC	Financial_Report.xls
EX-31.1 - CERTIFICATION OF CO-CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 - ICON LEASING FUND TWELVE, LLC	ex31-1.htm
EX-31.3 - CERTIFICATION OF PRINCIPAL ACCOUNTING AND FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 - ICON LEASING FUND TWELVE, LLC	ex31-3.htm
EX-32.2 - CERTIFICATION OF CO-CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 - ICON LEASING FUND TWELVE, LLC	ex32-2.htm
EX-32.3 - CERTIFICATION OF PRINCIPAL ACCOUNTING AND FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 - ICON LEASING FUND TWELVE, LLC	ex32-3.htm
EX-32.1 - CERTIFICATION OF CO-CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 - ICON LEASING FUND TWELVE, LLC	ex32-1.htm
EX-31.2 - CERTIFICATION OF CO-CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 - ICON LEASING FUND TWELVE, LLC	ex31-2.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended

March 31, 2012

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from

Commission_File_Number_

000-53189

ICON Leasing Fund Twelve, LLC

(Exact name of registrant as specified in its charter)

Delaware	20-5651009
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

3 Park Avenue, 36th Floor, New York, New York	10016
(Address of principal executive offices)	(Zip code)

(212) 418-4700

(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.

[X] Yes [ ] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

[X] Yes [ ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,’’ “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [X] Smaller reporting company [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

[ ] Yes [X] No

Number of outstanding shares of limited liability company interests of the registrant on May 4, 2012 is 348,630.

ICON Leasing Fund Twelve, LLC Table of Contents


PART I - FINANCIAL INFORMATION		Page

Item 1. Consolidated Financial Statements		1

Consolidated Balance Sheets		1

Consolidated Statements of Operations and Comprehensive Income (Loss)		2

Consolidated Statement of Changes in Equity		3

Consolidated Statements of Cash Flows		4

Notes to Consolidated Financial Statements		6

Item 2. Manager’s Discussion and Analysis of Financial Condition and Results of Operations		17

Item 3. Quantitative and Qualitative Disclosures About Market Risk		25

Item 4. Controls and Procedures		25

PART II – OTHER INFORMATION

Item 1. Legal Proceedings		26

Item 1A. Risk Factors		26

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		26

Item 3. Defaults Upon Senior Securities		26

Item 4. Mine Safety Disclosures		26

Item 5. Other Information		26

Item 6. Exhibits		27

Signatures		28

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

ICON Leasing Fund Twelve, LLC
(A Delaware Limited Liability Company)
Consolidated Balance Sheets

Assets

	March 31,
	2012			December 31,
	(unaudited)			2011

Current assets:
Cash and cash equivalents	$	12,633,244		$	26,317,435
Current portion of net investment in notes receivable		13,467,888			10,101,702
Current portion of net investment in finance leases		15,756,891			17,422,138
Other current assets		2,199,571			3,085,831

Total current assets		44,057,594			56,927,106

Non-current assets:
Net investment in notes receivable, less current portion		37,243,968			26,563,447
Net investment in finance leases, less current portion		144,171,513			148,501,603
Leased equipment at cost (less accumulated depreciation of
$92,199,031 and $82,423,653, respectively)		213,889,156			225,115,559
Investment in joint ventures		14,202,456			14,282,121
Other non-current assets		12,889,132			11,271,291

Total non-current assets		422,396,225			425,734,021

Total Assets	$	466,453,819		$	482,661,127

Liabilities and Equity

Current liabilities:
Current portion of non-recourse long-term debt	$	47,587,371		$	48,748,203
Revolving line of credit, recourse		1,200,000			-
Derivative financial instruments		5,167,956			5,606,662
Deferred revenue		4,725,541			4,149,418
Due to Manager and affiliates		116,320			109,356
Accrued expenses and other current liabilities		2,149,619			2,690,423

Total current liabilities		60,946,807			61,304,062

Non-current liabilities:
Non-recourse long-term debt, less current portion		109,146,185			120,578,143
Other non-current liabilities		55,581,035			55,175,810

Total non-current liabilities		164,727,220			175,753,953

Total Liabilities		225,674,027			237,058,015

Commitments and contingencies (Note 11)

Equity:
Members' Equity:
Additional Members		220,914,682			225,720,481
Manager		(881,531	)		(833,141	)
Accumulated other comprehensive loss		(5,846,362	)		(6,316,067	)

Total Members' Equity		214,186,789			218,571,273

Noncontrolling Interests		26,593,003			27,031,839

Total Equity		240,779,792			245,603,112

Total Liabilities and Equity	$	466,453,819		$	482,661,127

See accompanying notes to consolidated financial statements.

Table of Contents

ICON Leasing Fund Twelve, LLC
(A Delaware Limited Liability Company)
Consolidated Statements of Operations and Comprehensive Income (Loss)
(unaudited)

	Three Months Ended March 31,
	2012			2011

Revenue:
Finance income	$	5,494,270		$	5,712,181
Rental income		11,327,208			15,076,446
Income from investment in joint ventures		548,300			146,531
Net gain on sale of leased assets		289,669			-

Total revenue		17,659,447			20,935,158

Expenses:
Management fees - Manager		1,060,440			1,141,084
Administrative expense reimbursements - Manager		547,333			640,592
General and administrative		858,071			718,672
Interest		3,316,660			4,000,179
Depreciation		10,325,482			8,645,049
Reversal of credit loss reserve		(345,000	)		-
Impairment loss		-			11,290,617
Gain on derivative financial instruments		(2,292,488	)		(77,222	)

Total expenses		13,470,498			26,358,971

Net income (loss)		4,188,949			(5,423,813	)

Less: Net income (loss) attributable to noncontrolling interests		532,078			(4,141,757	)

Net income (loss) attributable to Fund Twelve	$	3,656,871		$	(1,282,056	)

Net income (loss) attributable to Fund Twelve allocable to:
Additional Members	$	3,620,302		$	(1,269,235	)
Manager		36,569			(12,821	)

	$	3,656,871		$	(1,282,056	)

Comprehensive income (loss):
Net income (loss)	$	4,188,949		$	(5,423,813	)
Change in valuation of derivative financial instruments		397,378			1,236,258
Currency translation adjustment		89,190			303,404

Total comprehensive income (loss):		4,675,517			(3,884,151	)

Less: Comprehensive income (loss) attributable to noncontrolling interests		548,941			(4,051,310	)

Comprehensive income attributable to Fund Twelve	$	4,126,576		$	167,159

Weighted average number of additional shares of
limited liability company interests outstanding		348,636			348,650

Net income (loss) attributable to Fund Twelve per weighted
average additional share of limited liability company
interests outstanding	$	10.38		$	(3.64	)

See accompanying notes to consolidated financial statements.

Table of Contents

ICON Leasing Fund Twelve, LLC
(A Delaware Limited Liability Company)
Consolidated Statement of Changes in Equity

	Members' Equity
	Additional									Accumulated
	Shares of									Other			Total
	Limited Liability			Additional						Comprehensive			Members'			Noncontrolling			Total
	Company Interests			Members			Manager			Loss			Equity			Interests			Equity
Balance, December 31, 2011		348,650		$	225,720,481		$	(833,141	)	$	(6,316,067	)	$	218,571,273		$	27,031,839		$	245,603,112

Net income		-			3,620,302			36,569			-			3,656,871			532,078			4,188,949
Change in valuation of
derivative financial instruments		-			-			-			380,515			380,515			16,863			397,378
Currency translation adjustment		-			-			-			89,190			89,190			-			89,190
Cash distributions		-			(8,410,900	)		(84,959	)		-			(8,495,859	)		(987,777	)		(9,483,636	)
Shares of limited liability company interests
repurchased		(20	)		(15,201	)		-						(15,201	)		-			(15,201	)

Balance, March 31, 2012 (unaudited)		348,630		$	220,914,682		$	(881,531	)	$	(5,846,362	)	$	214,186,789		$	26,593,003		$	240,779,792

See accompanying notes to consolidated financial statements.

Table of Contents

ICON Leasing Fund Twelve, LLC
(A Delaware Limited Liability Company)
Consolidated Statements of Cash Flows
(unaudited)

	Three Months Ended March 31,
	2012			2011

Cash flows from operating activities:
Net income (loss)	$	4,188,949		$	(5,423,813	)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Finance income		(3,670,561	)		(3,798,683	)
Rental income paid directly to lenders by lessees		(7,548,502	)		(8,175,408	)
Income from investment in joint ventures		(548,300	)		(146,531	)
Depreciation		10,325,482			8,645,049
Interest expense on non-recourse financing paid directly
to lenders by lessees		869,615			1,309,097
Interest expense from amortization of debt financing costs		247,813			290,426
Accretion of seller's credit and other		590,423			588,018
Impairment loss		-			11,290,617
Reversal of credit loss reserve		(345,000	)		-
Net gain on sale of leased assets		(289,669	)		-
Gain on derivative financial instruments		(2,292,488	)		(77,222	)
Changes in operating assets and liabilities:
Collection of finance leases		9,223,482			9,573,545
Other assets		1,241,075			(344,744	)
Accrued expenses and other current liabilities		(682,874	)		(98,584	)
Deferred revenue		353,721			(1,692,677	)
Due to/from Manager and affiliates		6,964			56,305
Distributions from joint ventures		382,505			146,531

Net cash provided by operating activities		12,052,635			12,141,926

Cash flows from investing activities:
Purchase of equipment		-			(2,012,552	)
Proceeds from sale of equipment		1,463,425			2,729,276
Investment in joint venture		-			(12,218,393	)
Distributions received from joint ventures in excess of profits		245,460			188,043
Investment in notes receivable		(16,130,690	)		-
Principal repayment on notes receivable		2,350,633			2,470,167

Net cash used in investing activities		(12,071,172	)		(8,843,459	)

Cash flows from financing activities:
Proceeds from revolving line of credit, recourse		1,200,000			-
Repayment of non-recourse long-term debt		(5,376,579	)		(3,176,867	)
Repurchase of limited liability company interests		(15,201	)		-
Distributions to noncontrolling interests		(987,777	)		(1,563,675	)
Cash distributions to members		(8,495,859	)		(8,496,183	)

Net cash used in financing activities		(13,675,416	)		(13,236,725	)

Effects of exchange rates on cash and cash equivalents		9,762			1,446

Net decrease in cash and cash equivalents		(13,684,191	)		(9,936,812	)

Cash and cash equivalents, beginning of period		26,317,435			29,219,287

Cash and cash equivalents, end of period	$	12,633,244		$	19,282,475

See accompanying notes to consolidated financial statements.

Table of Contents

ICON Leasing Fund Twelve, LLC
(A Delaware Limited Liability Company)
Consolidated Statements of Cash Flows
(unaudited)

	Three Months Ended March 31,
	2012		2011

Supplemental disclosure of cash flow information:

Cash paid during the period for interest	$	1,621,007	$	1,029,433

Supplemental disclosure of non-cash investing and financing activities:

Principal and interest on non-recourse long-term debt
paid directly to lenders by lessees	$	8,155,205	$	8,175,408

Exchange of equity interest in three consolidated joint ventures for the
proportionate share of certain notes receivable	$	-	$	17,068,983

See accompanying notes to consolidated financial statements.

Table of Contents

ICON Leasing Fund Twelve, LLC

(A Delaware Limited Liability Company)

Notes to Consolidated Financial Statements

March 31, 2012

(unaudited)

(1)	Basis of Presentation

The accompanying consolidated financial statements of ICON Leasing Fund Twelve, LLC (the “LLC”), have been prepared in accordance with U.S. generally accepted accounting principles (“US GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission for Quarterly Reports on Form 10-Q. In the opinion of the manager, ICON Capital Corp., a Delaware corporation (the “Manager”), all adjustments, which are of a normal recurring nature, considered necessary for a fair presentation have been included. These consolidated financial statements should be read together with the consolidated financial statements and notes included in the LLC’s Annual Report on Form 10-K for the year ended December 31, 2011. The results for the interim period are not necessarily indicative of the results for the full year.

Certain reclassifications have been made to the accompanying consolidated financial statements in prior periods to conform to the current presentation.

Credit Quality of Notes Receivable and Direct Financing Leases and Allowance for Credit Losses

The Manager weighs all credit decisions on a combination of external credit ratings as well as internal credit evaluations of all potential borrowers. A potential borrower’s credit is analyzed using those credit ratings as well as the potential borrower’s financial statements and other financial data deemed relevant.

As the LLC’s notes receivable and direct finance leases (each, a “Note” and, collectively, the “Notes”) are limited in number, the LLC is able to estimate the allowance for credit losses based on a detailed analysis of each Note as opposed to using portfolio based metrics and allowance for credit losses. Notes are analyzed quarterly and categorized as either performing or non-performing based on payment history. If a Note becomes non-performing due to a borrower’s missed scheduled payments or failed financial covenants, the Manager analyzes if a reserve should be established or if the Note should be restructured. Material events would be specifically disclosed in the discussion of each Note held.

Recent Accounting Pronouncements

In May 2011, the FASB issued ASU No 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS (“ASU 2011-04”), which amends its guidance related to fair value measurements in order to align the definition of fair value measurements and the related disclosure requirements between U.S. GAAP and International Financial Reporting Standards. The new guidance also changes certain existing fair value measurement principles and disclosure requirements. The adoption of ASU 2011-04 became effective for the Partnership on January 1, 2012. The adoption of these additional disclosures did not have a material impact on the LLC’s consolidated financial statements.

In June 2011, the FASB issued ASU No 2011-05, Presentation of Comprehensive Income (“ASU 2011-05”), which revises the manner in which companies present comprehensive income in financial statements. The new guidance removes the option to report other comprehensive income and its components in the statement of changes in equity and instead requires presentation in one continuous statement of comprehensive income or two separate, but consecutive statements. The adoption of ASU 2011-05 became effective for the Partnership on January 1, 2012. The adoption of this guidance did not have a material impact on the LLC’s consolidated financial statements, as it only required a change in the format of presentation.

Table of Contents

ICON Leasing Fund Twelve, LLC

(A Delaware Limited Liability Company)

Notes to Consolidated Financial Statements

March 31, 2012

(unaudited)

(2)	Net Investment in Notes Receivable

Net investment in notes receivable consisted of the following:

	March 31,			December 31,
	2012			2011

Principal outstanding	$	49,189,406		$	35,877,028
Initial direct costs		2,632,277			1,896,458
Deferred fees		(780,827	)		(434,337	)
Credit loss reserve		(329,000	)		(674,000	)

Net investment in notes receivable		50,711,856			36,665,149

Less: Current portion of net
investment in notes receivable		13,467,888			10,101,702

Net investment in notes receivable,
less current portion	$	37,243,968		$	26,563,447

On February 3, 2012, the LLC made a term loan in the amount of $13,593,750 to subsidiaries of Revstone Transportation, LLC. The loan bears interest at 15% per year and is for a period of sixty months. The loan is secured by all of Revstone’s assets, including a mortgage on real property. In addition, the LLC agreed to make a secured capital expenditure loan (the “CapEx Loan”), which is intended not to exceed $1,000,000. On April 2, 2012, Revstone borrowed approximately $223,000 in connection with the CapEx Loan. The outstanding CapEx Loan balance bears interest at 17% per year and is for a period of sixty months. The CapEx Loan is secured by a first priority security interest in the automotive manufacturing equipment purchased with the proceeds from the CapEx Loan and a second priority security interest in the term loan collateral.

On February 29, 2012, the LLC made a term loan in the amount of $2,000,000 to VAS Aero Services, LLC. The loan bears interest at variable rates ranging between 12% and 14.5% per year and is for a period of thirty-one months. The loan is secured by a second priority interest on all of VAS’s assets.

On May 2, 2012, certain affiliates of Northern Leasing Systems, Inc. satisfied their obligations in connection with promissory notes by making a payment of approximately $5,018,000.

Table of Contents

ICON Leasing Fund Twelve, LLC

(A Delaware Limited Liability Company)

Notes to Consolidated Financial Statements

March 31, 2012

(unaudited)

(3)	Net Investment in Finance Leases

Net investment in finance leases consisted of the following:

	March 31,			December 31,
	2012			2011

Minimum rents receivable	$	188,582,181		$	205,829,027
Estimated residual values		25,554,382			18,054,383
Initial direct costs		4,351,130			4,632,591
Unearned income		(58,559,289	)		(62,592,260	)

Net investment in finance leases		159,928,404			165,923,741

Less: Current portion of net
investment in finance leases		15,756,891			17,422,138

Net investment in finance leases,
less current portion	$	144,171,513		$	148,501,603

On April 25, 2012, Sealynx Automotive Transieres SAS filed for Redressement Judiciaire, a proceeding under French law similar to Chapter 11 reorganization under the U.S. Bankruptcy Code. It is not possible at this time to determine the LLC’s ability to collect on the amounts due from Sealynx. The LLC’s Manager has estimated that the value of the underlying collateral exceeds the net book value of the receivable. Considering this, among other factors, the LLC’s Manager has concluded that no allowance for bad debt is required as of March 31, 2012.

(4)	Leased Equipment at Cost

Leased equipment at cost consisted of the following:

	March 31,		December 31,
	2012		2011

Marine - Crude oil tanker	$	168,120,037	$	168,120,037
Offshore oil field services equipment		54,383,809		54,383,809
Marine - Container vessels		52,691,711		52,691,711
Automotive manufacturing equipment		12,584,917		14,035,942
Coal drag line		12,834,631		12,834,631
Motor coaches		5,473,082		5,473,082
		306,088,187		307,539,212

Less: Accumulated depreciation		92,199,031		82,423,653

	$	213,889,156	$	225,115,559

On January 3, 2012, CUSA PRTS, LLC and its parent company, Coach Am Group Holdings Corp., commenced a voluntary Chapter 11 proceeding in U.S. Bankruptcy Court. The Manager has reviewed CUSA’s ability to make future rental payments relating to the leased motor coaches through ongoing discussions with CUSA’s management and, based on its findings, has concluded that no allowance for bad debt is required as of March 31, 2012.

On January 4, 2012, MW Universal, Inc. and certain of its subsidiaries satisfied their obligations relating to two lease schedules. As a result, the LLC recognized a gain on the sale of certain automotive manufacturing equipment of approximately $290,000.

Depreciation expense was $10,325,482 and $8,645,049 for the three months ended March 31, 2012 and 2011, respectively.

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ICON Leasing Fund Twelve, LLC

(A Delaware Limited Liability Company)

Notes to Consolidated Financial Statements

March 31, 2012

(unaudited)

(5)	Non-Recourse Long-Term Debt

On January 20, 2012, the LLC satisfied its non-recourse debt obligation with Wells Fargo, secured by certain motor coaches, for approximately $1,192,000.

As of March 31, 2012 and December 31, 2011, the LLC had non-recourse long-term debt obligations of $156,733,556 and $169,326,346, respectively, with maturity dates ranging from September 1, 2013 to January 31, 2015, and interest rates ranging from 3.85% to 7.96% per year, fixed after giving effect to respective interest rate swap agreements.

(6)	Revolving Line of Credit, Recourse

On May 10, 2011, the LLC entered into an agreement with California Bank & Trust (“CB&T”) for a revolving line of credit of $10,000,000 (the “Facility”), which is secured by all of the LLC’s assets not subject to a first priority lien. Amounts available under the Facility are subject to a borrowing base that is determined, subject to certain limitations, on the present value of the future receivables under certain loans and lease agreements in which the LLC has a beneficial interest. At March 31, 2012, the LLC had $8,800,000 available under the Facility.

The Facility expires on March 31, 2013 and the LLC may request a one year extension to the revolving line of credit within 390 days of the then-current expiration date, but CB&T has no obligation to extend. The interest rate for general advances under the Facility is CB&T’s prime rate and the interest rate on up to five separate non-prime rate advances that are permitted to be made under the Facility is the 90-day rate at which U.S. dollar deposits can be acquired by CB&T in the London Interbank Eurocurrency Market plus 2.5% per year, provided that neither interest rate is permitted to be less than 4.0% per year. In addition, the LLC is obligated to pay a commitment fee based on an annual rate of 0.50% on unused commitments under the Facility. At March 31, 2012, the LLC had $1,200,000 obligations outstanding under the Facility. Subsequent to March 31, 2012, the LLC repaid $1,200,000, which reduced its outstanding loan balance to $0.

At March 31, 2012, the LLC was in compliance with all covenants under the Loan Agreement.

(7)	Transactions with Related Parties

Fees and other expenses paid or accrued by the LLC to the Manager or its affiliates were as follows:

			Three Months Ended March 31,
Entity	Capacity	Description	2012		2011
ICON Capital Corp.	Manager	Acquisition fees (1)	$	957,641	$	1,302,313
ICON Capital Corp.	Manager	Administrative expense reimbursements (2)		547,333		640,592
ICON Capital Corp.	Manager	Management fees (2)		1,060,440		1,141,084
Total			$	2,565,414	$	3,083,989

(1) Amount capitalized and amortized to operations over the estimated service period in accordance with the LLC's accounting policies.
(2) Amount charged directly to operations.

At March 31, 2012 and December 31, 2011, the LLC had a net payable due to the Manager and its affiliates of $116,320 and $109,356, respectively, primarily related to administrative expense reimbursements.

Table of Contents

ICON Leasing Fund Twelve, LLC

(A Delaware Limited Liability Company)

Notes to Consolidated Financial Statements

March 31, 2012

(unaudited)

(8)	Derivative Financial Instruments

The LLC may enter into derivative transactions for purposes of hedging specific financial exposures, including movements in foreign currency exchange rates and changes in interest rates on its non-recourse long-term debt. The LLC enters into these instruments only for hedging underlying exposures. The LLC does not hold or issue derivative financial instruments for purposes other than hedging. Certain derivatives may not meet the established criteria to be designated as qualifying accounting hedges, even though the LLC believes that these are effective economic hedges.

The LLC recognizes all derivatives as either assets or liabilities on the consolidated balance sheets and measure those instruments at fair value. Changes in the fair value of such instruments are recognized immediately in earnings unless certain criteria are met. These criteria demonstrate that the derivative is expected to be highly effective at offsetting changes in the fair value or expected cash flows of the underlying exposure at both the inception of the hedging relationship and on an ongoing basis and include an evaluation of the counterparty risk and the impact, if any, on the effectiveness of the derivative. If these criteria are met, which the LLC must document and assess at inception and on an ongoing basis, the LLC recognizes the changes in fair value of such instruments in accumulated other comprehensive income (loss) (“AOCI”), a component of equity on the consolidated balance sheets. Changes in the fair value of the ineffective portion of all derivatives are recognized immediately in earnings.

Interest Rate Risk

The LLC’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements on its variable non-recourse debt. The LLC’s hedging strategy to accomplish this objective is to match the projected future cash flows with the underlying debt service. Interest rate swaps designated as cash flow hedges involve the receipt of floating rate payments from a counterparty in exchange for the LLC making fixed rate payments over the life of the agreements without exchange of the underlying notional amount.

Designated Derivatives

As of March 31, 2012, the LLC had eleven floating-to-fixed interest rate swaps that are designated and qualifying as cash flow hedges with an aggregate notional amount of $131,400,790. These interest rate swaps have maturity dates ranging from November 14, 2013 to September 30, 2014.

For these derivatives, the LLC records the gain or loss from the effective portion of changes in the fair value of derivatives designated and qualifying as cash flow hedges in AOCI and such gain or loss is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings and within the same line item on the statements of operations and comprehensive income (loss) as the impact of the hedged transaction. During the three months ended March 31, 2012, the LLC recorded $9,356 of hedge ineffectiveness in earnings.

During the twelve months ending March 31, 2013, the LLC estimates that approximately $2,637,606 will be reclassified from AOCI to interest expense.

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ICON Leasing Fund Twelve, LLC

(A Delaware Limited Liability Company)

Notes to Consolidated Financial Statements

March 31, 2012

(unaudited)

(8)	Derivative Financial Instruments - continued

Non-designated Derivatives

As of March 31, 2012, the LLC had two interest rate swaps that are not designated and qualifying as cash flow hedges with an aggregate notional amount of $12,315,323 that are not speculative and are used to meet the LLC’s objectives in using interest rate derivatives to add stability to interest expense and to manage its exposure to interest rate movements.

Additionally, the LLC holds warrants that are held for purposes other than hedging. All changes in the fair value of the interest rate swaps not designated as hedges and the warrants are recorded directly in earnings.

The table below presents the fair value of the LLC’s derivative financial instruments as well as their classification within the LLC’s consolidated balance sheets as of March 31, 2012 and December 31, 2011:

	Asset Derivatives					Liability Derivatives
		March 31,		December 31,			March 31,		December 31,
		2012		2011			2012		2011
	Balance Sheet Location	Fair Value		Fair Value		Balance Sheet Location	Fair Value		Fair Value
Derivatives designated
as hedging instruments:
Interest rate swaps		$	-	$	-	Derivative financial instruments	$	4,674,455	$	5,083,670

Derivatives not designated
as hedging instruments:
Interest rate swaps		$	-	$	-	Derivative financial instruments	$	493,501	$	522,992
Warrants	Other non-current assets	$	3,429,000	$	1,148,250		$	-	$	-

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ICON Leasing Fund Twelve, LLC

(A Delaware Limited Liability Company)

Notes to Consolidated Financial Statements

March 31, 2012

(unaudited)

(8)	Derivative Financial Instruments - continued

The tables below present the effect of the LLC’s derivative financial instruments designated as cash flow hedging instruments on the consolidated statement of operations and comprehensive income (loss) for the three months ended March 31, 2012:

Location of Gain (Loss)

Gain (Loss) Recognized

Amount of Gain (Loss)

Location of Gain (Loss)

Recognized in Income on

in Income on Derivative

Recognized

Reclassified

Gain (Loss) Reclassified

Derivative (Ineffective Portion

(Ineffective Portion and

in AOCI on Derivative

from AOCI into Income

and Amounts Excluded

Amounts Excluded

Derivatives

(Effective Portion)

from Effectiveness Testing)

Interest rate swaps

(422,547

)

Interest expense

(803,062

)

Loss on financial instruments

(9,356

)

Location of Gain (Loss)

Gain (Loss) Recognized

Amount of Gain (Loss)

Location of Gain (Loss)

Recognized in Income on

in Income on Derivative

Recognized

Reclassified

Gain (Loss) Reclassified

Derivative (Ineffective Portion

(Ineffective Portion and

in AOCI on Derivative

from AOCI into Income

and Amounts Excluded

Amounts Excluded

Derivatives

(Effective Portion)

from Effectiveness Testing)

Interest rate swaps

11,481

Interest expense

(1,134,330

)

Loss on financial instruments

(12,078

)

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ICON Leasing Fund Twelve, LLC

(A Delaware Limited Liability Company)

Notes to Consolidated Financial Statements

March 31, 2012

(unaudited)

(8)	Derivative Financial Instruments - continued

The LLC’s derivative financial instruments not designated as hedging instruments generated a gain on financial instruments on the consolidated statements of operations and comprehensive income (loss) for the three months ended March 31, 2012 and 2011 of $2,301,844 and $89,300, respectively. The net gain recorded for the three months ended March 31, 2012 was comprised of gains of $21,094 relating to interest rate swap contracts and $2,280,750 relating to the increase in the fair value of the warrants. The net gain recorded for the three months ended March 31, 2011 was comprised of a gain of $92,040 relating to interest rate swap contracts and losses of ($2,740) relating to warrants.

Foreign Exchange Risk

The LLC is exposed to foreign exchange risk from fluctuations in Euros and pounds sterling. The LLC, at times, uses foreign currency derivatives, including currency forward agreements, to manage its exposure to fluctuations in the USD-Euro and USD-pounds sterling exchange rates. Currency forward agreements involve fixing the foreign exchange rate for delivery of a specified amount of foreign currency on a specified date. The currency forward agreements typically have been cash settled in U.S. dollars for their fair value at or close to their settlement date. The LLC had no foreign currency derivatives outstanding at March 31, 2012.

Derivative Risks

The LLC manages exposure to possible defaults on derivative financial instruments by monitoring the concentration of risk that the LLC has with any individual bank and through the use of minimum credit quality standards for all counterparties. The LLC does not require collateral or other security in relation to derivative financial instruments. Since it is the LLC’s policy to enter into derivative contracts with banks of internationally acknowledged standing only, the LLC considers the counterparty risk to be remote.

As of March 31, 2012 and December 31, 2011, the fair value of the derivatives in a liability position was $5,167,956 and $5,606,662, respectively. In the event that the LLC would be required to settle its obligations under the agreements as of March 31, 2012, the termination value would be $5,352,049.

(9)	Accumulated Other Comprehensive Loss

AOCI included accumulated unrealized losses on derivative financial instruments and accumulated unrealized losses on currency translation adjustments of $4,452,312 and $1,394,050, respectively, at March 31, 2012 and accumulated unrealized losses on derivative financial instruments and accumulated unrealized losses on currency translation adjustments of $4,832,827 and $1,483,240, respectively, at December 31, 2011.

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ICON Leasing Fund Twelve, LLC

(A Delaware Limited Liability Company)

Notes to Consolidated Financial Statements

March 31, 2012

(unaudited)

(10)	Fair Value Measurements

The LLC accounts for the fair value of financial instruments in accordance with the accounting pronouncements, which require assets and liabilities carried at fair value to be classified and disclosed in one of the following three categories:

·	Level 1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

·	Level 2: Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

·	Level 3: Pricing inputs that are generally unobservable and cannot be corroborated by market data.

Financial Assets and Liabilities Measured on a Recurring Basis

Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Manager’s assessment, on the LLC’s behalf, of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy.

The following table summarizes the valuation of the LLC’s material financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2012:

	Level 1		Level 2		Level 3		Total
Assets:

Warrants	$	-	$	-	$	3,429,000	$	3,429,000

Liabilities:

Derivative Financial Instruments	$	-	$	5,167,956	$	-	$	5,167,956

The estimated fair value of the LLC’s warrants was based on the discounted value of future cash flows of the underlying company. The significant unobservable inputs used in the fair value measurement of the LLC’s warrants included the use of a discount rate of 22%. Increases or decreases of these inputs would result in a lower or higher fair value measurement.

The following table summarizes the valuation of the LLC’s material financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2011:

	Level 1		Level 2		Level 3		Total
Assets:

Warrants	$	-	$	-	$	1,148,250	$	1,148,250

Liabilities:

Derivative Financial Instruments	$	-	$	5,606,662	$	-	$	5,606,662

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ICON Leasing Fund Twelve, LLC

(A Delaware Limited Liability Company)

Notes to Consolidated Financial Statements

March 31, 2012

(unaudited)

(10)	Fair Value Measurements - continued

The LLC’s derivative contracts, including interest rate swaps and warrants, are valued using models based on readily observable or unobservable market parameters for all substantial terms of the LLC’s derivative contracts and are classified within Level 2 or Level 3. As permitted by the accounting pronouncements, the LLC uses market prices and pricing models for fair value measurements of its derivative instruments. The fair value of the warrants was recorded in other non-current assets and the fair value of the derivative liabilities was recorded in derivative financial instruments within the consolidated balance sheets.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The LLC is required, on a nonrecurring basis, to adjust the carrying value or provide valuation allowances for certain assets and liabilities using fair value measurements. The LLC’s non-financial assets, such as leased equipment at cost, are measured at fair value when there is an indicator of impairment and recorded at fair value only when an impairment charge is recognized.

The following table summarizes the valuation of the LLC’s material non-financial assets and liabilities measured at fair value on a nonrecurring basis for the period ended March 31, 2011:

	December 31, 2011		Level 1		Level 2		Level 3		Impairment Loss for the Three Months Ended March 31, 2011

Leased equipment at cost	$	-	$	-	$	-	$	19,393,283	$	11,290,617

The LLC’s non-financial assets are valued using inputs that are generally unobservable and cannot be corroborated by market data and are classified within Level 3. As permitted by the accounting pronouncements, the LLC uses projected cash flows for fair value measurements of its non-financial assets.

Fair value information with respect to the LLC’s leased assets and liabilities is not separately provided since (i) the current accounting pronouncements do not require fair value disclosures of lease arrangements and (ii) the carrying value of financial assets, other than lease-related investments, and the recorded value of recourse debt approximate fair value due to their short-term maturities and variable interest rates. The carrying value of the LLC’s non-recourse debt approximates its fair value due to its floating interest rates. The estimated fair value of the LLC’s other non-current liabilities and notes receivable was based on the discounted value of future cash flows expected to be received from the loans based on terms consistent with the range of the LLC’s internal pricing strategies for transactions of this type. Principal outstanding on fixed rate notes receivable was discounted at rates ranging between 12% and 20% per year. Principal outstanding on fixed rate non-recourse debt and other non-current liabilities were discounted at a rate of 3.968% per year.

	March 31, 2012
			Fair Value
	Carrying Value		(Level 3)
Principal outstanding on fixed rate notes receivable	$	49,189,406	$	51,061,120

Principal outstanding on fixed rate non-recourse debt	$	9,453,502	$	9,503,605

Other non-current liabilities	$	55,581,035	$	57,023,792

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ICON Leasing Fund Twelve, LLC

(A Delaware Limited Liability Company)

Notes to Consolidated Financial Statements

March 31, 2012

(unaudited)

(11)	Commitments and Contingencies

At the time the LLC acquires or divests of its interest in an equipment lease or other financing transaction, the LLC may, under very limited circumstances, agree to indemnify the seller or buyer for specific contingent liabilities. The Manager believes that any liability that may arise as a result of any such indemnification obligations will not have a material adverse effect on the consolidated financial condition of the LLC taken as a whole.

In connection with certain investments, the LLC is required to maintain restricted cash accounts with certain banks. Restricted cash of approximately $1,817,000 and $2,446,000 are presented within other non-current assets in the LLC’s consolidated balance sheets at March 31, 2012 and December 31, 2011.

On October 21, 2011, the Chapter 11 bankruptcy trustee for Equipment Acquisition Resources, Inc. (“EAR”) filed an adversary complaint against ICON EAR, LLC (“ICON EAR”) seeking the recovery of the lease payments that the trustee alleges were fraudulently transferred from EAR to ICON EAR. The complaint also seeks the recovery of payments made by EAR to ICON EAR during the 90-day period preceding EAR’s bankruptcy filing, alleging that those payments constituted a preference under the U.S. Bankruptcy Code. Additionally, the complaint seeks the imposition of a constructive trust over certain real property and the proceeds from the sale ICON EAR received as security in connection with its investment. The Manager believes these claims are frivolous and intends to vigorously defend this action. At this time, the LLC is unable to predict the outcome of this action or loss therefrom, if any.

Subsequent to the filing of the bankruptcy petition, EAR disclaimed any right to its equipment and such equipment became the subject of an Illinois State Court proceeding. Such equipment was subsequently sold as part of the Illinois State Court proceeding. On March 7, 2012, one of the creditors in the Illinois State Court proceeding won a summary judgment motion filed against ICON EAR that granted dismissal of ICON EAR’s claims to the proceeds resulting from the sale of certain EAR equipment. ICON EAR is appealing this decision. At this time, the LLC is unable to predict the outcome of this action.

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

The following is a discussion of our current financial position and results of operations. This discussion should be read together with our unaudited consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2011. This discussion should also be read in conjunction with the disclosures below regarding “Forward-Looking Statements” and the “Risk Factors” set forth in Item 1A of Part II of this Quarterly Report on Form 10-Q.

As used in this Quarterly Report on Form 10-Q, references to “we,” “us,” “our” or similar terms include ICON Leasing Fund Twelve, LLC and its consolidated subsidiaries.

Forward-Looking Statements

Certain statements within this Quarterly Report on Form 10-Q may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”). These statements are being made pursuant to the PSLRA, with the intention of obtaining the benefits of the “safe harbor” provisions of the PSLRA, and, other than as required by law, we assume no obligation to update or supplement such statements. Forward-looking statements are those that do not relate solely to historical fact. They include, but are not limited to, any statement that may predict, forecast, indicate or imply future results, performance, achievements or events. You can identify these statements by the use of words such as “may,” “will,” “could,” “anticipate,” “believe,” “estimate,” “expect,” “continue,” “further,” “plan,” “seek,” “intend,” “predict” or “project” and variations of these words or comparable words or phrases of similar meaning. These forward-looking statements reflect our current beliefs and expectations with respect to future events and are based on assumptions and are subject to risks and uncertainties and other factors outside our control that may cause actual results to differ materially from those projected. We undertake no obligation to update publicly or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

Overview

Our offering period ended on April 30, 2009 and our operating period commenced on May 1, 2009. During our offering period, we raised $347,686,947 in total equity. We operate as an equipment leasing and finance program in which the capital our members invested was pooled together to make investments, pay fees and establish a small reserve. With the proceeds from the sale of shares of our limited liability company interests (“Shares”), we invested and continue to invest in equipment subject to leases, other equipment financing, and residual ownership rights in items of leased equipment and established a cash reserve. After the net offering proceeds were invested, additional investments are made with the cash generated from our initial investments to the extent that cash is not used for expenses, reserves and distributions to members. The investment in additional equipment in this manner is called “reinvestment.” We anticipate investing in equipment from time to time for five years. This time frame is called the “operating period” and may be extended, at the sole discretion of our Manager, for up to an additional three years. After the operating period, we will then sell our assets in the ordinary course of business during a time frame called the “liquidation period.”

Our Manager manages and controls our business affairs, including, but not limited to, our equipment leases and other financing transactions, under the terms of our limited liability company agreement.

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Recent Significant Transactions

We engaged in the following significant transactions since December 31, 2011:

New Investments

On February 3, 2012, we made a term loan in the amount of $13,593,750 to subsidiaries of Revstone Transportation, LLC. The loan bears interest at 15% per year and is for a period of sixty months. The loan is secured by all of Revstone’s assets, including a mortgage on real property. In addition, we agreed to make the CapEx Loan, which is intended not to exceed $1,000,000. On April 2, 2012, Revstone borrowed approximately $223,000 in connection with the CapEx Loan. The outstanding CapEx Loan balance bears interest at 17% per year and is for a period of sixty months. The CapEx Loan is secured by a first priority security interest in the automotive manufacturing equipment purchased with the proceeds from the CapEx Loan and a second priority security interest in the term loan collateral.

·	On February 29, 2012, we made a term loan in the amount of $2,000,000 to VAS Aero Services, LLC. The loan bears interest at variable rates ranging between 12% and 14.5% per year and is for a period of thirty-one months. The loan is secured by a second priority interest on all of VAS’s assets.

Dispositions

·	On January 4, 2012, MW Universal, Inc. and certain of its subsidiaries satisfied their obligations relating to two lease schedules. As a result, we recognized a gain on the sale of certain automotive manufacturing equipment of approximately $290,000.

·	On May 2, 2012, certain affiliates of Northern Leasing Systems, Inc. satisfied their obligations in connection with promissory notes by making a payment of approximately $5,018,000.

Acquisition Fees

In connection with the new investments made since December 31, 2011, we paid total acquisition fees to our Manager of approximately $958,000.

Recent Accounting Pronouncements

There are no recent accounting pronouncements that had a significant impact on our consolidated financial statements as of March 31, 2012. See Note 1 to our consolidated financial statements for a discussion of recent accounting pronouncements.

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Results of Operations for the Three Months Ended March 31, 2012 (the “2012 Quarter”) and 2011 (the “2011 Quarter”)

Financing Transactions

We provide financing in diverse industries. The following tables set forth the types of assets securing the financing transactions in our portfolio at March 31, 2012 and December 31, 2011:

	March 31, 2012				December 31, 2011
	Net		Percentage of		Net		Percentage of
	Carrying		Total Net		Carrying		Total Net
Asset Type	Value		Carrying Value		Value		Carrying Value
Offshore oil field services equipment	$	138,550,030		66%	$	143,464,624		71%
Automotive manufacturing equipment		16,669,016		8%		2,695,055		1%
Marine - Crude oil tanker		10,437,841		4%		10,485,419		6%
Cranes & transportation equipment		8,317,253		4%		8,729,806		4%
Gas compressors		7,677,699		4%		7,841,466		4%
Marine - Product tankers		7,416,468		4%		7,709,533		4%
Analog seismic system equipment		6,029,941		3%		6,542,561		3%
Point of sale equipment		4,981,179		2%		5,306,784		3%
Telecommunications equipment		3,472,371		2%		4,213,063		2%
Rail support construction equipment		2,236,531		1%		2,800,538		1%
Metal cladding & production equipment		2,714,167		1%		2,800,041		1%
Aircraft engines		2,137,764		1%		-		-
	$	210,640,260		100%	$	202,588,890		100%

The net carrying value of our financing transactions includes the balances of our net investment in notes receivable and our net investment in finance leases, which are included in our consolidated balance sheets.

During the 2012 Quarter and the 2011 Quarter, one customer generated a significant portion (defined as 10% or more) of our total finance income as follows:

		Percentage of Total Finance Income
Customer	Asset Type	2012 Quarter		2011 Quarter
Leighton Holdings Limited	Offshore oil field services equipment		55%		59%

Interest income from our net investment in notes receivable and finance income from our net investment in finance leases are included in finance income in the consolidated statements of operations and comprehensive income (loss).

The foregoing percentages are only as of a stated period and are not expected to be comparable in future periods. Further, these percentages are only representative of the percentage of the carrying value of such assets or finance income as of a stated period, as applicable, and as such are not indicative of the concentration of any asset type or customer by the amount of equity invested or our investment portfolio as a whole.

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Operating Lease Transactions

We have also financed a diversified portfolio of equipment pursuant to operating leases. The equipment has been leased to customers in various industries. The following tables set forth the types of equipment subject to operating leases in our investment portfolio at March 31, 2012 and December 31, 2011:

	March 31, 2012				December 31, 2011
	Net		Percentage of		Net		Percentage of
	Carrying		Total Net		Carrying		Total Net
Asset Type	Value		Carrying Value		Value		Carrying Value
Marine - Crude oil tanker	$	114,438,325		54%	$	122,078,577		54%
Offshore oil field services equipment		42,308,723		20%		43,333,507		19%
Marine - Container vessels		39,123,847		17%		39,985,602		17%
Coal drag line		9,983,950		5%		10,166,296		5%
Automotive manufacturing equipment		4,729,207		2%		6,065,808		3%
Motor coaches		3,305,104		2%		3,485,769		2%
	$	213,889,156		100%	$	225,115,559		100%

The net carrying value of our operating lease transactions includes the balance of our leased equipment at cost, which is included in our consolidated balance sheets.

During the 2012 Quarter and the 2011 Quarter, certain customers generated significant portions (defined as 10% or more) of our total rental income as follows:

		Percentage of Total Rental Income
Customer	Asset Type	2012 Quarter		2011 Quarter
AET, Inc. Limited	Marine - Crude oil tanker		53%		40%
Swiber Holdings Limited	Offshore oil field services equipment		21%		16%
Vroon Group B.V.	Marine - Container vessels		15%		11%
Teekay Shipping	Marine - Crude oil tanker		-		10%
			89%		77%

Rental income from our operating leases is included in rental income in the consolidated statements of operations and comprehensive income (loss).

The foregoing percentages are only as of a stated period and are not expected to be comparable in future periods. Further, these percentages are only representative of the percentage of the carrying value of such assets or rental income as of a stated period, as applicable, and as such are not indicative of the concentration of any asset type or customer by the amount of equity invested or our investment portfolio as a whole.

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Revenue for the 2012 Quarter and the 2011 Quarter is summarized as follows:

	Three Months Ended March 31,
	2012		2011		Change

Finance income	$	5,494,270	$	5,712,181	$	(217,911	)
Rental income		11,327,208		15,076,446		(3,749,238	)
Income from investment in joint ventures		548,300		146,531		401,769
Net gain on sale of leased assets		289,669		-		289,669

Total revenue	$	17,659,447	$	20,935,158	$	(3,275,711	)

Total revenue for the 2012 Quarter decreased $3,275,711, or 15.6%, as compared to the 2011 Quarter. The decrease in rental income was primarily due to the termination of eight operating leases, in addition to the reclassification of two leases from operating to direct financing leases during and after the 2011 Quarter. The increase in income from investment in joint ventures was primarily due to the operating results of our investment in two new joint ventures during 2011.

Expenses for the 2012 Quarter and the 2011 Quarter are summarized as follows:

	Three Months Ended March 31,
	2012			2011			Change

Management fees - Manager	$	1,060,440		$	1,141,084		$	(80,644	)
Administrative expense reimbursements - Manager		547,333			640,592			(93,259	)
General and administrative		858,071			718,672			139,399
Interest		3,316,660			4,000,179			(683,519	)
Depreciation		10,325,482			8,645,049			1,680,433
Reversal of credit loss reserve		(345,000	)		-			(345,000	)
Impairment loss		-			11,290,617			(11,290,617	)
Gain on derivative financial instruments		(2,292,488	)		(77,222	)		(2,215,266	)

Total expenses	$	13,470,498		$	26,358,971		$	(12,888,473	)

Total expenses for the 2012 Quarter decreased $12,888,473, or 48.9%, as compared to the 2011 Quarter. The decrease in total expenses is primarily due to an impairment loss recorded by ICON Mayon, LLC (“ICON Mayon”) during the 2011 Quarter and an increase in the valuation of our warrants during the 2012 Quarter, partially offset by an increase in depreciation due to the reduction in residual values for certain vessels during 2011.

Noncontrolling Interests

Net income (loss) attributable to noncontrolling interests increased $4,673,835, from a net loss of $4,141,757 in the 2011 Quarter to net income of $532,078 in the 2012 Quarter. The increase was primarily due to our not incurring operating losses or other losses during the 2012 Quarter of the magnitude of the operating loss recorded by ICON Mayon during the 2011 Quarter, as well as the termination of three consolidated joint ventures effective January 1, 2011.

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Net Income Attributable to Fund Twelve

As a result of the foregoing factors, net income (loss) attributable to us for the 2012 Quarter and the 2011 Quarter was $3,656,871 and ($1,282,056), respectively. Net income (loss) attributable to us per weighted average additional Share outstanding for the 2012 Quarter and the 2011 Quarter was $10.38 and ($3.64), respectively.

Financial Condition

This section discusses the major balance sheet variances at March 31, 2012 compared to December 31, 2011.

Total Assets

Total assets decreased $16,207,308, from $482,661,127 at December 31, 2011 to $466,453,819 at March 31, 2012. The decrease was primarily due to (i) the depreciation of leased equipment at cost and (ii) cash distributions to our members and noncontrolling interests during the 2012 Quarter.

Current Assets

Current assets decreased $12,869,512, from $56,927,106 at December 31, 2011 to $44,057,594 at March 31, 2012. The decrease was primarily due to (i) cash used for investments in two notes receivable and (ii) cash distributions to our members and noncontrolling interests during the 2012 Quarter.

Total Liabilities

Total liabilities decreased $11,383,988, from $237,058,015 at December 31, 2011 to $225,674,027 at March 31, 2012. The decrease was primarily due to scheduled repayments of our non-recourse long-term debt during the 2012 Quarter.

Current Liabilities

Current liabilities decreased $357,255, from $61,304,062 at December 31, 2011 to $60,946,807 at March 31, 2012. The decrease was primarily due to (i) scheduled repayments of our non-recourse long-term debt and (ii) a decrease in accrued expenses and other current liabilities, partially offset by the proceeds received from the Facility during the 2012 Quarter.

Equity

Equity decreased $4,823,320, from $245,603,112 at December 31, 2011 to $240,779,792 at March 31, 2012. The decrease was primarily due to distributions to our members and noncontrolling interests, partially offset by net income during the 2012 Quarter.

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Liquidity and Capital Resources

Summary

At March 31, 2012 and December 31, 2011, we had cash and cash equivalents of $12,633,244 and $26,317,435, respectively. During our offering period, our main source of cash was from financing activities and our main use of cash was in investing activities. During our operating period, our main source of cash is typically from operating activities and our main use of cash is in investing and financing activities. Our liquidity will vary in the future, increasing to the extent cash flows from investments and proceeds from the sale of our investments exceed expenses and decreasing as we enter into new investments, meet our debt obligations, pay distributions to our members and to the extent that expenses exceed cash flows from operations and the proceeds from sale of our investments.

We currently have adequate cash balances and generate a sufficient amount of cash flow from operations to meet our short-term working capital requirements. We expect to generate sufficient cash flows from operations to sustain our working capital requirements in the foreseeable future. In the event that our working capital is not adequate to fund our short-term liquidity needs, we could borrow up to $10,000,000 under our Facility. For additional information, see Note 6 to our consolidated financial statements.

We anticipate that our liquidity requirements for the remaining life of the fund will be financed by the expected results of our operating and financing activities, as well as cash received from our investments at maturity.

We anticipate being able to meet our liquidity requirements into the foreseeable future. However, our ability to generate cash in the future is subject to general economic, financial, competitive, regulatory and other factors that affect us and our lessees’ and borrowers’ businesses that are beyond our control.

Pursuant to the terms of our offering, we established a cash reserve in the amount of 0.5% of the gross offering proceeds. As of March 31, 2012, the cash reserve was $1,738,435.

Cash Flows

Operating Activities

Cash provided by operating activities decreased $89,291, from $12,141,926 in the 2011 Quarter, to $12,052,635 in the 2012 Quarter. The decrease was primarily due to the decrease in the collection of rentals from operating leases and finance leases as a result of the year-over-year decrease in leased equipment at cost and net investment in finance leases.

Investing Activities

Cash used in investing activities increased $3,227,713, from $8,843,459 in the 2011 Quarter, to $12,071,172 in the 2012 Quarter. The increase was due to our investments in two new notes receivable during the 2012 Quarter, partially offset by our investment in a noncontrolling interest during the 2011 Quarter.

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Financing Activities

Cash used in financing activities increased $438,691, from $13,236,725 in the 2011 Quarter, to $13,675,416 in the 2012 Quarter. The increase was primarily due to the increase in repayments of non-recourse long-term debt, partially offset by (i) an increase in the proceeds received from the Facility and (ii) a decrease in distributions to noncontrolling interests.

Non-Recourse Long-Term Debt

We had non-recourse long-term debt obligations at March 31, 2012 of $156,733,556. Most of our non-recourse long-term debt obligations consist of notes payable in which the lender has a security interest in the underlying equipment and an assignment of the rental payments under the lease, in which case the lender is being paid directly by the lessee. In other cases, we receive the rental payments and pay the lender. If the lessee were to default on the underlying lease resulting in our defaulting on the non-recourse long-term debt, the equipment would be returned to the lender in extinguishment of the non-recourse long-term debt.

Distributions

We, at our Manager’s discretion, pay monthly distributions to each of our additional members and noncontrolling interests starting with the first month after each such member’s admission and the commencement of our joint venture operations, respectively, and we expect to continue to pay such distributions until the end of our operating period. We paid distributions of $84,959, $8,410,900 and $987,777 to our Manager, additional members and noncontrolling interests, respectively, during the 2012 Quarter.

Commitments and Contingencies and Off-Balance Sheet Transactions

Commitments and Contingencies

At March 31, 2012, we had non-recourse debt obligations. The lender has a security interest in the majority of the equipment collateralizing each non-recourse long-term debt instrument and an assignment of the rental payments under the lease associated with the equipment. In such cases, the lender is being paid directly by the lessee. In other cases, we receive the rental payments and pay the lender. If the lessee defaults on the lease, the equipment would be returned to the lender in extinguishment of the non-recourse debt. At March 31, 2012, our outstanding non-recourse long-term indebtedness was $156,733,556. The Facility had $1,200,000 outstanding at March 31, 2012. Subsequent to March 31, 2012, we repaid $1,200,000, which reduced our outstanding loan balance to $0.

In connection with certain investments, we are required to maintain restricted cash accounts with certain banks. The aforementioned cash amounts are presented within other non-current assets in our consolidated balance sheets at March 31, 2012 and December 31, 2011.

On October 21, 2011, the Chapter 11 bankruptcy trustee for EAR filed an adversary complaint against ICON EAR seeking the recovery of certain funds that the trustee alleges were fraudulently transferred from EAR to ICON EAR. The complaint also seeks the recovery of payments made by EAR to ICON EAR during the 90-day period preceding EAR’s bankruptcy filing, alleging that those payments constituted a preference under the U.S. Bankruptcy Code. Additionally, the complaint seeks the imposition of a constructive trust over certain real property and the proceeds from the sale ICON EAR received as security in connection with its investment. Our Manager believes these claims are frivolous and intends to vigorously defend this action. At this time, we are unable to predict the outcome of this action or loss therefrom, if any.

Subsequent to the filing of the bankruptcy petition, EAR disclaimed any right to its equipment and such equipment became the subject of an Illinois State Court proceeding. Such equipment was subsequently sold as part of the Illinois State Court proceeding. On March 7, 2012, one of the creditors in the Illinois State Court proceeding won a summary judgment motion filed against ICON EAR that granted dismissal of ICON EAR’s claims to the proceeds resulting from the sale of certain EAR equipment. ICON EAR is appealing this decision. At this time, we are unable to predict the outcome of this action.

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Off-Balance Sheet Transactions

None.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There are no material changes to the disclosures related to this item since the filing of our Annual Report on Form 10-K for the year ended December 31, 2011.

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures

In connection with the preparation of this Quarterly Report on Form 10-Q for the three months ended March 31, 2012, as well as the financial statements for our Manager, our Manager carried out an evaluation, under the supervision and with the participation of the management of our Manager, including its Co-Chief Executive Officers and the Principal Accounting and Financial Officer, of the effectiveness of the design and operation of our Manager’s disclosure controls and procedures as of the end of the period covered by this report pursuant to the Securities Exchange Act of 1934, as amended. Based on the foregoing evaluation, the Co-Chief Executive Officers and the Principal Accounting and Financial Officer concluded that our Manager’s disclosure controls and procedures were effective.

In designing and evaluating our Manager’s disclosure controls and procedures, our Manager recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Our Manager’s disclosure controls and procedures have been designed to meet reasonable assurance standards. Disclosure controls and procedures cannot detect or prevent all error and fraud. Some inherent limitations in disclosure controls and procedures include costs of implementation, faulty decision-making, simple error and mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based, in part, upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all anticipated and unanticipated future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with established policies or procedures.

Evaluation of internal control over financial reporting

There have been no changes in our internal control over financial reporting during the three months ended March 31, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

In the ordinary course of conducting our business, we may be subject to certain claims, suits and complaints filed against us. In our Manager’s opinion, the outcome of such matters, if any, will not have a material impact on our consolidated financial position, cash flows or results of operations. We are not aware of any material legal proceedings that are currently pending against us or against any of our assets.

Item 1A. Risk Factors

There have been no material changes from the risk factors disclosed in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2011.

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

Our Manager consented to our repurchase of 20 Shares during the 2012 Quarter. The repurchase amounts are calculated according to a specified repurchase formula pursuant to our LLC Agreement. Repurchased Shares have no voting rights and do not share in distributions with other members. Our LLC Agreement limits the number of Shares that can be repurchased in any one year and repurchased Shares may not be reissued. The following table details our Share repurchases for the three months ended March 31, 2012:

	Total Number of		Average Price Paid
Period	Shares Repurchased		Per Share
January 1, 2012 through January 31, 2012		20	$	760.05
February 1, 2012 through February 29, 2012		-	$	-
March 1, 2012 through March 31, 2012		-	$	-
Total		20

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

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Item 6. Exhibits

3.1	Certificate of Formation of Registrant (Incorporated by reference to Exhibit 3.1 to Registrant’s Registration Statement on Form S-1 filed with the SEC on November 13, 2006 (File No. 333-138661)).

4.1	Limited Liability Company Agreement of Registrant (Incorporated by reference to Exhibit A to Registrant’s Prospectus filed with the SEC on May 8, 2007 (File No. 333-138661)).

10.1	Commercial Loan Agreement, dated as of August 31, 2005, by and among California Bank & Trust and ICON Income Fund Eight B L.P., ICON Income Fund Nine, LLC, ICON Income Fund Ten, LLC and ICON Leasing Fund Eleven, LLC (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated June 20, 2007).

10.2	Loan Modification Agreement, by and between California Bank & Trust and ICON Income Fund Eight B L.P., ICON Income Fund Nine, LLC, ICON Income Fund Ten, LLC and ICON Leasing Fund Eleven, LLC, dated as of December 26, 2006 (Incorporated by reference to Exhibit 10.2 to Registrant’s Current Report on Form 8-K dated June 20, 2007).

10.3	Loan Modification Agreement, by and between California Bank & Trust, ICON Income Fund Eight B L.P., ICON Income Fund Nine, LLC, ICON Income Fund Ten, LLC, ICON Leasing Fund Eleven, LLC and ICON Leasing Fund Twelve, LLC, dated as of June 20, 2007 (Incorporated by reference to Exhibit 10.3 to Registrant’s Current Report on Form 8-K dated June 20, 2007).

10.4	Third Loan Modification Agreement, by and between California Bank & Trust, ICON Income Fund Eight B L.P., ICON Income Fund Nine, LLC, ICON Income Fund Ten, LLC, ICON Leasing Fund Eleven, LLC and ICON Leasing Fund Twelve, LLC, dated as of May 1, 2008 (Incorporated by reference to Exhibit 10.4 to Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2008, filed May 15, 2008).

10.5	Fourth Loan Modification Agreement, by and between California Bank & Trust, ICON Income Fund Eight B L.P., ICON Income Fund Nine, LLC, ICON Income Fund Ten, LLC, ICON Leasing Fund Eleven, LLC, ICON Leasing Fund Twelve, LLC and ICON Equipment and Corporate Infrastructure Fund Fourteen, L.P., dated as of August 12, 2009 (Incorporated by reference to Exhibit 10.5 to Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2009, filed August 14, 2009).

10.6	Termination of Commercial Loan Agreement, by and between California Bank & Trust and ICON Income Fund Eight B L.P., ICON Income Fund Nine, LLC, ICON Income Fund Ten, LLC, ICON Leasing Fund Eleven, LLC, ICON Leasing Fund Twelve, LLC, and ICON Equipment and Corporate Infrastructure Fund Fourteen, L.P., dated as of May 10, 2011 (Incorporated by reference to Exhibit 10.6 to Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2011, filed May 16, 2011).

10.7	Commercial Loan Agreement, by and between California Bank & Trust and ICON Leasing Fund Twelve, LLC, dated as of May 10, 2011 (Incorporated by reference to Exhibit 10.7 to Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2011, filed May 16, 2011).

31.1	Rule 13a-14(a)/15d-14(a) Certification of Co-Chief Executive Officer.

31.2	Rule 13a-14(a)/15d-14(a) Certification of Co-Chief Executive Officer.

31.3	Rule 13a-14(a)/15d-14(a) Certification of Principal Accounting and Financial Officer.

32.1	Certification of Co-Chief Executive Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2	Certification of Co-Chief Executive Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.3	Certification of Principal Accounting and Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


101.INS*	XBRL Instance Document.

101.SCH*	XBRL Taxonomy Extension Schema Document.

101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document.

101.LAB*	XBRL Taxonomy Extension Labels Linkbase Document.

101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document.

*	XBRL (eXtensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

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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.

ICON Leasing Fund Twelve, LLC

(Registrant)

By: ICON Capital Corp.

(Manager of the Registrant)

May 14, 2012

By: /s/ Michael A. Reisner

Michael A. Reisner

Co-Chief Executive Officer and Co-President

(Co-Principal Executive Officer)

By: /s/ Mark Gatto

Mark Gatto

Co-Chief Executive Officer and Co-President

(Co-Principal Executive Officer)

By: /s/ Keith S. Franz

Keith S. Franz

Managing Director

(Principal Accounting and Financial Officer)

ICON LEASING FUND TWELVE, LLC - FORM 10-Q - May 14, 2012

Attached files

ICON LEASING FUND TWELVE, LLC Reports