Help with sweater pattern

Hi forum!
I’m working on this sweater: http://www.allfreeknitting.com/Knitted-Sweaters/Solid-Staple-Sweater-from-Red-Heart-Yarn
and I’m a little confused about the instructions for shaping the neck. Could someone please try to help me figure out what I’m supposed to do here? What happens to the 12 stitches on the holder?
Thanks!

Row 1 (right side): K20
(22, 22, 24, 24) for left front, join 2nd ball of yarn and k12 sts,
place these 12 sts on a holder, k20 (22, 22, 24, 24) for right front.
Work both fronts at the same time with separate balls of yarn.

Row 2: Purl across both fronts (using separate balls of yarn).

Row 3: Knit to last 3 sts of first front, k2tog, k1; on
2nd front, k1, ssk, knit across—19 (21, 21, 23, 23) sts for each front.
Repeat last 2 rows 5 more times—14 (16, 16, 18, 18) sts. Work even in
Stockinette st on both fronts, if needed, until armholes measure same as
back armholes.

Bind off.

You’re going to be working the 2 shoulders at the same time with 2 balls of yarn. The 12 sts on the holder will be used later for the collar.
For row 1 (e.g. the first size) knit 20, join the 2nd ball of yarn, k12 placing the 12 on a holder and finish the row by knitting 20sts. Turn and purl back across the right shoulder to the gap, drop the yarn, pick up the first yarn strand and purl across the left shoulder.
On the next row, knit to the last 3sts (at the neck edge), k2tog, k1. Drop the yarn strand, pick up the second yarn strand, k1, ssk and knit to the end of the row. Purl the next row. Repeat as given for your size and then continue in stockinette until the armholes measure the same as the back.