Brookfield Asset Management Announces Strong 20...
TORONTO, ONTARIO--(Marketwire - November 07, 2008) - Brookfield Asset
Management Inc. (TSX: BAM) (NYSE: BAM) (AEX: BAMA)
Investors, analysts and other interested parties can access
Brookfield Asset Management's 2008 Q3 Results as well as the
Shareholders' Letter and Supplemental Information on Brookfield's web
site under the Investor Centre/Financial Reports section at
www.brookfield.com.
The 2008 Q3 Results conference call can be accessed via webcast on
November 7, 2008 at 11 a.m. Eastern Time at www.brookfield.com or via
teleconference at 1-800-319-4610 toll free in North America. For
overseas calls please dial 1-604-638-5340, at approximately 10:50
a.m. Eastern Time. The teleconference taped rebroadcast can be
accessed at 1-800-319-6413 or 604- 638-9010 (Password 2811).
Brookfield Asset Management Inc. (TSX: BAM) (NYSE: BAM) (AEX: BAMA)
today announced its results for the third quarter ended September 30,
2008.
Cash Flow From Operations
Cash flow from operations for the third quarter totalled $355 million
($0.58 per share). Operating cash flow in the same quarter in 2007
was $255 million ($0.40 per share) on a comparable basis, which
excludes a security disposition gain of $66 million, or $321 million
($0.52 per share) including the gain. On a comparable basis,
operating cash flow per share increased by 45% quarter-over-quarter
due to improved water levels and pricing in the company's renewable
power business and an increased contribution from our commercial
office business.
Three months ended Nine months ended
US$ millions (except per share September 30 September 30
amounts) 2008 2007 2008 2007
---------------------------------------------------------------------------
Cash flow from operations
Comparable basis (excluding
security disposition gain) $ 355 $ 255 $ 1,176 $ 1,001
- per share 0.58 0.40 1.92 1.61
Total basis (including security
disposition gain) $ 355 $ 321 $ 1,176 $ 1,332
- per share 0.58 0.52 1.92 2.17
---------------------------------------------------------------------------
"In the last few months we increased our overall cash holdings and
liquidity to more than $3.5 billion, most of that at the Brookfield
corporate level. This is one of the highest levels of liquidity we
have ever held, but given uncertainty in the markets we want to be
prepared for the unknowns, and opportunities which may present
themselves in this environment. In addition, our operating
performance in the quarter reflected the durability of our cash
flows, most of which are supported by long-term contractual
arrangements with credit-worthy counterparties, the high quality of
our asset base and operating platforms, and the stability of our long
duration investment grade capitalization," commented Bruce Flatt,
Senior Managing Partner of Brookfield Asset Management. "While we are
exercising caution during these turbulent times, and preserving a
high level of liquidity, we are exploring a number of potential
opportunities to expand our operating platforms and create additional
shareholder value."
In the past months, the company completed the following capital
raising initiatives:
- Formed an investment fund in October 2008, managed by Brookfield,
into which a portion of the company's U.S. Pacific Northwest freehold
timberlands were sold. Brookfield retains an approximate 40% direct
and indirect interest in the timberlands. Total proceeds were $1.2
billion, generating net cash proceeds to Brookfield of approximately
$600 million, and will result in a modest gain that will be recorded
in the fourth quarter.
- Closed the sale of the company's Lloyds Insurance business and
committed to sell the U.S. property and casualty business, which will
generate gross proceeds of approximately $310 million and net
proceeds of approximately $150 million prior to year end.
- Sold a group of transmission lines in Brazil for $275 million net
cash proceeds, which is to close in early 2009.
- Closed the sale of a 50% interest in the Canada Trust Tower office
property in Toronto for C$425 million, generating net proceeds after
debt repayment of approximately $200 million.
- Completed $1 billion of financings, including issuing $150 million
of corporate debt with a 4.5 year term and a 6.5% blended coupon, and
$850 million of property-specific financings.
Net Income
Net income was $171 million in the third quarter of 2008 compared
with $93 million on the same basis last year. Increases in operating
cash flows were offset by a higher level of non-cash charges,
including depreciation on assets purchased since the second quarter
of 2007. In the company's view, these assets should generate
increasing cash flows over an extended period of time due to their
high quality, long life and value appreciation potential. The company
believes that the depreciation and amortization being recorded is far
greater than the expenditures required to maintain the assets.
Three months ended Nine months ended
US$ millions (except per share September 30 September 30
amounts) 2008 2007 2008 2007
---------------------------------------------------------------------------
Net income
- total $ 171 $ 93 $ 478 $ 441
- per share $ 0.27 $ 0.13 $ 0.75 $ 0.68
---------------------------------------------------------------------------
This news release and accompanying financial statements make
reference to cash flow from operations on a total and per share
basis. Cash flow from operations is defined as net income excluding
depreciation and amortization, interests of non-controlling
shareholders, future income taxes and other items as described as
such in the consolidated statements of income, and including
dividends and disposition gains that are not otherwise included in
net income. Brookfield uses cash flow from operations to assess its
operating results and the value of its business and believes that
many of its shareholders and analysts also find this measure of value
to them. The company provides the components of cash flow from
operations and a full reconciliation between cash flow from
operations and net income with the supplemental information
accompanying this news release. Cash flow from operations is a
non-GAAP measure which does not have any standard meaning prescribed
by GAAP and therefore may not be comparable to similar measures
presented by other companies.
Dividend Declaration
The Board of Directors declared a dividend of US$0.13 per Class A
Common Share, payable on February 28, 2009, to shareholders of record
as at the close of business on February 1, 2009. The Board also
declared all of the regular monthly and quarterly dividends on its
preferred shares.
Information on Brookfield Asset Management's declared share dividends
can be found on the company's web site under Investor Centre/Stock
and Dividend Information.
Additional Information
The Letter to Shareholders and the company's Supplemental Information
for the nine months ended September 30, 2008 contain further
information on the company's strategy, operations and financial
results. Shareholders are encouraged to read these documents, which
are available on the company's web site.
Brookfield Asset Management Inc., focused on property, power and
infrastructure assets, has approximately $90 billion of assets under
management and is co-listed on the New York and Toronto Stock
Exchanges under the symbol BAM and on NYSE Euronext under the symbol
BAMA. For more information, please visit our web site at
www.brookfield.com.
Please note that Brookfield's audited annual and unaudited quarterly
reports have been filed on Edgar and Sedar and can also be found in
the investor section of our web site at www.brookfield.com. Hard
copies of the annual and quarterly reports can be obtained free of
charge upon request.
For more information, please visit our web site at
www.brookfield.com.
Note: This news release contains forward-looking information within
the meaning of Canadian provincial securities laws and
"forward-looking statements" within the meaning of Section 27A of the
U.S. Securities Act of 1933, as amended, Section 21E of the U.S.
Securities Exchange Act of 1934, as amended, "safe harbor" provisions
of the United States Private Securities Litigation Reform Act of 1995
and in any applicable Canadian securities regulations. The words,
"sustainable," "should," "may," "prepared," "uncertainty,"
"exploring," "expand," "create," "increasing," "extended,"
"potential," "preserving," "generate," "appreciation," "believe,"
derivations thereof, and other expressions which are predictions of
or indicate future events, trends or prospects and which do not
relate to historical matters identify forward-looking statements.
Forward-looking statements in this news release include statements in
regards to durability of the company's cash flows, future gains and
proceeds, potential opportunities, the company's ability to increase
cash flows over an extended period of time, the company's long-term
contractual arrangements, the stability of its long duration
investment grade capitalization and the expenditures required to
maintain assets purchased since the second quarter of 2007. Although
Brookfield Asset Management believes that its anticipated future
results, performance or achievements expressed or implied of such
assets by the forward-looking statements and information are based
upon reasonable assumptions and expectations, the reader should not
place undue reliance on forward-looking statements and information as
such statements and information involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of the company to differ materially from
anticipated future results, performance or achievement expressed or
implied by such forward-looking statements and information.
Factors that could cause actual results to differ materially from
those contemplated or implied by forward-looking statements include:
economic and financial conditions in the countries in which we do
business; the behaviour of financial markets, including fluctuations
in interest and exchange rates; market demand for an infrastructure
company, which is unknown; ability to compete for new acquisitions in
the competitive infrastructure space; availability of equity and debt
financing; strategic actions including dispositions; the ability to
effectively integrate acquisitions into existing operations and the
ability to attain expected benefits; the company's continued ability
to attract institutional partners to its Specialty Investment Funds;
adverse hydrology conditions; regulatory and political factors within
the countries in which the company operates; acts of God, such as
earthquakes and hurricanes; the possible impact of international
conflicts and other developments including terrorist acts; and other
risks and factors detailed from time to time in the company's form
40-F filed with the Securities and Exchange Commission as well as
other documents filed by the company with the securities regulators
in Canada and the United States including the company's most recent
Annual Information Form under the heading "Business Environment and
Risks."
We caution that the foregoing factors that may affect future results
is not exhaustive. When relying on our forward-looking statements to
make decisions with respect to Brookfield Asset Management, investors
and others should carefully consider the foregoing factors and other
uncertainties and potential events. Except as required by law, the
company undertakes no obligation to publicly update or revise any
forward-looking statements or information, whether written or oral,
as a result of new information, future events or otherwise.
CONSOLIDATED STATEMENTS OF CASH FLOW FROM OPERATIONS
(Unaudited) Three months ended Nine months ended
US$ millions (except per September 30 September 30
share amounts) 2008 2007 2008 2007
---------------------------------------------------------------------------
Fees earned $ 109 $ 96 $ 336 $ 323
Revenues less direct
operating costs
Commercial properties(1) 595 350 1,474 1,134
Power generation 213 105 728 463
Infrastructure(2) 36 54 128 257
Development and other
properties 62 40 245 303
Specialty funds 32 16 255 137
Investment and other income 247 319 682 866
---------------------------------------------------------------------------
1,294 980 3,848 3,483
Expenses
Interest 535 454 1,537 1,276
Other operating costs 167 108 480 323
Current income taxes 2 (6) 40 40
Non-controlling interests 235 103 615 512
---------------------------------------------------------------------------
Cash flow from operations $ 355 $ 321 $ 1,176 $ 1,332
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Cash flow from operations
per common share
Diluted $ 0.58 $ 0.52 $ 1.92 $ 2.17
Diluted - excluding
security disposition
gain $ 0.58 $ 0.40 $ 1.92 $ 1.61
---------------------------------------------------------------------------
---------------------------------------------------------------------------
(1) Commercial properties includes $31 million (2007 - $nil) of dividend
income recognized in the first three months of 2008 from Canary Wharf
Group which is included in "Investment and Other Income" in the
company's consolidated financial statements, which are prepared in
accordance with Canadian GAAP
(2) Infrastructure includes the results of the company's Chilean
transmission operations, which are recorded on a consolidated basis for
the first six months of 2007 and on an equity accounted basis in 2008
Notes
Cash flow from operations is reconciled to net income before other
items on page 7 of this news release as follows:
Three months ended Nine months ended
(Unaudited) September 30 September 30
US$ millions 2008 2007 2008 2007
---------------------------------------------------------------------------
Net income excluding other items
(see page 7) $ 350 $ 250 $ 1,159 $ 986
Dividends from equity accounted
investments(1) 5 5 17 15
Gain on sale of exchangeable
debentures(1) - 66 - 331
---------------------------------------------------------------------------
Cash flow from operations (per
above) $ 355 $ 321 $ 1,176 $ 1,332
---------------------------------------------------------------------------
---------------------------------------------------------------------------
(1) Included in "Investment and Other Income" in the Statements of Cash
Flow from Operations
The consolidated statements of cash flow from operations above are
prepared on a basis that is consistent with management's discussion
and analysis and differ from the company's consolidated financial
statements presented in its interim report, which are prepared in
accordance with Canadian generally accepted accounting principles
("GAAP"). Management uses cash flow from operations as a key measure
to evaluate performance and to determine the underlying value of its
businesses. Readers are encouraged to consider both measures in
assessing Brookfield Asset Management's results. Cash flow from
operations is equal to net income excluding "other items" as
presented in the following consolidated statements of income and
including dividends from investments and the gain on the sale of an
exchangeable debenture investment. The exchangeable debenture gain
would have been included in income prior to the implementation of a
change in accounting requirements but, as a result of a transitional
provision, has been recorded in shareholders' equity.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30 December 31
US$ millions 2008 2007
---------------------------------------------------------------------------
Assets
Cash and cash equivalents $ 1,670 $ 1,561
Financial assets 1,038 1,529
Operating assets
Securities 1,327 1,646
Loans and notes receivable 2,285 909
Property, plant and equipment 38,186 37,972
Investments 949 1,352
Intangible assets 1,838 1,773
Goodwill 1,811 1,528
Accounts receivable and other 6,868 7,327
---------------------------------------------------------------------------
$ 55,972 $ 55,597
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Liabilities
Corporate borrowings $ 2,348 $ 2,048
Non-recourse borrowings
Property specific mortgages 24,167 21,644
Other debt of subsidiaries 5,216 7,463
Accounts payable and other liabilities 9,286 10,055
Intangible liabilities 963 1,047
Capital securities 1,618 1,570
Non-controlling interests of others in assets 5,683 4,256
Preferred equity 870 870
Common equity 5,821 6,644
---------------------------------------------------------------------------
$ 55,972 $ 55,597
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Note
Investment in Canary Wharf Group included in "Commercial Properties"
with a carried value of $182 million (2007 $182 million) is included
in "Securities" in the company's consolidated financial statements,
which are prepared in accordance with Canadian GAAP.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) Three months ended Nine months ended
US$ millions (except per September 30 September 30
share amounts) 2008 2007 2008 2007
--------------------------------------------------------------------------
Total revenues $ 3,216 $ 2,219 $ 9,862 $ 6,185
Fees earned $ 109 $ 96 $ 336 $ 323
Revenues less direct
operating costs
Commercial properties(1) 595 350 1,474 1,134
Power generation 213 105 728 463
Infrastructure(2) 36 54 128 257
Development and other
properties 62 40 245 303
Specialty funds 32 16 255 137
Investment and other
income 242 248 665 520
--------------------------------------------------------------------------
1,289 909 3,831 3,137
Expenses
Interest 535 454 1,537 1,276
Other operating costs 167 108 480 323
Current income taxes 2 (6) 40 40
Non-controlling interests 235 103 615 512
--------------------------------------------------------------------------
350 250 1,159 986
Other items
Depreciation and
amortization (333) (250) (975) (740)
Equity accounted losses
from investments (6) - (34) (68)
Provisions and other 104 (33) (5) (17)
Future income taxes (105) 11 (84) (123)
Non-controlling interests
in the foregoing items 161 115 417 403
--------------------------------------------------------------------------
Net income $ 171 $ 93 $ 478 $ 441
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Net income per common
share
Diluted $ 0.27 $ 0.13 $ 0.75 $ 0.68
Basic $ 0.27 $ 0.13 $ 0.76 $ 0.70
---------------------------------------------------------------------------
---------------------------------------------------------------------------
(1) Commercial properties includes $31 million (2007 - $nil) of dividend
income recognized in the first three months of 2008 from Canary Wharf
Group which is included in "Investment and Other Income" in the
company's consolidated financial statements, which are prepared in
accordance with Canadian GAAP
(2) Infrastructure includes the results of the company's Chilean
transmission operations, which are recorded on a consolidated basis for
the first six months of 2007 and on an equity accounted basis in 2008
Note
The consolidated statements of income are prepared on a basis
consistent with the company's financial statements presented in its
interim report, which are prepared in accordance with Canadian GAAP.
Contacts:
Brookfield Asset Management
Denis Couture, SVP, Investor Relations and Corporate and
International Affairs
(416) 956-5189
(416) 363-2856 (FAX)
Email: dcouture@brookfield.com
Website: www.brookfield.com
This announcement was originally distributed by Hugin. The issuer is
solely responsible for the content of this announcement.
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