Brookfield Asset Management Inc. (TSX: BAM)(NYSE: BAM)(AEX: BAMA) -
Investors, analysts and other interested parties can access
Brookfield Asset Management's 2008 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 Results conference call can be accessed via webcast on
February 13, 2009 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. today announced its results for
the year ended December 31, 2008.
Cash Flow From Operations
Cash flow from operations on a comparable basis (i.e., excluding
major disposition gains) for the full year was $1.2 billion ($1.98
per share), compared with $1.1 billion ($1.79 per share) reported
in 2007, representing an increase of 11% on a per share basis. Cash
flow from operations for the fourth quarter on the same basis
increased to $241 million ($0.40 per share) from $163 million
($0.25 per share), representing a 48% increase.
Total cash flow from operations, including major disposition
gains, was $1.4 billion ($2.33 per share), compared with $1.9
billion ($3.11 per share) on the same basis in 2007, and for the
fourth quarter totalled $247 million ($0.41 per share) compared
with $575 million ($0.94 per share).
Three months ended Years ended
Cash flow from operations December 31 December 31
-------------------- ------------------
US$ millions (except per share
amounts) 2008 2007 2008 2007
---------------------------------------------------------------------------
Comparable basis (excluding major
disposition gains) $ 241 $ 163 $ 1,214 $ 1,120
- per share 0.40 0.25 1.98 1.79
Total basis (including major
disposition gains) $ 247 $ 575 $ 1,423 $ 1,907
- per share 0.41 0.94 2.33 3.11
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"Our renewable power and office property businesses both
produced strong operating cash flows during the quarter, which led
to the overall improvement in operating cash flows. The stable
revenue profiles of these businesses should provide us with a
strong earnings base for 2009 and beyond," commented Bruce Flatt,
Senior Managing Partner of Brookfield Asset Management. "In
addition, we continue to bolster our capitalization and liquidity
which, at over $3 billion of core liquidity, remains at
historically high levels."
Net Income
Net income for 2008 was $649 million ($1.02 per share) compared
to $787 million ($1.24 per share) in 2007. Excluding major
disposition gains, net income in 2008 was $525 million ($0.81 per
share) compared with $349 million ($0.51 per share) on the same
basis last year.
Net income in 2007 reflected a large number of disposition
gains. In addition, the 2008 results reflect increases in a higher
level of non-cash charges, including depreciation on assets
purchased in 2007, offset in part by a non-cash tax recovery
arising from an increase in the value of our tax assets.
Three months ended Years ended
December 31 December 31
------------------- ------------------
US$ millions (except per share
amounts) 2008 2007 2008 2007
----------------------------------------------------------------------------
Net income $ 171 $ 346 $ 649 $ 787
- per share 0.27 0.56 1.02 1.24
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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 May 31, 2009, to shareholders of record
as at the close of business on May 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 year ended December 31, 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 $80 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 "continue", "payable", "expect", "intend",
derivations thereof and other expressions, including conditional
verbs such as "should", 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
the strength of our future earnings base and the bolstering of our
capitalization and liquidity levels, procedures and assumptions to
be used in preparing our pro forma opening balance sheet for our
adoption of IFRS and date of our first IFRS reporting period.
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; availability of equity
and debt financing; strategic actions including dispositions; the
ability to complete and 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; changes in accounting
policies to be adopted under IFRS 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 Management's
Discussion and Analysis of Financial Results 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
Three months ended Years ended
(Unaudited) December 31 December 31
US$ millions (except per share ------------------- ------------------
amounts) 2008 2007 2008 2007
----------------------------------------------------------------------------
Fees earned $ 113 $ 92 $ 449 $ 415
Revenues less direct operating
costs
Commercial properties(1) 388 414 1,862 1,548
Power generation 158 148 886 611
Infrastructure(2) 68 33 196 290
Development and other properties (5) 115 240 418
Specialty funds 49 233 304 370
Investment and other income 212 343 894 1,209
----------------------------------------------------------------------------
983 1,378 4,831 4,861
Expenses
Interest 447 510 1,984 1,786
Other operating costs 160 141 640 464
Current income taxes (47) 28 (7) 68
Non-controlling interests 176 124 791 636
----------------------------------------------------------------------------
Cash flow from operations $ 247 $ 575 $ 1,423 $ 1,907
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash flow from operations per
common share
Diluted $ 0.41 $ 0.94 $ 2.33 $ 3.11
Diluted - excluding major
disposition gains $ 0.40 $ 0.25 $ 1.98 $ 1.79
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(1) Commercial properties includes $31 million (2007 - $nil) of dividend
income recognized in the first three months of 2008 from Canary Wharf
Group which is included in "Investment and Other Income" in the
company's consolidated financial statements, which are prepared in
accordance with Canadian GAAP
(2) Infrastructure includes the results of the company's Chilean
transmission operations, which are recorded on a consolidated basis for
the first six months of 2007 and on an equity accounted basis in 2008
Notes
Cash flow from operations is reconciled to net income before
other items on page 6 of this news release as follows:
Three months ended Years ended
(Unaudited) December 31 December 31
-------------------- ---------------
US$ millions 2008 2007 2008 2007
--------------------------------------------------------------------------
Net income excluding other items
(see page 6) $ 242 $ 569 $ 1,401 $ 1,555
Dividends from equity accounted
investments(1) 5 6 22 21
Gain on sale of exchangeable
debentures(1) - - - 331
--------------------------------------------------------------------------
Cash flow from operations (per
above) $ 247 $ 575 $ 1,423 $ 1,907
--------------------------------------------------------------------------
--------------------------------------------------------------------------
(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 of Financial Results and differ from the
company's consolidated financial statements presented in its annual
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.
UNDERLYING VALUE AND NET INVESTED CAPITAL
Underlying Net Invested Capital
Value ------------------------------
As at December 31 (Unaudited) (Unaudited) (Unaudited)
US$ millions 2008 2008 2007
----------------------------------------------------------------------------
Assets
Operating platforms
Commercial properties $ 7,798 $ 4,575 $ 4,598
Power generation 6,639 1,215 1,425
Infrastructure 1,004 761 1,645
Development and other
properties 3,313 3,334 3,464
Specialty funds 903 870 1,112
Investments 701 702 1,336
Cash and financial
assets 1,073 1,073 892
Other assets 2,650 2,568 3,013
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$ 24,081 $ 15,098 $ 17,485
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Liabilities
Corporate borrowings $ 2,284 $ 2,284 $ 2,048
Subsidiary borrowings 733 733 711
Capital securities 1,425 1,425 1,570
Other liabilities 3,267 2,654 3,482
----------------------------------------------------------------------------
7,709 7,096 7,811
Capitalization
Co-investor interests
in consolidated
operations 3,541 2,214 2,160
Preferred equity 870 870 870
Common equity 11,961 4,918 6,644
----------------------------------------------------------------------------
16,372 8,002 9,674
----------------------------------------------------------------------------
$ 24,081 $ 15,098 $ 17,485
----------------------------------------------------------------------------
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UNDERLYING VALUE OF COMMON EQUITY
As at December 31,
2008 (unaudited)
US$ millions (except
per share amounts) Total Per Share
---------------------------------------------------------
Common equity -
including future
tax liability $ 11,961 $ 20.67
Add back: future tax
liability 2,220 3.70
---------------------------------------------------------
Common equity -
excluding future
tax liability $ 14,181 $ 24.37
---------------------------------------------------------
---------------------------------------------------------
This news release contains a preliminary analysis of the
underlying value of the company and its common equity, based on the
procedures and assumptions that we expect to follow in preparing
our pro forma opening balance sheet for our adoption of
International Financial Reporting Standards ("IFRS"). Accordingly,
certain assets, such as appraisal surplus relating to inventories
and intangible assets, such as the value of the company's asset
management business, have not been reflected. Please refer to our
Supplemental Information under "Introduction - Basis of
Presentation," which is available on the company's website for
further information.
This information has been prepared using the standards and
interpretations currently issued and expected to be effective at
the end of our first annual IFRS reporting period, which we intend
to be December 31, 2010. Consequently, in preparing this
information, assumptions have been made about the accounting
policies expected to be adopted. Certain accounting policies
expected to be adopted under IFRS may not be adopted and the
application of such policies to certain transactions or
circumstances may be modified and as a result underlying values are
subject to change. Furthermore, the underlying values have not been
audited or subject to a review by the Corporation's auditor.
CONSOLIDATED STATEMENTS OF INCOME
Three months ended Years ended
(Unaudited) December 31 December 31
US$ millions (except per share ---------------------- --------------------
amounts) 2008 2007 2008 2007
----------------------------------------------------------------------------
Total revenues $ 3,006 $ 3,158 $ 12,868 $ 9,343
Fees earned $ 113 $ 92 $ 449 $ 415
Revenues less direct operating
costs
Commercial properties(1) 388 414 1,862 1,548
Power generation 158 148 886 611
Infrastructure(2) 68 33 196 290
Development and other
properties (5) 115 240 418
Specialty funds 49 233 304 370
Investment and other income 207 337 872 857
----------------------------------------------------------------------------
978 1,372 4,809 4,509
Expenses
Interest 447 510 1,984 1,786
Other operating costs 160 141 640 464
Current income taxes (47) 28 (7) 68
Non-controlling interests 176 124 791 636
----------------------------------------------------------------------------
242 569 1,401 1,555
Other items
Depreciation and amortization (355) (294) (1,330) (1,034)
Equity accounted losses from
investments (12) (4) (46) (72)
Revaluation and other items (262) (95) (267) (112)
Future income taxes 545 35 461 (88)
Non-controlling interests in
the foregoing items 13 135 430 538
----------------------------------------------------------------------------
Net income $ 171 $ 346 $ 649 $ 787
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net income per common share
Diluted $ 0.27 $ 0.56 $ 1.02 $ 1.24
Basic $ 0.28 $ 0.57 $ 1.04 $ 1.27
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Commercial properties includes $31 million (2007 - $nil) of dividend
income recognized in the first three months of 2008 from Canary Wharf
Group which is included in "Investment and Other Income" in the
company's consolidated financial statements, which are prepared in
accordance with Canadian GAAP
(2) Infrastructure includes the results of the company's Chilean
transmission operations, which are recorded on a consolidated basis for
the first six months of 2007 and on an equity accounted basis in 2008
Note
The consolidated statements of income are prepared on a basis
consistent with the company's financial statements presented in its
annual report, which are prepared in accordance with Canadian
GAAP.
MAJOR DISPOSITION GAINS
Cash Flow from
Years ended December 31 Operations Net Income
---------------- ----------------
US$ millions (Unaudited) Quarter 2008 2007 2008 2007
----------------------------------------------------------------------------
Core office properties -
disposition 3 $ 80 $ - $ 48 $ -
Longview sale 4 24 - 15 -
Brazil Residential dilution loss 4 (18) - (18) -
Private equity - other
operations 1 58 - 58 -
Core office properties - debt
breakage costs 3 - (14) - (8)
Banco Brascan joint venture gain 2 - 17 - 17
Brazil exchange seats sale 4 - 168 - 168
Norbord exchangeable debenture 2 65 - 21 -
Core office properties -
dispositions 1/2/4 - 54 - 32
Sale of Stelco 4 - 231 - 229
Disposition gains included in
opening retained earnings(1) 1/2/3 - 331 - -
----------------------------------------------------------------------------
$ 209 $ 787 $ 124 $ 438
----------------------------------------------------------------------------
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(1) As opposed to net income, due to a prescribed change in accounting
guidelines
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
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