Brookfield Asset Management Reports Strong Results for Third

Brookfield Asset Management Reports Strong Results for Third Quarter
of 2012 
17% Increase in Funds From Operations 
TORONTO, ONTARIO -- (Marketwire) -- 11/09/12 -- Brookfield Asset
Management Inc. (TSX:BAM.A)(NYSE:BAM)(EURONEXT:BAMA) -  


 
Investors, analysts and other interested parties can access Brookfield Asset
Management's 2012 Third Quarter Results as well as the Shareholders' Letter 
and Supplemental Information on Brookfield's website under the              
Investors/Financial Reports section at www.brookfield.com.                  
                                                                            
The 2012 Third Quarter Results conference call can be accessed via webcast  
on November 9, 2012 at 11:00 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 1-
604-638-9010 (Password 2811#).                                              

 
Brookfield Asset Management Inc. today announced its financial
results for the quarter ended September 30, 2012.  


 
                                      Three months ended   Nine months ended
                                         September 30(1)     September 30(1)
                                    ----------------------------------------
US$ millions (except per share                                              
 amounts)                                 2012      2011      2012      2011
----------------------------------------------------------------------------
                                                                            
Funds from operations(2,3)               $ 282     $ 241     $ 809     $ 781
Net income(2)                              334       253       888     1,369
Total return(2,3)                          578       210     1,561     1,477
                                                                            
Per Brookfield share                                                        
  Funds from operations(2,3)            $ 0.40    $ 0.35    $ 1.13    $ 1.13
  Net income(2)                           0.48      0.36    
  1.25      2.03
  Total return(2,3)                       0.92      0.34      2.48      2.37
----------------------------------------------------------------------------
----------------------------------------------------------------------------
1. Financial results are based on International Financial Reporting         
   Standards ("IFRS") unless otherwise noted                                
2. Attributable to Brookfield shareholders. Excludes amounts attributable to
   non-controlling interests                                                
3. Non-IFRS measure. See Basis of Presentation on page 4 for details        

 
"Acquisitions made in the last three years are beginning to generate
significant cash flows. Our strategy of investing in high quality
assets that compound in value over time, positions Brookfield to
continue to deliver strong cash flow growth through periods of
economic uncertainty," said Bruce Flatt, CEO of Brookfield.
"Furthermore, our clients are allocating increasing amounts of their
capital to property and infrastructure assets globally, which is
enabling us to increase our assets under management." 
Financial Results  
Total Return for Brookfield shareholders was $578 million, or $0.92
per share, which brings our Total Return for the nine months of 2012
to $1.6 billion, or $2.48 per share. Total Return includes our share
of funds from operations ("FFO"), which was $282 million for the
quarter, as well as $328 million of valuation gains; less $32 million
of preferred share dividends.  
FFO totalled $723 million on a consolidated basis, of which $282
million (or $0.40 per share) accrued to Brookfield shareholders,
compared to $241 million of FFO for Brookfield shareholders in the
2011 quarter. The increase in FFO from the prior year reflects
improved operating performance and economics in most of our core
operations, including increased cash flows in our property operations
and the impact of increased housing activity in the United States on
operations within our private equity group. We did, however,
experience water flows in our renewable power operations that were
well below long-term average, leading to a reduction in FFO from this
segment, and we incurred a $34 million charge on the early redemption
of corporate debt which was refinanced with lower cost long-term
debt. The comparative quarter in 2011 reflected more normalized
hydroelectric generation levels and $50 million of mark-to-market
losses on investment positions.  
The valuation gains of $328 million (or $0.52 per share) included in
Total Return during the current quarter include fair value changes
recorded in net income and other comprehensive income, as well as
changes in incremental values that we record in respect of items not
otherwise revalued in our financial statements. These reflect
continued increases in commercial property valuations and housing
related private equity investments.  
The intrinsic value of our common equity was $42.86 per share at
September 30, compared to $40.99 at the beginning of the year, and
$41.81 at June 30. The increase in the third quarter reflects the
total return generated during the period and the positive impact of
stronger foreign exchange rates on non-U.S. operations, partially
offset by common equity dividends.  
Consolidated net income was $872 million, of which $334 million (or
$0.48 per share) accrued to Brookfield shareholders. Net income
includes FFO as well as non-cash revaluation items such as accounting
depreciation and changes in the appraised values of commercial
properties. This compares to $253 million for Brookfield shareholders
(or $0.36 per share) in the third quarter of 2011.   
Operating Highlights  
We continued to expand our asset management franchise with both
listed and private entities.  
Investors are increasing their allocations of capital to investment
strategies that we employ and we continue to expand our flagship
listed issuers and private funds. Committed and invested client
capital of our listed issuers and private funds increased by $4.3
billion or 19% since year end. Quarterly highlights include the
successful first close on one private fund and the final closes on
two private funds focused on private equity and multifamily
residential. We are in the midst of capital campaigns for a number of
private funds seeking a further $5 billion of third party capital. We
hope to launch our third flagship listed entity, Brookfield Property
Partners, by the end of the fourth quarter and expect it to rank as
one of the largest and highest quality listed global public property
businesses.  
We generated $7.8 billion of capital since June 30 through asset
sales, equity issuance, fund formations and debt financings, and a
total of $20.1 billion year to date.  
We are improving our liquidity and lowering our financing costs with
the benefit of supportive credit markets, low coupon rates and
continued investor interest in companies that produce stable cash
flows and growth. We continue to see opportunities to refinance at
attractive rates, which lowers our cost of capital, extends term and
funds new growth initiatives.  
We continued to invest in high quality assets in our major operating
businesses, increasing the capit
al deployed by both our listed
entities and private funds. We also completed a number of organic
growth initiatives that increased the value of our assets and the
associated cash flows.  
We announced or completed acquisitions and capital expansions
totalling $4.7 billion in the quarter, deploying $2.7 billion of
equity capital on behalf of clients and Brookfield shareholders. More
importantly, we believe these new businesses have significant growth
potential. Assets that we acquired over the past three years are now
making significant contributions to our cash flow.  
Subsequent to quarter end, we acquired an Australian property
developer with $1 billion of assets, including a prime office site in
Sydney and a portfolio of hotels and residential developments and
increased our interest in a flagship development property, 100
Bishopsgate, in the City of London. Also in the fourth quarter, we
reached an agreement to acquire an industrial property business with
assets in the southwestern U.S. and Mexico for approximately $870
million.   
Our renewable power operations received regulatory approval for the
acquisition of four hydroelectric facilities in the southeastern
United States with 378 megawatts of capacity for $600 million and
invested in a listed company with wind farms adjacent to our
facilities in California.  
Our infrastructure business acquired a district heating and cooling
business in Toronto from the city and an investment partner, an
acquisition that draws on our expertise across renewable power,
utilities and property. We advanced the $1.7 billion purchase of a
3,200 kilometre toll road network in Brazil. In addition, we closed
the acquisition of a UK utility and obtained regulatory clearance for
the recapitalization of the utility which we plan to merge with our
existing natural gas connections unit. We are also considering asset
dispositions, that could include a portion of our timber holdings,
which we would redeploy into other growth opportunities.  
Our infrastructure group completed a $600 million expansion of our
Australian railroad, transforming the cash flow profile of this
business by securing the revenue streams with long-term "take or pay"
contracts from major industrial and resource customers. We have also
completed the majority of construction on our Texas transmission
network and expect it will contribute to cash flow in 2013.  
Organic growth initiatives in our property business included the
leasing of 1.8 million square feet of commercial property, bringing
the year-to-date total to 5.6 million square feet at rents 33% higher
than expiring leases. We completed the renovation of our flagship
First Canadian Place office tower in Toronto, and closed over $700
million in commercial office property financings, netting proceeds of
approximately $300 million.   
Our U.S. retail business is executing on its growth strategy by
attracting high quality new tenants, increasing occupancy across the
portfolio and extending the term of leases. Initial rents for leases
commencing occupation in 2012 increased by 10% over the comparable
expiring rents, increasing net operating income by 4% for their
regional mall portfolio and FFO by 9%.  
In our renewable power business, we are moving forward with $0.4
billion of hydroelectric development projects in North and South
America, and considering opportunistic acquisitions in Europe.  
We see continued evidence of strength in U.S. housing markets, which
is improving the performance of a number of our cyclical investments
that are linked to this part of the economy. We have approximately $3
billion invested in companies that benefit from the recovery in U.S.
residential real estate.  
Intrinsic Value of Common Equity  
The intrinsic value of Brookfield's common equity was $42.86 per
share at September 30, 2012. This includes net invested capital of
$36.40 per share and $6.46 per share related to the company's asset
management franchise.  
Dividend Declaration  
The Board of Directors declared a quarterly dividend of US$0.14 per
share (representing US$0.56 per annum), payable on February 28, 2013,
to shareholders of record as at the close of business on February 1,
2013. 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 website under Investors/Stock and
Dividend Information. 
Basis of Presentation  
This news release and accompanying financial statements are based on
International Financial Reporting Standards ("IFRS") unless otherwise
noted and make reference to total return, funds from operations,
invested capital and intrinsic value. 
Total return is defined as comprehensive income excluding deferred
tax expenses and the impact of foreign currency fluctuations on the
long-term capital invested in non-U.S. operations, and including
incremental valuation adjustments for assets not otherwise revalued
under IFRS. Brookfield uses total return to assess the performance of
the overall business as well as its individual business units. 
Funds from operations is defined as net income prior to fair value
changes, depreciation and amortization, and deferred income taxes,
and includes certain disposition gains that are not otherwise
included in net income as determined under IFRS. Brookfield uses
funds 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.  
Invested capital represents the capital invested by the company in
its operations on a segmented basis, net of the underlying
liabilities and non-controlling interests. These balances are derived
from the company's IFRS balance sheets and are adjusted to exclude
deferred income taxes and to include adjustments to present the fair
value of assets and liabilities that are carried at historical book
values or otherwise not reflected in the company's IFRS balance
sheets. Common equity on this basis is referred to as net invested
capital. 
Intrinsic value includes net invested capital as well as the value
attributed to the company's asset management franchise. Asset
management franchise value represents management's estimate of the
value attributable to the company's asset management activities that
is not otherwise included in net invested capital based on current
capital under management, associated fee arrangements, and potential
growth. 
Total return, funds from operations, invested capital and intrinsic
value and their per share equivalents are non-IFRS measures which do
not have any standard meaning prescribed by IFRS and therefore may
not be comparable to similar measures presented by other companies.
The company provides additional information on the determination of
total return, funds from operations, invested capital and intrinsic
value and a reconciliation between total return and comprehensive
income attributable to Brookfield shareholders, funds from operations
and net income attributable to Brookfield shareholders, and invested
capital and intrinsic value and common equity in the Supplemental
Information available at www.brookfield.com. 
Additional Information  
The Letter to Shareholders and the company's Supplemental Information
for the quarter ended Septem
ber 30, 2012 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 website.  
The attached statements are based primarily on information that has
been extracted from our unaudited interim financial statements for
the quarter ended September 30, 2012, which have been prepared using
IFRS. The amounts have not been audited and are not subject to review
by Brookfield's external auditor.  
Brookfield Asset Management Inc. is a global alternative asset
manager with over $150 billion in assets under management. The
company has over a 100-year history of owning and operating assets
with a focus on property, renewable power, infrastructure and private
equity. It has a range of public and private investment products and
services. Brookfield is co-listed on the New York and Toronto Stock
Exchanges under the symbol BAM and BAM.A, respectively, and on NYSE
Euronext under the symbol BAMA. For more information, please visit
our website at www.brookfield.com. 


 
Please note that Brookfield's previous audited annual and unaudited         
quarterly reports have been filed on EDGAR and SEDAR and can also be found  
in the investor section of its website 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 website 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.
Forward-looking statements include statements that are predictive in
nature, depend upon or refer to future events or conditions, include
statements regarding the operations, business, financial condition,
expected financial results, performance, prospects, opportunities,
priorities, targets, goals, ongoing objectives, strategies and
outlook of the company and its subsidiaries, as well as the outlook
for North American and international economies for the current fiscal
year and subsequent periods, and include words such as "expects,"
"anticipates," "plans," "believes," "estimates," "seeks," "intends,"
"targets," "projects," "forecasts" or negative versions thereof and
other similar expressions, or future or conditional verbs such as
"may," "will," "should," "would" and "could."  
Although we believe that our anticipated future results, performance
or achievements expressed or implied 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 because they involve known
and unknown risks, uncertainties and other factors, many of which are
beyond our control, 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,
but are not limited to: the impact or unanticipated impact of general
economic, political and market factors in the countries in which we
do business; the behavior of financial markets, including
fluctuations in interest and foreign exchange rates; global equity
and capital markets and the availability of equity and debt financing
and refinancing within these markets; strategic actions including
dispositions; the ability to complete and effectively integrate
acquisitions into existing operations and the ability to attain
expected benefits; changes in accounting policies and methods used to
report financial condition (including uncertainties associated with
critical accounting assumptions and estimates); the effect of
applying future accounting changes; business competition; operational
and reputational risks; technological change; changes in government
regulation and legislation within the countries in which we operate;
changes in tax laws, catastrophic events, 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 our documents filed with the securities
regulators in Canada and the United States.  
We caution that the foregoing list of important factors that may
affect future results is not exhaustive. When relying on our
forward-looking statements, 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, that may be as a
result of new information, future events or otherwise. 
CONSOLIDATED BALANCE SHEETS 


 
                                                  (Unaudited)               
                                                 September 30    December 31
US$ millions                                             2012           2011
----------------------------------------------------------------------------
Assets                                                                      
Cash and cash equivalents                       $       2,760  $       2,027
Other financial assets                                  3,555          3,773
Accounts receivable and other                           7,071          6,723
Inventory                                               6,518          6,060
Investments                                            11,006          9,401
Investment properties                                  30,984         28,366
Property, plant and equipment                          26,486         22,832
Timber                                                  3,142          3,155
Intangible assets                                       4,186          3,968
Goodwill                                                2,561          2,607
Deferred income tax asset                               1,870          2,110
----------------------------------------------------------------------------
Total Assets                                    $     100,139  $      91,022
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Liabilities and Equity                                                      
Accounts payable and other                      $      10,480  $       9,266
Corporate borrowings                                    4,219          3,701
Non-recourse borrowings                                                     
  Property-specific mortgages                          31,752         28,415
  Subsidiary borrowings                                 5,441          4,441
                                                                            
Deferred income tax liability                           5,696          5,817
                                                                            
Capital securities                                      1,301          1,650
Interests of others in consolidated funds                 390            333
  Equity                                                                    
  Preferred equity                                      2,700          2,140
  Non-controlling interests in net assets              20,948   
      18,516
  Common equity                                        17,212         16,743
----------------------------------------------------------------------------
  Total equity                                         40,860         37,399
----------------------------------------------------------------------------
Total Liabilities and Equity                    $     100,139  $      91,022
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
CONSOLIDATED STATEMENTS OF OPERATIONS 


 
(Unaudited)                          Three months ended  Nine months ended  
                                    ----------------------------------------
For the period ended September 30                                           
US$ millions (except per share                                              
 amounts)                                2012      2011      2012      2011 
----------------------------------------------------------------------------
Total revenues                       $  4,701  $  4,423  $ 13,205  $ 11,799 
                                    ----------------------------------------
                                                                            
Asset management and other services       146       119       331       290 
Revenues less direct costs                                                  
  Property                                499       418     1,468     1,183 
  Renewable power                          94       193       512       610 
  Infrastructure                          210       177       618       549 
  Private equity                          230        98       511       332 
Equity accounted income                   256       393       904     1,621 
Investment and other income               145        51       398       255 
----------------------------------------------------------------------------
                                        1,580     1,449     4,742     4,840 
Expenses                                                                    
  Interest                                593       622     1,860     1,732 
  Operating costs                         128       115       368       343 
  Current income taxes                     31        26       100        80 
----------------------------------------------------------------------------
Net income prior to other items           828       686     2,414     2,685 
Other items                                                                 
  Fair value changes                      493       318       693       876 
  Depreciation and amortization          (327)     (224)     (911)     (676)
  Deferred income taxes                  (122)      (64)     (225)     (171)
----------------------------------------------------------------------------
Net income                           $    872  $    716  $  1,971  $  2,714 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Net income attributable to:                                                 
  Brookfield shareholders            $    334  $    253  $    888  $  1,369 
  Non-controlling interests               538       463     1,083     1,345 
----------------------------------------------------------------------------
                                     $    872  $    716  $  1,971  $  2,714 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Net income per share                                                        
  Diluted                            $   0.48  $   0.36  $   1.25  $   2.03 
  Basic                              $   0.49  $   0.36  $   1.28  $   2.10 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
RECONCILIATION OF NET INCOME TO TOTAL RETURN(1) 


 
(Unaudited)                          Three months ended   Nine months ended 
                                     ---------------------------------------
For the period ended September 30                                           
US$ millions (except per share                                              
 amounts)                                 2012     2011      2012      2011 
----------------------------------------------------------------------------
Net income attributable to Brookfield                                       
 shareholders (see page 7)(2)         $    334 $    253  $    888  $  1,369 
Fair value changes included in other                                        
 comprehensive income(2)                   (90)    (508)      (15)     (419)
----------------------------------------------------------------------------
                                           244     (255)      873       950 
remove: deferred income taxes                                               
 included in net income(2)                  91        5       177       (16)
add: fair value changes not included                                        
 in IFRS comprehensive income              275      486       605       620 
----------------------------------------------------------------------------
                                           610      236     1,655     1,554 
less: preferred share dividends            (32)     (26)      (94)      (77)
----------------------------------------------------------------------------
Total return(3)                       $    578 $    210  $  1,561  $  1,477 
- Per share                           $   0.92 $   0.34  $   2.48  $   2.37 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                                            
(Unaudited)                          Three months ended   Nine months ended 
                                    ----------------------------------------
For the period ended September 30                                           
US$ millions                             2012      2011      2012      2011 
----------------------------------------------------------------------------
Total return consists of                                                    
  Funds from operations(3) (see                                             
   below)                            $    282  $    241  $    809  $    781 
  Valuation gains(3)                      328        (5)      846       773 
  less: preferred share dividends         (32)      (26)      (94)      (77)
----------------------------------------------------------------------------
                                     $    578  $    210  $  1,561  $  1,477 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Notes:                                                                      
1.  See Basis of Presentation on page 4 for details                         
2.  Excludes amounts attributable to non-controlling interests              
3.  Total return, funds from operations and valuation gains are non-IFRS    
    measures                                                                

 
RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS(1) 


 
(Unaudited)                          Three months ended  Nine months ended  
                                    ----------------------------------------
For the period ended September 30                                           
US$ millions                
             2012      2011      2012      2011 
----------------------------------------------------------------------------
Net income prior to other items (see                                        
 page 7)                             $    828  $    686  $  2,414  $  2,685 
  Adjust for: fair value changes                                            
   within equity accounted income        (102)     (226)     (464)   (1,104)
  Disposition gains recorded in                                             
   equity under IFRS(2)                    (3)        5         8        69 
----------------------------------------------------------------------------
                                          723       465     1,958     1,650 
  Non-controlling interest               (441)     (224)   (1,149)     (869)
----------------------------------------------------------------------------
Funds from operations(3)            $    282  $    241  $    809  $    781 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Notes:                                                                      
1.  See Basis of Presentation on page 4 for details                         
2.  Excludes deferred income taxes                                          
3.  Non-IFRS measure                                                        

 
Contacts:
Media:
Brookfield Asset Management Inc.
Andrew Willis, SVP, Communications & Media
(416) 369-8236
(416) 363-2856 (FAX)
andrew.willis@brookfield.com 
Investors:
Brookfield Asset Management Inc.
Katherine Vyse, SVP, Investor Relations
(416) 369-8246
(416) 363-2856 (FAX)
katherine.vyse@brookfield.com
www.brookfield.com
 
 
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