Brookfield Asset Management Inc.
TSX : BAM
NYSE : BAM
AEX : BAMA

Brookfield Asset Management Inc.

August 08, 2008 08:00 ET

Brookfield Asset Management Announces Strong 2008 Second Quarter Results

TORONTO, ONTARIO--(Marketwire - Aug. 8, 2008) - Brookfield Asset Management Inc. (TSX:BAM)(NYSE:BAM)(AEX:BAMA) -

Investors, analysts and other interested parties can access Brookfield Asset Management's 2008 Q2 Results as well as the Shareholders' Letter and Supplemental Financial Information on Brookfield's web site under the Investor Centre/Financial Reports section at www.brookfield.com.

The 2008 Q2 Results conference call can be accessed via webcast on August 8, 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 second quarter ended June 30, 2008.

Cash Flow From Operations

Cash flow from operations for the second quarter totalled $378 million ($0.62 per share). Operating cash flow in the same quarter in 2007 was $340 million ($0.55 per share) on a comparable basis, which excludes a security disposition gain of $100 million, or $440 million ($0.72 per share) including the gain. On a comparable basis, operating cash flow per share increased by 13% quarter-over-quarter due to improved water levels and pricing in the company's renewable power business and stable growth within our commercial office business.



Three months ended Six months ended
June 30 June 30
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US$ millions (except per share
amounts) 2008 2007 2008 2007
---------------------------------------------------------------------------
Cash flow from operations
Comparable basis (excluding security
disposition gain) $ 378 $ 340 $ 821 $ 746
- per share(1) 0.62 0.55 1.34 1.22

Total basis (including security
disposition gain) $ 378 $ 440 $ 821 $ 1,011
- per share(1) 0.62 0.72 1.34 1.65
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(1) Adjusted to reflect three-for-two stock split on June 1, 2007


"Our operating performance reflects the sustainable cash flows which are generated by our high quality assets and operating platforms," commented Bruce Flatt, Senior Managing Partner of Brookfield Asset Management. "We remain focused on building our operations over the longer term."

Net Income

Net income was $110 million in the second quarter of 2008 compared with $153 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 Six months
ended June 30 ended June 30
US$ millions (except per share amounts) 2008 2007 2008 2007
---------------------------------------------------------------------------
Net income
- total $ 110 $ 153 $ 307 $ 348
- per share(1) $ 0.17 $ 0.24 $ 0.48 $ 0.55
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(1) Adjusted to reflect three-for-two stock split on June 1, 2007


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 financial 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 November 30, 2008, to shareholders of record as at the close of business on November 1, 2008. 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 Financial Information for the six months ended June 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 $95 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 report and quarterly disclosures can be obtained free of charge upon request.

Note: This news release contains forward-looking information within the meaning of Canadian provincial securities laws and other "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," "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 sustainability of the company's cash flows, the company's ability to increase cash flows over an extended period of time 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 Six months
ended June 30 ended June 30
US$ millions, except per share amounts 2008 2007 2008 2007
---------------------------------------------------------------------------
Fees earned $ 113 $ 95 $ 227 $ 227

Revenues less direct operating costs
Commercial properties(1) 427 396 879 784
Power generation 264 170 515 358
Infrastructure(2) 44 114 92 203
Development and other properties 119 117 183 263
Specialty funds 119 59 223 121
Investment and other income 148 248 435 547
---------------------------------------------------------------------------
1,234 1,199 2,554 2,503
Expenses
Interest 475 424 1,002 822
Other operating costs 148 105 313 215
Current income taxes 21 26 38 46
Non-controlling interests 212 204 380 409
---------------------------------------------------------------------------
Cash flow from operations $ 378 440 $ 821 $ 1,011
---------------------------------------------------------------------------
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Cash flow from operations per common
share(3)
Diluted $ 0.62 $ 0.72 $ 1.34 $ 1.65
Diluted - excluding security
disposition gain $ 0.62 $ 0.55 $ 1.34 $ 1.22
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(1) Commercial properties includes $31 million (2007 $nil) of dividend
income recognized in Q1 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 in
2007 and on an equity accounted basis in 2008

(3) Adjusted to reflect three-for-two stock split on June 1, 2007

Notes

Cash flow from operations is reconciled to net income before other items on
page 6 of this news release as follows:


(Unaudited) Three months Six months
ended June 30 ended June 30
US$ millions 2008 2007 2008 2007
--------------------------------------------------------------------------
Net income excluding other items (see
page 6) $ 372 $ 335 $ 809 $ 736
Dividends from equity accounted
investments(1) 6 5 12 10
Gain on sale of exchangeable
debentures(1) - 100 - 265
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Cash flow from operations (per above) $ 378 $ 440 $ 821 $ 1,011
--------------------------------------------------------------------------
--------------------------------------------------------------------------
(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 recent accounting requirements but, as a result of transitional provision, has been recorded in shareholders' equity.



CONSOLIDATED BALANCE SHEETS

---------------------------------------------------------------------
(Unaudited)
June 30 December 31
US$ millions 2008 2007
---------------------------------------------------------------------
Assets
Cash and cash equivalents $ 1,532 $ 1,561
Financial assets 1,467 1,529
Operating assets
Securities 1,639 1,646
Loans and notes receivable 2,258 909
Property, plant and equipment
Commercial properties 21,284 21,166
Power generation 5,675 5,137
Infrastructure 2,996 3,046
Development and other properties 9,175 7,573
Other plant and equipment 1,041 1,050
Investments 1,033 1,352
Intangible assets 1,935 1,773
Goodwill 2,017 1,528
Accounts receivable and other 7,534 7,327
---------------------------------------------------------------------
$ 59,586 $ 55,597
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Liabilities and Shareholders' Equity
Liabilities
Corporate borrowings $ 2,396 $ 2,048
Non-recourse borrowings
Property specific mortgages 22,152 21,644
Other debt of subsidiaries 8,714 7,463
Accounts payable and other liabilities 10,576 10,055
Intangible liabilities 1,036 1,047
Capital securities 1,681 1,570
Non-controlling interests of others in assets 5,877 4,256
Preferred equity 870 870
Common equity 6,284 6,644
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$ 59,586 $ 55,597
---------------------------------------------------------------------
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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 Six months ended
US$ millions, except per share Jun 30 June 30
amounts 2008 2007 2008 2007
--------------------------------------------------------------------------
Total revenues $ 3,436 $ 2,125 $ 6,646 $ 3,966
--------------------------------------------------------------------------

Fees earned $ 113 $ 95 $ 227 $ 227

Revenues less direct operating costs
Commercial properties(1) 427 396 879 784
Power generation 264 170 515 358
Infrastructure(2) 44 114 92 203
Development and other properties 119 117 183 263
Specialty funds 119 59 223 121
Investment and other income 142 143 423 272
--------------------------------------------------------------------------
1,228 1,094 2,542 2,228
Expenses
Interest 475 424 1,002 822
Other operating costs 148 105 313 215
Current income taxes 21 26 38 46
Non-controlling interests 212 204 380 409
--------------------------------------------------------------------------
372 335 809 736
Other items
Depreciation and amortization (328) (267) (642) (490)
Equity accounted losses from
investments (15) (29) (28) (68)
Other (46) 11 (109) 16
Future income taxes 3 (69) 21 (134)
Non-controlling interests in the
foregoing items 124 172 256 288
--------------------------------------------------------------------------
Net income $ 110 $ 153 $ 307 $ 348
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Net income per common share(3)
Diluted $ 0.17 $ 0.24 $ 0.48 $ 0.55
Basic $ 0.17 $ 0.25 $ 0.49 $ 0.57
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(1) Commercial properties includes $31 million (2007 $nil) of dividend
income recognized in Q1 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 in
2007 and on an equity accounted basis in 2008

(3) Adjusted to reflect three-for-two stock split on June 1, 2007


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.

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