Brookfield Homes Corporation
NYSE : BHS

Brookfield Homes Corporation

October 26, 2007 16:04 ET

Brookfield Homes Reports Third Quarter Results

Investors, analysts and other interested parties can access Brookfield Homes' Supplemental Information Package on Brookfield Homes' website under the Investor Relations/Financial Reports section at www.brookfieldhomes.com. Brookfield Homes' third quarter investor conference call can be accessed by teleconference on October 26, 2007 at 5:00 pm (Eastern Time) at 1-800-319-4610, toll free in North America. The archived teleconference may be accessed by dialing 1-800-319-6413 (passcode: 2817), toll free in North America through November 26, 2007. Alternatively, the conference call can be accessed by Webcast on Brookfield Homes' website at www.brookfieldhomes.com.

FAIRFAX, VIRGINIA--(Marketwire - Oct. 26, 2007) - Brookfield Homes Corporation (NYSE:BHS) today announced financial results for the third quarter ended September 30, 2007:

- Net income for the three months ended September 30, 2007 was $2 million, compared to $28 million in 2006. The decrease in net income was primarily due to impairment charges and writedowns on housing and land assets of $41 million or $23 million after minority interest and taxes, as well as lower home and lot sales, and reduced gross margins on housing to 18% from 26%. These decreases were partially offset by a reversal of an income tax liability related to an uncertain tax position of $25 million.

- Housing revenue for the three months ended September 30, 2007 totaled $117 million, compared to $160 million for the same period in 2006. The decrease in housing revenue is primarily due to fewer home closings during the quarter in the Southland/Los Angeles and San Diego/Riverside markets.

- For the quarter, earnings per share is $0.06 compared to $1.03 for the prior year.

- Third Quarter 2007 Financial Highlights



Results of Operations Three Months Ended Nine Months Ended
Sept. 30 Sept. 30
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(Millions, except per share
amounts and units) 2007 2006 2007 2006
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Housing revenue $ 117 $ 160 $ 376 $ 475
Housing gross margin $ 22 $ 42 $ 70 $ 132
Total revenue $ 121 $ 175 $ 386 $ 542
Total gross margin / (loss) $ (13) $ 50 $ 36 $ 167
Net income / (loss)
before taxes $ (38) $ 45 $ (17) $ 145
Net income $ 2 $ 28 $ 40 $ 90
Earnings per share - diluted $ 0.06 $ 1.03 $ 1.48 $ 3.27
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Net new home orders (units) 130 264 631 751
Backlog of homes (units at
end of period) 323 531 323 531
Home closings (units) 179 232 567 700
Average home selling price
(per unit) $ 667,000 $ 710,000 $ 673,000 $ 700,000
Lot sales (units) 21 158 63 618
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(a) Unit information includes joint ventures


Recent Developments and Operating Highlights

- 2007 Home Closings: Market conditions remain weak, and the company had lower than anticipated sales in the third quarter. The company is now targeting approximately 1,000 home closings for 2007. To date, the company has closed or in backlog over 900 homes.

- Lots Owned and Controlled: At September 30, 2007, the company's lots owned or controlled total 26,498. The company has direct ownership of 12,736 lots and 13,762 lots under option are controlled with the objective of adding value through land entitlements.



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Northern Southland/ San Diego/ Washington Corporate
California Los Angeles Riverside D.C. Area and Other Total
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Geographic
diversi-
fication
of lots 33% 12% 29% 25% 1% 100%
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Lot supply
Owned 1,326 1,358 6,096 3,814 142 12,736
Optioned 7,539 1,865 1,500 2,858 - 13,762
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Total 8,865 3,223 7,596 6,672 142 26,498
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- Declared Dividend - The company declared a semi-annual dividend of $0.20 per common share payable on December 31, 2007 to stockholders of record on December 14, 2007.

Outlook

"Inventories of resale, and new homes for sale, continue to be at all time highs, despite continued new home price declines. Homebuyer confidence remains weak and it is expected this will continue until a balance of supply and demand is achieved in the market," concluded Ian Cockwell, President & Chief Executive Officer.

Brookfield Homes Corporation

Brookfield Homes Corporation is a residential homebuilder and land developer, building homes and developing land in master-planned communities and infill locations. We design, construct and market single-family and multi-family homes primarily to move-up and luxury homebuyers. We also entitle and develop land for our own communities and sell lots to other homebuilders. Our portfolio includes 26,000 lots owned and controlled in the Northern California; Southland / Los Angeles; San Diego / Riverside; and Washington D.C. Area markets. For more information, visit the Brookfield Homes website at www.brookfieldhomes.com.

Note: Certain statements in this press release that are not historical facts, including information concerning possible or assumed future results of operations of the company, expected home closings (and the timing thereof), the company's future outlook, and those statements preceded by, followed by, or that include the words "believe", "planned", "should", "goals", "expected", "potential," "estimate," "targeted," "scheduled" or similar expressions, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Undue reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which may cause the actual results to differ materially from the anticipated future results expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those set forward in the forward-looking statements include, but are not limited to: changes in general economic, real estate and other conditions; mortgage rate changes; availability of suitable undeveloped land at acceptable prices; adverse legislation or regulation; ability to obtain necessary permits and approvals for the development of our land; availability of labor or materials or increases in their costs; ability to develop and market our master-planned communities successfully; confidence levels of consumers; ability to raise capital on favorable terms; adverse weather conditions and natural disasters; relations with the residents of our communities; risks associated with increased insurance costs or unavailability of adequate coverage and ability to obtain surety bonds; competitive conditions in the homebuilding industry, including product and pricing pressures; and additional risks and uncertainties referred to in our Form 10-K and other SEC filings, many of which are beyond our control. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.



Brookfield Homes Corporation
Consolidated Statements of Income

(Unaudited)
------------------------------------------------
Three Months Ended Nine Months Ended
September 30 September 30
---------------------- ----------------------
(thousands, except per
share amounts) 2007 2006 2007 2006
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Revenue

Housing $ 117,405 $ 160,025 $ 376,077 $ 475,530

Land 3,359 15,520 9,598 67,368
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Total revenue 120,764 175,545 385,675 542,898

Direct cost of sales (133,911) (125,322) (349,554) (375,507)
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(13,147) 50,223 36,121 167,391

Equity in earnings /
(loss) from housing and
land joint ventures (6,727) 11,204 (6,347) 12,874

Other (expense) / income (5,519) (254) 174 7,753

Selling, general and
administrative expense (16,007) (12,699) (50,037) (33,771)

Minority interest 3,691 (3,737) 2,763 (9,141)
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Net income / (loss)
before taxes (37,709) 44,737 (17,326) 145,106

Income tax recovery /
(expense) 39,328 (17,134) 57,135 (55,575)
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Net income $ 1,619 $ 27,603 $ 39,809 $ 89,531
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Weighted average shares
outstanding

Basic 26,628 26,572 26,623 26,981

Diluted 26,816 26,898 26,865 27,368

Earnings per share

Basic $ 0.06 $ 1.04 $ 1.50 $ 3.32

Diluted $ 0.06 $ 1.03 $ 1.48 $ 3.27
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Brookfield Homes Corporation
Condensed Balance Sheets

(Unaudited)
As at September 30 As at December 31
-------------------------- -----------------
(thousands) 2007 2006 2006
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Assets

Housing and land inventory $ 1,108,258 $ 1,049,544 $ 1,075,192

Investments in housing and
land joint ventures 108,112 103,044 90,325

Consolidated land inventory
not owned 71,090 16,925 59,381

Receivables and other assets 36,514 36,177 37,031

Cash and cash equivalents 1,164 12,421 86,809

Deferred income taxes 57,057 44,894 52,715
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$ 1,382,195 $ 1,263,005 $ 1,401,453
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Liabilities and Stockholders'
Equity

Project specific and other
financings $ 690,568 $ 610,934 $ 617,931

Accounts payable and other
liabilities 178,988 272,399 320,061

Minority interest 104,101 61,778 92,055

Stockholders' equity 408,538 317,894 371,406
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$ 1,382,195 $ 1,263,005 $ 1,401,453
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