BAM Investments Ltd.
TSX : BNB

August 11, 2006 13:54 ET

BAM Investments Announces Second Quarter Results

TORONTO, ONTARIO--(CCNMatthews - Aug. 11, 2006) - BAM Investments Ltd. (TSX:BNB) today announced its financial results for the second quarter ended June 30, 2006.

The company recorded a net income of $1.2 million before tax for the three months ended June 30, 2006, compared to a net loss of $0.1 million in the same period last year. This increase is due to an increase in the quarterly dividends by Brookfield Asset Management Inc. ("Brookfield") from US$0.11 per share to US$0.16 per share. After providing for the recognition of future tax assets and preferred share dividend obligations, net income per common share was $1.71 for the three month period, compared with a net loss per common share of $0.33 for the comparable period in 2005.

BAM Investments is a publicly listed investment company whose principal mandate is to provide its common shareholders with a leveraged investment in the securities of Brookfield, which currently consists of 36,977,485 Class A Limited Voting shares of Brookfield.

On July 21, 2006, BAM Investments announced that it had purchased 10.9 million Class A Limited Voting Shares of Brookfield for $499 million from Partners limited ("Partners") in exchange for the issuance to partners of 2,507,973 common shares of BAM Investments and a $72 million promissory note.

BAM Investments' ownership interest in Brookfield is 37 million Class A Shares, representing a 9.6% equity interest in Brookfield. The transaction, which is consistent with the company's mandate, increased the company's asset base and cash flows, thereby strengthening its financial position and increasing its financial flexibility.

On April 4, 2006, Brookfield announced a three-for-two stock split of its outstanding Class A Limited Voting shares. The split was implemented by way of a stock dividend whereby shareholders, including BAM Investments, received one-half of a Brookfield share for each share held. As a result, the company increased its holdings by 8.7 million Class A Limited Voting shares of Brookfield. In addition, Brookfield increased its quarterly dividend on a post-split basis from US$0.11 per share to US$0.16 per share, commencing with the May 31, 2006 dividend. The increase represents approximately $6 million of additional investment income for BAM Investments on an annualized basis, based on its current financial profile.



Consolidated Statements of Operations
------------------------------------------------------------------------
Three months ended Six months ended
June 30 June 30, 2006
------------------------------------------
(unaudited)
$thousands, except per
share amounts 2006 2005 2006 2005
------------------------------------------------------------------------
Investment income $ 4,657 $ 3,330 $ 7,665 $ 6,362
------------------------------------------------------------------------
Expenses
Operating 115 84 316 272
Amortization of deferred
financing costs 378 377 755 755
Subsidiary preferred
share dividends 2,943 2,943 5,886 5,886
------------------------------------------------------------------------
3,436 3,440 6,957 6,913
------------------------------------------------------------------------
Net income (loss) before tax 1,221 (74) 708 (551)
Future tax recovery 10,345 - 10,345 -
------------------------------------------------------------------------
Net income (loss) 11,566 (74) 11,053 (551)
Preferred share dividends (1,238) (1,235) (2,476) (2,473)
------------------------------------------------------------------------
Net income (loss) for common
shareholders $ 10,328 $ (1,309) $ 8,577 $ (3,024)
------------------------------------------------------------------------
------------------------------------------------------------------------
Net income (loss) per common
share $ 1.71 $ (0.33) $ 1.30 $ (0.73)
------------------------------------------------------------------------
------------------------------------------------------------------------


Net Asset Value

The calculated net asset value of the company's common shares as at June 30, 2006 based on the stock market price of Brookfield's Class A shares of $44.86 was $157.69 per share. A $1.00 change in the value of Brookfield's Class A shares results in a $4.66 change in the calculated net asset value of a BAM Investments common share.



Statement of Financial Position
------------------------------------------------------------------------
As at June 30, 2006
(unaudited) --------------------------------
$thousands, except per share amounts Net Asset Value(5) Book Value
------------------------------------------------------------------------
Assets

Cash and equivalents $ 3,416 $ 3,416
Brookfield Asset Management Inc.(1) 1,658,810 903,372
Deferred financing costs - 1,927
------------------------------------------------------------------------
$ 1,662,226 $ 908,715
------------------------------------------------------------------------
------------------------------------------------------------------------
Liabilities(2)
Loans payable $ 72,000 $ 72,000
Future tax liability(5) 60,102 60,102
Accounts payable and provisions 1,978 1,978
Retractable preferred shares(3) 205,000 205,000
------------------------------------------------------------------------
339,080 339,080
------------------------------------------------------------------------
Shareholders' Equity

Preferred shares 70,750 70,750
Common shares 1,252,396 498,885
------------------------------------------------------------------------
1,323,146 569,635
------------------------------------------------------------------------
$ 1,662,226 $ 908,715
------------------------------------------------------------------------
------------------------------------------------------------------------
Per Common Share(4) $ 157.69 $ 62.82
------------------------------------------------------------------------
------------------------------------------------------------------------

1 The investment in Brookfield Asset Management Inc. ("Brookfield")
represents 36,977,485 Class A Limited Voting shares of Brookfield with
a market value of $44.86 per share as at June 30, 2006.
2 The net asset value of liabilities approximates their respective book
values.
3 Represents $205.0 million retractable preferred shares issued by BNN
Split Corp., which is a subsidiary of the company.
4 As at June 30, 2006, there were 7,941,781 common shares of the company
issued and outstanding.
5 The company has available non-capital losses of $29.1 million and the
tax bases of the company's common share investments exceed their
accounting carrying value by $364 million.


BAM Investments Corp. is a publicly listed investment company whose principal business mandate is to provide its common shareholders with a leveraged investment in Brookfield common shares. The company's common shares trade on the Toronto Stock Exchange under the ticker symbol "BNB".

Note: This news release contains "forward-looking statements". The words "believe", "expect", "anticipate", "intend", "estimate" and other expressions which are predictions of or indicate future events and trends and which do not relate to historical matters identify forward-looking statements. 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, performance or achievements of the company to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those set forth in the forward-looking statements include general economic conditions, interest rates, availability of equity and debt financing and other risks detailed from time to time in the company's continuous disclosure documents. The company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Contact Information

  • BAM Investments Ltd.
    Brian D. Lawson
    President and Chief Executive Officer
    (416) 359-8620