Brookfield Asset Management Inc.
TSX : BAM
NYSE : BAM

Brookfield Asset Management Inc.

May 02, 2007 08:00 ET

Brookfield Asset Management Announces First Quarter Results and Shareholder Initiatives

TORONTO, ONTARIO--(CCNMatthews - May 2, 2007) - Brookfield Asset Management Inc. (TSX:BAM)(NYSE:BAM) -

Investors, analysts and other interested parties can access Brookfield Asset Management's 2007 First Quarter 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 First Quarter 2007 Results conference call can be accessed via webcast on May 2, 2007 at 11:00 a.m. EST at www.brookfield.com or via teleconference at 1-877-356-9134 toll free in North America. For overseas calls please dial
1-706-902-0751, at approximately 10:50 a.m. EST. The teleconference taped rebroadcast can be accessed at 1-800-558-5253 or 416-626-4100 (Reservation # 21335898).

Brookfield Asset Management Inc. (TSX:BAM)(NYSE:BAM) today announced:

- First quarter cash flow from operations of $571 million or $1.40 per share compared with $307 million or $0.75 in 2006;

- A three-for-two stock split, which will be implemented by way of a stock dividend;

- The proposed listing of the company's Class A Shares on Euronext; and

- The proposed distribution to shareholders, by way of a special dividend, of a direct interest in its infrastructure operations through Brookfield Infrastructure Partners, a new publicly traded limited partnership.

First Quarter Results

In the first quarter ended March 31, 2007 cash flow from operations totalled $571 million ($1.40 per share), compared with $307 million ($0.75 per share) reported in the same quarter last year. Net income totalled $195 million ($0.46 per share) compared with $179 million ($0.43 per share) reported in the same period last year.

The following table presents the results on a total and per share basis.



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Three months ended March 31
US$ millions (except per share amounts) 2007 2006
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Cash flow from operations $ 571 $ 307
- per share $ 1.40 $ 0.75

Net income $ 195 $ 179
- per share $ 0.46 $ 0.43
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Bruce Flatt, Managing Partner of Brookfield Asset Management, commented: "Our results this quarter reflect strong performance in most of our operations. We remain focused on enhancing shareholder value and building out each of our operating platforms to enable us to achieve our long-term goals. The spin-off of Brookfield Infrastructure Partners is a major step in this direction, as it will provide investors with an attractive focused infrastructure vehicle, facilitating access to the capital markets to fund our infrastructure growth plans."

Three-for-Two Stock Split

On May 1, 2007, the Board of Directors approved a three-for-two stock split of the company's outstanding Class A Shares. The split will be implemented by way of a stock dividend whereby shareholders will receive one-half of a Brookfield Class A Share for each Class A and Class B Share held (i.e. one additional share for every two shares held). Fractional shares will be paid in cash at the prevailing market price. The stock dividend will be payable on or about June 1, 2007 to shareholders of record at the close of business on May 24, 2007.

Brookfield is undertaking the stock split to ensure the shares remain accessible to individual shareholders and to improve the liquidity of the shares. The split will have no unfavourable tax consequences in Canada or the United States, and will not dilute shareholders' equity. The number of shares subject to the company's current normal course issuer bid will be adjusted upwards to reflect the stock split.

Euronext Listing

With the recent merger of NYSE and Euronext, as well as Brookfield's continued global expansion, Brookfield intends to seek a listing for the company's Class A Shares on Euronext to provide Brookfield with greater access to European and other global investors.

Distribution of Infrastructure Assets

Brookfield intends to distribute to its Class A shareholders a direct interest in its infrastructure operations through a newly created publicly traded partnership to be named Brookfield Infrastructure Partners L.P. ("Brookfield Infrastructure"). Brookfield Infrastructure's initial operations will be principally comprised of interests in Brookfield's electricity transmission and timber businesses. Brookfield Infrastructure will serve as the primary vehicle through which Brookfield's future infrastructure related acquisitions, other than property and renewable power operations, will be made.

Brookfield will retain an approximate 40% interest in Brookfield Infrastructure and will manage the operations under a long term management agreement.

Brookfield Infrastructure intends to seek a listing for its units on the New York Stock Exchange. Further details regarding the operations of Brookfield Infrastructure will be set forth in regulatory filings which Brookfield intends to submit to securities regulatory authorities in the United States and Canada during the second quarter.

Subject to receipt of the various required approvals, Brookfield will implement the spin-off by way of a special dividend currently estimated to be approximately US$1.00 per Brookfield Class A Share, taking into account the pending three-for-two stock split, or approximately $600 million in aggregate. The record date for, and the exact amount of, the dividend will be established at the time that regulatory filings are finalized, which is expected to be during the third quarter.

Brookfield believes the spin-off will:

- accelerate Brookfield's strategy to build out its asset management platform through creation of a managed company with an effective cost of capital to support its infrastructure growth strategies;

- create a focused public vehicle that will be well-positioned for future infrastructure acquisitions; and

- surface the value of the Company's currently owned infrastructure assets for shareholders.

Brookfield Infrastructure will be focused on the ownership and operation of infrastructure assets that provide essential products and services, are long-life in nature, and are expected to produce stable cash flows that increase over time with inflation. The assets are expected to include, among others: electricity transmission, pipeline and utility distribution infrastructure; transportation infrastructure; social infrastructure (i.e. hospitals, schools) and timber assets. The partnership will not include property and renewable power operations. Through its management agreement with Brookfield Asset Management, Brookfield Infrastructure will be able to access Brookfield's proprietary deal flow, business development expertise and operating capabilities.

Given the strong global demand for high quality infrastructure assets, the scarcity of publicly-traded infrastructure companies, and Brookfield's long track record of success in owning and operating long-life, high-quality, cash flow generating assets, Brookfield believes that Brookfield Infrastructure will provide investors with a unique opportunity to participate more directly in the growth of this business and an attractive combination of current yield plus capital appreciation.

The completion of the distribution of Brookfield Infrastructure to Brookfield's shareholders is subject to satisfaction of a number of conditions and, as such, there can be no certainty that the distribution will proceed or proceed in the manner or in the amount set forth above.

Dividend Declaration

The Board of Directors declared a dividend of US$0.18 per Class A Share (on a pre-split basis), payable on August 31, 2007, to shareholders of record as at the close of business on August 1, 2007, as well as the regular monthly and quarterly dividends on its preferred shares. On a post-split basis, the dividend per Class A Share will be US$0.12.

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 quarter ended March 31, 2007 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 over $70 billion of assets under management and is co-listed on the New York and Toronto Stock Exchanges under the symbol BAM. For more information, please visit our web site at www.brookfield.com.

Note: This press 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 "intend," "position," "continue," "will" 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 press release include the proposed listing of Brookfield's stock on Euronext and the proposed distribution to Brookfield shareholders of units of Brookfield Infrastructure ("BIP") and the details related thereto. Although Brookfield Asset Management believes that these forward-looking statements and information are based upon reasonable assumptions and expectations, the reader should not place undue reliance on them, or any other forward looking statements or information in this press release. The completion of the proposed Euronext listing and the proposed distribution of Brookfield Infrastructure units, as well as the future performance and prospects of Brookfield Infrastructure following the distribution of the Brookfield Infrastructure units are subject to a number of known and unknown risks and uncertainties. In particular, the Euronext listing and the distribution of BIP units each require stock exchange approval, which has not yet been received, and the distribution of BIP units is subject to approval of SEC, Canadian provincial securities regulators and other regulatory bodies. Factors that could cause actual results of Brookfield Infrastructure or the Company to differ materially from those contemplated or implied by the statements in this press release include the fact that success of Brookfield Infrastructure will be dependant on market demand for an infrastructure company, which is unknown, the availability of equity and debt financing for Brookfield Infrastructure, the ability to effectively complete new acquisitions in the competitive infrastructure space and to integrate acquisitions into existing operations, and other risks and factors described in the documents filed by the company with the securities regulators in Canada and the United States including in the Annual Information Form under the heading "Business Environment and Risks" and other risks and factors which will be described the registration statement to be filed in connection with the distribution of BIP units. The company undertakes no obligation to publicly update or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise.



CONSOLIDATED STATEMENTS OF CASH FLOW FROM OPERATIONS

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(Unaudited) Three months ended March 31
US$ millions, except per share amounts 2007 2006
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Fees earned $ 132 $ 54

Revenues less direct operating costs
Property 534 282
Power generation 188 200
Timberlands 31 39
Transmission 58 7
Specialty funds 62 39
Investment and other income 299 95
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1,304 716

Expenses
Interest 398 224
Operating costs 110 71
Current income taxes 20 14
Non-controlling interests in net income
before the following 205 100
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$ 571 $ 307
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Cash flow from operations per common share
Diluted $ 1.40 $ 0.75
Basic $ 1.45 $ 0.77
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Note

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 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 equity accounted investments and the gain
on the sale of an exchangeable debenture investment. The 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. In addition, the
onsolidated balance sheet presents the company's cost accounted
nvestment in Canary Wharf Group as part of its property operations,
consistent with management's determination of business segments,
whereas it is included in "Securities" in the company's statutory
financial statements.


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(Unaudited) Three months ended March 31
US$ millions 2007 2006
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Cash flow from operations is reconciled
to the statement of net income as follows:

Net income excluding other items $ 401 $ 302
Dividends from equity accounted
investments(1) 5 5
Gain on sale of exchangeable
investments(1) 165 -
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Cash flow from operations $ 571 $ 307
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(1) Included in Investment and Other Income in the Statement of
Cash Flow from Operations



CONSOLIDATED BALANCE SHEETS

---------------------------------------------------------------------
(Unaudited)
March 31 December 31
US$ millions 2007 2006
---------------------------------------------------------------------
Assets
Operating assets
Securities $ 1,540 $ 1,529
Loans and notes receivable 702 651
Property, plant and equipment
Property 20,327 20,396
Power generating 4,426 4,309
Timberlands 1,014 1,011
Transmission 1,913 1,929
Other plant and equipment 628 619
---------------------
30,550 30,444
Cash and cash equivalents 1,221 1,204
Financial assets 2,306 1,665
Investments 736 775
Goodwill 669 669
Accounts receivable and other 5,813 5,951
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$ 41,295 $ 40,708
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Liabilities and Shareholders' Equity
Liabilities
Corporate borrowings $ 1,495 $ 1,507
Non-recourse borrowings
Property specific mortgages 16,917 17,148
Other debt of subsidiaries 4,134 4,153
Accounts payable and other liabilities 6,651 6,497
Capital securities 1,476 1,585
Non-controlling interests of others in assets 3,872 3,734
Preferred equity 689 689
Common equity 6,061 5,395
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$ 41,295 $ 40,708
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Note

Includes investment in Canary Wharf Group in "Property" with a
carried value of $182 million (2006 - $182 million), which is
included in "Securities" in the company's consolidated financial
statements which are prepared in accordance with GAAP.



CONSOLIDATED STATEMENTS OF INCOME

----------------------------------------------------------------------
(Unaudited) Three months ended March 31
US$ millions, except per share amounts 2007 2006
----------------------------------------------------------------------
Total revenues $ 1,841 $ 1,183
----------------------------

Fees earned $ 132 $ 54
Revenues less direct operating costs
Property 534 282
Power generation 188 200
Timberlands 31 39
Transmission 58 7
Specialty funds 62 39
Investment and other income 129 90
----------------------------------------------------------------------
1,134 711

Expenses
Interest 398 224
Operating costs 110 71
Current income taxes 20 14
Non-controlling interests in net income
before the following 205 100
----------------------------------------------------------------------
401 302

Other items
Depreciation and amortization (223) (104)
Equity accounted loss from investments (39) (22)
Provisions and other 5 20
Future income taxes (65) (71)
Non-controlling interests in the
foregoing items 116 54
----------------------------------------------------------------------
Net income $ 195 $ 179
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Net income per common share
Diluted $ 0.46 $ 0.43
Basic $ 0.48 $ 0.44
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Note

The consolidated statements of income and comprehensive income are
prepared on a basis consistent with the company's financial statements
presented in its interim report, which are prepared in accordance
with GAAP.



CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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(Unaudited) Three months ended March 31
US$ millions 2007 2006
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Comprehensive income
Net income $ 195 $ 179
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Other comprehensive income (loss)
Foreign currency translation 64 16
Available-for-sale securities 38 -
Derivative instruments designated as
cash flow hedges (38) -
Future income taxes 3 -
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67 16
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Comprehensive income $ 262 $ 195
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