Brookfield Homes Corporation
NYSE : BHS

Brookfield Homes Corporation

October 24, 2006 16:17 ET

Brookfield Homes Reports Third Quarter Earnings

FAIRFAX, VIRGINIA--(CCNMatthews - Oct. 24, 2006) -

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 24, 2006 at 5:00 pm (Eastern Time) at 1-888-789-0089, toll free in North America. The archived teleconference may be accessed by dialing 1-888-509-0081 (passcode: 631931), toll free in North America through November 24, 2006. Alternatively, the conference call can be accessed by Webcast on Brookfield Homes' website at www.brookfieldhomes.com.

Brookfield Homes Corporation (NYSE:BHS) today announced financial results for the third quarter ended September 30, 2006:

- Net income for the three months ended September 30, 2006 totaled $28 million, a decrease of $10 million when compared to the same period in 2005. The decrease in net income was primarily related to fewer home closings in the quarter compared to the same period last year. The decline was partially offset by a decrease in selling, general and administrative expense, related primarily to a mark-to-market adjustment of the stock compensation obligation.

- Housing revenue for the quarter totaled $160 million, compared to $253 million in 2005. The decrease in housing revenue is primarily due to 137 fewer units closed during the quarter compared to 2005, offset by an increase in the company's average selling price to $702,000 from $693,000 in 2005.

- Earnings per share for the three months ended September 30, 2006 totaled $1.03 compared to $1.20 for the prior year, and for the nine months ended September 30, 2006 was $3.27 per share, an increase of 15% when compared to the same period in 2005.



Third Quarter 2006 Financial Highlights

Results of Operations Three Months Nine Months Ended
Ended Sept. 30 Sept. 30
-----------------------------------------
(Millions, except per share
amounts and units) 2006 2005 2006 2005
------------------------------------------------------------------------
Home closings (units) 228 365 682 942

Housing revenue $ 160 $ 253 $ 475 $ 634

Housing gross margin $ 42 $ 73 $ 132 $ 186

Total revenue $ 176 $ 267 $ 551 $ 672

Total gross margin $ 51 $ 81 $ 176 $ 205

Selling, general and
Administrative expense $ 14 $ 28 $ 35 $ 69

Net income $ 28 $ 38 $ 90 $ 89

Contribution from bulk land
sales to net income $ 5 $ 2 $ 20 $ 5
------------------------------------------------------------------------
Earnings per share - diluted

-- Excluding bulk land sales $ 0.85 $1.14 $2.54 $2.67

-- Bulk land sales 0.18 0.06 0.73 0.16
------------------------------------------------------------------------
$ 1.03 $1.20 $3.27 $2.83
------------------------------------------------------------------------


Recent Developments and Operating Highlights

- Homes in Backlog and Lot Sales: Despite a significant increase in the backlog of home sales in Southland/Los Angeles, the continued slowdown in demand for new homes in the San Diego/ Riverside and Washington D.C. markets, reduced the company's total backlog to 516 homes at September 30, 2006, down from 939 homes at September 30, 2005. The company currently estimates closings of 1,200 homes for the year ending December 31, 2006, a decrease of 24%, compared to 2005. The company continues its program of bulk lot sales and 592 lots have been closed year to date for net income of $20 million ($5 million or $0.18 per share was recorded during the three months ended September 30, 2006).

- Declared Dividend -- The company declared a semi-annual dividend of $0.20 per common share payable on December 29, 2006 to stockholders of record on December 15, 2006.

- 2006 Earnings Guidance -- The company has reduced the range of its 2006 earnings guidance to between $5.60 and $6.00 per share as a result of the impact the continued market uncertainty may have on its estimated 2006 home closings and bulk land sales. This earnings guidance is based on home closings between 1,100 and 1,200 homes and bulk lot sales between 800 and 1,000 lots.

Outlook

"The long anticipated slowdown in housing markets in the U.S. remains a challenge, particularly in our San Diego and Washington, D.C. markets. However, we have reduced the risk in our portfolio through optioning land, and we continue to focus on leveraging our market and entitlement expertise to proactively manage our assets to add longer term value for shareholders," concluded Ian Cockwell, President & Chief Executive Officer of Brookfield Homes.

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 approximately 30,000 lots owned and controlled in the San Francisco Bay Area; Southland / Los Angeles; San Diego / Riverside; Sacramento; 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 and lot closings and deliveries (and the timing thereof), expected 2006 earnings guidance, possible bulk land sales, the company's future outlook and growth plans, 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) 2006 2005 2006 2005
------------------------------------------------------------------------


Revenue
Housing $ 160,025 $ 253,059 $ 475,530 $ 633,566

Land and other revenues 16,159 14,650 76,014 38,728
------------------------------------------------------------------------
Total revenue 176,184 267,709 551,544 672,294

Direct cost of sales (125,322) (186,319) (375,507) (466,854)
------------------------------------------------------------------------
50,862 81,390 176,037 205,440
Equity in earnings from
housing and land
joint ventures 11,204 15,658 12,874 25,249

Selling, general and
administrative
expense (13,592) (28,907) (34,664) (69,894)

Minority interest (3,737) (6,888) (9,141) (15,877)
------------------------------------------------------------------------
Net income before taxes 44,737 61,253 145,106 144,918

Income tax expense (17,134) (23,431) (55,575) (55,797)
------------------------------------------------------------------------
Net income $ 27,603 $ 37,822 $ 89,531 $ 89,121
------------------------------------------------------------------------

Weighted average shares
Outstanding

Basic 26,572 30,931 26,981 30,932

Diluted 26,898 31,481 27,368 31,518

Earnings per share

Basic $ 1.04 $ 1.22 $ 3.32 $ 2.88

Diluted $ 1.03 $ 1.20 $ 3.27 $ 2.83
------------------------------------------------------------------------





Brookfield Homes Corporation

Condensed Balance Sheets

(Unaudited)
As at September 30 As at December 31
---------------------------------------------
(thousands) 2006 2005 2005
-----------------------------------------------------------------------
Assets

Housing and land
inventory $ 1,049,544 $ 884,022 $ 912,617

Investments in housing
and land joint ventures 103,044 57,590 53,260

Consolidated land
inventory not owned 16,925 23,100 22,100

Receivables and other
assets 36,177 50,266 94,081

Cash and cash equivalents 12,421 211,538 198,411

Deferred income taxes 44,894 35,588 49,417
------------------------- ---------------------------------------------
$ 1,263,005 $ 1,262,104 $ 1,329,886
------------------------- ---------------------------------------------

Liabilities and
Stockholders' Equity

Project specific and
other financings $ 665,718 $ 590,736 $ 691,410

Accounts payable and
other liabilities 217,615 290,289 320,787

Minority interest 61,778 52,342 53,040

Stockholders' equity 317,894 328,737 264,649
-----------------------------------------------------------------------
$ 1,263,005 $ 1,262,104 $ 1,329,886
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