Brascan Announces Third Quarter Earnings of $70 Million; Strong Performance From Three of Four Business Sectors.Business Editors TORONTO--(BUSINESS WIRE)--Nov. 8, 2001 Brascan Corporation today announced income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the for the nine months ended September September: see month. 30, 2001 of $266 million or $1.35 per share, down from $297 million or $1.51 per share in the same period of 2000. Total income for the first nine months of 2000 was $557 million, which included gains of $260 million. Strong performance in three of the company's four business sectors resulted in earnings of $70 million in the third quarter, compared to $106 million in the same period last year. The decline is principally attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to lower prices for natural resource products. The earnings contribution from property, energy and financial operations increased to $134 million for the third quarter of 2001, an improvement of 12% compared with the same quarter last year. Year to date, these operations increased their contribution to $400 million, a 19% improvement over last year. Each of these operations performed better than last year and the outlook for the balance of 2001 remains positive. Natural resource operations, however, were severely impacted by lower metal prices, resulting in losses from these operations of $22 million for the quarter and $4 million for the year to date. The negative impact relative to last year was $58 million for the current quarter and $127 million for the year to date. 2001 Financial Highlights The following table highlights the solid performance of three of the company's four principal areas of operation in contrast to the losses incurred in the natural resource sector:
Three months ended Nine months ended
September 30 September 30
MILLIONS (CDN.$) 2001 2000 2001 2000
------------------------------------------------------------
Operating income
Property operations $37 $25 $129 $81
Energy operations 27 16 74 56
Financial and other
operations 44 41 134 112
Investment and other income 26 38 63 87
-------------------------------
134 120 400 336
Natural resource operations (22) 36 (4) 123
-------------------------------
112 156 396 459
Unallocated expenses 42 50 130 162
-------------------------------
Income from continuing
operations $70 $106 $266 $297
------------------------------------------------------------
Robert Robert, Henry Martyn 1837-1923. American army engineer and parliamentary authority. He designed the defenses for Washington, D.C., during the Civil War and later wrote Robert's Rules of Order (1876). Noun 1. Harding, Chairman of Brascan, commented that "The benefits of our diversified diversified (di·verˑ·s asset base are clearly apparent in our most recent financial results. A major priority for us has been to build the stable portion of our earnings base, with the objective of cushioning our overall results from the impact of market downturns on our longer cycle mining and forest product operations." 2001 Operating Highlights
- The group's property executives excelled in safeguarding the
interests of tenants and in expediting the re-occupancy of the
group's downtown New York office buildings following the
tragic events of September 11.
- Over 3 million square feet of office space has been leased,
representing three times the contractually expiring amount, in
accord with our program to extend the term of our overall
lease portfolio.
- Six hydroelectric power plants were acquired in Maine, which
together with existing and potential transmission
interconnections will add meaningfully to the returns from our
energy operations.
- Important additions were made to our mining base through
exploration success and the acquisition of significant mineral
resources in Chile and Argentina.
- The giant Antamina copper-zinc mine in Peru was commissioned
four months ahead of schedule and within budget.
- $530 million of group equity securities were repurchased in
the current year to further enhance shareholder value.
Operating Overview Property operations contributed $129 million in the first nine months of 2001, up from $81 million in the same period last year. The contribution for the third quarter increased to $37 million from $25 million last year. This improvement reflects higher returns from commercial properties as a result of proactive releasing programs as well as gains on the sale of part interests in three office properties earlier in the year. Working closely with city and state authorities, Brookfield Brookfield. 1 Village (1990 pop. 18,876), Cook co., NE Ill., a residential suburb of Chicago; inc. 1893. The noted Chicago Zoological Park (Brookfield Zoo) is there. 2 City (1990 pop. 35,184), Waukesha co., SE Wis. made exceptional progress in returning tenants to their office premises premises n. 1) in real estate, land and the improvements on it, a building, store, shop, apartment, or other designated structure. The exact premises may be important in determining if an outbuilding (shed, cabana, detached garage) is insured or whether a person in downtown Downtown (called a "city centre" in British English) is a term used in North America when referring to a city's core, usually both in a geographical and commercial / community sense. New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of . One Liberty Plaza One Liberty Plaza is a skyscraper in lower Manhattan, New York, which resides at the location of the former Singer Building (in 1968, the second tallest building to be demolished). One Liberty Plaza is currently owned and operated by Brookfield Properties. opened for occupancy Gaining or having physical possession of real property subject to, or in the absence of, legal right or title. In a fire insurance policy, for example, the term occupancy on October October: see month. 24, 2001, 36 days ahead of plan, and Merrill Lynch Merrill Lynch & Co., Inc. (NYSE: MER TYO: 8675 ), through its subsidiaries and affiliates, provides capital markets services, investment banking and advisory services, wealth management, asset management, insurance, banking and related products and services on a global basis. began to re-occupy its premises in World Financial Center later in the same week. Energy operations contributed $74 million in the first nine months, up from $56 million last year. The third quarter contribution from this sector increased to $27 million from $16 million. Higher revenues from marketing operations and the return to more normal water flows on the lower Mississippi River
precipitation, in chemistry, a process in which a solid is separated from a suspension, sol, or solution. In a suspension such as sand in water the solid spontaneously precipitates (settles out) on standing. levels in northern Ontario Northern Ontario is the part of the province of Ontario which lies north of Lake Huron (including Georgian Bay), the French River and Lake Nipissing. Northern Ontario has a land area of 802,000 km² (310,000 mi²) and constitutes 87% of the land area of Ontario, although it and western Quebec Quebec, city, Canada Quebec, Fr. Québec, city (1991 pop. 167,517), provincial capital, S Que., Canada, at the confluence of the St. Lawrence and St. Charles rivers. . Financial and other operations contributed $134 million in the first nine months, up from $112 million last year, reflecting growth in investment banking, asset management services and security gains recorded earlier in the year. The contribution from financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. and other operations in the third quarter increased to $44 million from $41 million last year. Natural resource operations lost $4 million in the first nine months, compared to a contribution of $123 million last year. Most of this change occurred in the third quarter, with earnings declining from $36 million last year to a loss of $22 million this year. Copper, nickel nickel, metallic chemical element; symbol Ni; at. no. 28; at. wt. 58.69; m.p. about 1,453°C;; b.p. about 2,732°C;; sp. gr. 8.902 at 25°C;; valence 0, +1, +2, +3, or +4. and zinc zinc, metallic chemical element; symbol Zn; at. no. 30; at. wt. 65.38; m.p. 419.58°C;; b.p. 907°C;; sp. gr. 7.133 at 25°C;; valence +2. Zinc is a lustrous bluish-white metal. It is found in Group 12 of the periodic table. prices fell 32%, 31% and 28%, respectively, relative to the third quarter of 2000. The contribution from forest product operations also declined, due mainly to lower panelboard and pulp prices. With the mining industry being challenged by the recent severe drop in base metal prices, Noranda Noranda: see Rouyn-Noranda, Que., Canada. has intensified in·ten·si·fy v. in·ten·si·fied, in·ten·si·fy·ing, in·ten·si·fies v.tr. 1. To make intense or more intense: its efforts to achieve productivity improvements and reduce costs. In October, steps were taken to reduce administrative and development costs by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $60 million annually. Progress also continues to be made in implementing Six Sigma Not to be confused with Sigma 6. Six Sigma is a set of practices originally developed by Motorola to systematically improve processes by eliminating defects.[1] A defect is defined as nonconformity of a product or service to its specifications. and other productivity enhancement programs, with over 1,000 people now trained in this highly disciplined approach to management. Cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses for the nine months ended September 30, 2001 increased to $358 million from $336 million in the same period in 2000. Cash flow from operations for the third quarter of 2001 increased to $119 million from $103 million in the same period last year. These increases were principally due to increased cash flow contributions from the company's financial and energy operations. Business Developments Progress continues on the company's business development program to expand and add value to the group's production and earnings base. Property Operations
- Brookfield acquired the land lease under the recently acquired
2.6 million square foot Bankers Hall office complex in
Calgary, which enhanced its value and facilitated the
refinancing of the property with a $378 million non-recourse
12-year mortgage.
- Over 3 million square feet of office space was proactively
re-leased during the first nine months of the year, thereby
reducing portfolio risk and positioning our office property
business to maintain its strong record of financial
performance in the event of a prolonged economic slowdown.
- Construction continues on the 1.2 million square foot CIBC
World Markets office tower at 300 Madison Avenue in midtown
Manhattan for completion in early 2004.
Energy Operations
- In October, a hydroelectric generating and transmission system
was acquired in northern Maine for $245 million, comprised of
six generating stations with a total capacity of 127 megawatts
(MW). The transmission facilities include a 20 MW
interconnection to the New England Power Pool, which will be
expanded to 130 MW after the acquisition closes in early 2002.
- Construction continued on four hydroelectric generating
stations in Ontario, British Columbia and southern Brazil,
with an aggregate capacity of 121 MW.
Financial Services and Other
- Trilon launched the Tricap Restructuring Fund to focus on
corporate restructurings and turnaround situations. The market
timing and interest in this fund has been excellent, with
closing subscriptions expected shortly.
- The Imagine Group, Trilon's finite risk reinsurance
subsidiary, made good progress in expanding its business base,
including the acquisition during the quarter of Enterprise Re,
a US-based re-insurance company.
Natural Resource Operations
- The Antamina copper-zinc mine in northern Peru achieved
commercial production in October, four months ahead of
schedule. Antamina will be among the largest and lowest-cost
producers in the world, with average annual production of
300,000 tonnes of copper and 280,000 tonnes of zinc contained
in concentrate.
- The Lomas Bayas copper mine in northern Chile, acquired
through Falconbridge in July, achieved its highest quarterly
production rate since it began operating, increasing its
expected annual production of copper cathode to approximately
56,000 tonnes.
- The group's mineral resources were increased with the purchase
in September of the El Pachon copper deposit in western
Argentina and the exploration successes at the La Fortuna
deposit in Chile, where inferred mineral resources were
announced to be 410 million tonnes grading 0.61% copper and
0.56 grams per tonne of gold.
- The $185 million Barton oriented strandboard mill in Alabama
commenced production in July, and the $40 million
particleboard line being installed at the Cowie mill in
Scotland is on schedule for completion by year end.
Capital Repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. Program Shares of Brascan and its affiliates continued to be repurchased during the quarter in order to increase value for the benefit of the group's continuing shareholders. During the first nine months of 2001, $530 million of group securities were acquired.
- Brascan acquired 2,903,300 of its Class A common shares
through normal course purchases, including 2,019,900 acquired
during the third quarter.
- Brascan acquired 4.3 million publicly held common shares of
Great Lakes Power under a going-private transaction approved
by Great Lakes Power's shareholders. These shares were
acquired in exchange for $250,000 in cash and 3.9 million
Class A common shares of Brascan.
- Brascan acquired 6,526,700 common shares of Nexfor through
normal course purchases to increase its ownership of Nexfor to
38%.
- Trilon acquired 14.5 million of its common shares for a total
cost of $175 million under a substantial issuer bid,
increasing Brascan's ownership of Trilon to 71%.
Corporate Financings In September, Brascan issued 10,000,000 5.75% Class A Preference Shares, Series 10, to raise $243 million of net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). for general corporate purposes, including increasing its interests in its principal business units. These shares commenced trading on The Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. on September 17, 2001 under the symbol BNN BNN Boston Neighborhood Network BNN Boundary Network Node (IBM) BNN Back-Propagation Neural Network BNN Biological Neural Network BNN Bart's Neverending Network (public-service TV network in The Netherlands) .PR.H. During the quarter Brascan reset the dividend rate on its Class A Preference Shares, Series 8 from a fixed annual rate of 6.25% payable quarterly, to a variable rate based on the prime rate payable monthly. Holders of $174 million of these shares elected e·lect v. e·lect·ed, e·lect·ing, e·lects v.tr. 1. To select by vote for an office or for membership. 2. To pick out; select: elect an art course. to convert their shares on a one-for-one basis into a new series of Brascan Class A Preference Shares, Series 9 (BNN.PR.G) paying a fixed dividend rate of 5.63% for the five years commencing November November: see month. 1, 2001. Holders of the $26 million of Series 8 Preference Shares who elected to retain their existing shareholdings will receive a variable rate dividend, with another opportunity to convert their shares into the Series 9 Preference Shares on November 1, 2006 and every five years thereafter. In October, Brascan filed a preliminary short-form prospectus A document, notice, circular, advertisement, letter, or communication in written form or by radio or television that offers any security for sale, or confirms the sale of any security. that enables the company to issue debt securities in an aggregate amount of US$500 million over a two-year period. The proceeds of any issues under this filing will be used for general corporate purposes, including increasing the company's interests in its principal business units and the repayment Repayment The act of paying back a debt. Notes: Everyone has to repay their debts eventually. See also: Debt, Defeasance, Loan of corporate debt. Outlook Robert Harding, Brascan's Chairman, in commenting on the outlook for the current year, stated that: "We enter the current downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. with three of our four business units recording solid earnings gains. In the natural resource sector, which is heavily impacted by over-supply and record low prices, we are soundly financed and well positioned to add to our operating base through the purchase of quality assets, which are now becoming available at reasonable prices. We are also continuing our focus on restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). our existing operations in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with our Six Sigma and other profit improvement programs." Brascan Corporation owns and operates real estate, power generating, financial and natural resource businesses, located principally in North and South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. . The Company's goal is to build long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. shareholder value by creating sustainable cash flows generated from high quality assets and by continuously developing new opportunities for future growth. Brascan is listed on The Toronto Stock Exchange and the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. under the symbol BNN. A conference call has been arranged for investors and analysts to discuss Brascan's third quarter results with senior management on Thursday Thursday: see week. , November 8 at 2:00 p.m. (ENT ENT ears, nose, and throat (otorhinolaryngology). ENT abbr. ear, nose, and throat ENT ear, nose and throat. ENT Ears, nose & throat; formally, otorhinolaryngology ). The call can be accessed by dialing 416-641-6693 (local and overseas) or 1-800-937-4595 (toll free in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. ) at approximately 1:50 p.m. A taped rebroadcast of the teleconference will be available until December December: see month. 6, 2001 by calling 416-626-4100 and entering reservation A clause in a deed of real property whereby the grantor, one who transfers property, creates and retains for the grantor some right or interest in the estate granted, such as rent or an Easement ,a right of use over the land of another. number 19914567. This conference call will also be Webcast live on our web site at www.brascancorp.com, where it will be archived for future reference.
Consolidated Financial Statements
Consolidated Balance Sheet (unaudited)
----------------------------------------------------
September 30 December 31
MILLIONS 2001 2000
----------------------------------------------------
Assets
Cash and cash equivalents $ 109 $ 347
Securities 2,517 2,371
Accounts and notes receivable 2,723 2,833
Investments accounted for
using equity method 3,737 3,654
Property, plant and equipment 2,190 2,018
Other assets 556 378
----------------------------------------------------
$11,832 $11,601
----------------------------------------------------
Liabilities
Corporate borrowings $ 1,249 $ 1,360
Subsidiary company borrowings 2,522 2,420
----------------------------------------------------
3,771 3,780
Accounts payable and deferred
credits 1,264 1,207
Capital base and other
shareholders'interests
Minority interests 1,508 1,701
Shareholders' equity (Note 4) 5,289 4,913
----------------------------------------------------
6,797 6,614
----------------------------------------------------
$11,832 $11,601
----------------------------------------------------
Note: This news release contains "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of Section 27A of the Securities Act of 1933, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , and Section 21E of the Securities Exchange Act of 1934, as amended. 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 Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. 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 Debt Financing When a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise to repay and other risks detailed from time to time in the company's continuous disclosure documents, including its 40-F filed with the Securities and Exchange Commission. 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.
Consolidated Statement of Income (unaudited)
--------------------------------------------------------------
Three months ended Nine months ended
September 30 September 30
MILLIONS, EXCEPT PER
SHARE AMOUNTS 2001 2000 2001 2000
==============================================================
Group revenues $3,170 $3,254 $9,739 $9,892
Revenue of equity accounted
affiliates 2,862 2,957 8,827 9,034
--------------------------------
Consolidated revenues 308 297 912 858
Equity in pre-tax earnings
of affiliates 23 78 173 314
--------------------------------
Income before the undernoted
items 331 375 1,085 1,172
Operating expenses 149 144 453 428
Interest expense 70 65 204 190
Minority interests 31 40 102 120
Taxes and other provisions 11 20 60 137
--------------------------------------------------------------
Income from continuing operations 70 106 266 297
Income and gain on the sale
of discontinued operations
(Note 6) - - - 260
--------------------------------------------------------------
Net income $70 $106 $266 $557
--------------------------------------------------------------
Per basic Class A Class B common share
Income from continuing
operations $0.36 $0.57 $1.36 $1.53
Net income $0.36 $0.57 $1.36 $3.02
--------------------------------------------------------------
Per diluted Class A Class B common share
Income from continuing
operations $0.35 $0.55 $1.35 $1.51
Net income $0.35 $0.55 $1.35 $2.96
--------------------------------------------------------------
Consolidated Statement of Retained Earnings (unaudited)
--------------------------------------------------------------
Three months ended Nine months ended
September 30 September 30
MILLIONS 2001 2000 2001 2000
==============================================================
Balance, beginning
of period $2,455 $2,279 $2,367 $1,938
Net income 70 106 266 557
--------------------------------------------------------------
2,525 2,385 2,633 2,495
--------------------------------------------------------------
Shareholder distributions
Convertible note interest 1 1 3 5
Preferred share
dividends 10 11 31 32
Common share dividends 44 42 129 127
55 54 163 164
--------------------------------------------------------------
Balance, end of period $2,470 $2,331 $2,470 $2,331
--------------------------------------------------------------
Consolidated Statement of Cash Flows (unaudited)
--------------------------------------------------------------
Three months ended Nine months ended
September 30 September 30
MILLIONS 2001 2000 2001 2000
==============================================================
Group operating cash
flow $276 $362 $953 $1,324
Operating cash flows
of equity accounted
affiliates 157 259 595 988
--------------------------------------------------------------
Consolidated cash flow
from operations (Note 9) 119 103 358 336
--------------------------------------------------------------
Financing and shareholder
distributions
Corporate borrowings:
Issuances - 10 57 20
Repayments (150) (1) (230) (307)
Subsidiary company
borrowings:
Issuances 56 27 179 203
Repayments (3) (1) (217) (8)
Minority interests - - (176) -
Convertible note
repurchases - - - (40)
Shares:
Issuances 250 - 250 -
Repurchases (57) (80) (79) (81)
Convertible note
interest paid (1) (1) (3) (5)
Dividends paid (54) (53) (160) (159)
--------------------------------------------------------------
41 (99) (379) (377)
--------------------------------------------------------------
Investing
Securities:
Purchases (89) (170) (308) (287)
Sales 23 114 162 289
Loans and other
receivables:
Advances (464) (183) (1,013) (805)
Collections 298 328 1,220 543
Investment in property
and equipment (5) (3) (140) (121)
Corporate investments:
Purchases (23) - (51) -
Sales - - - 619
Other (50) (61) (87) (163)
--------------------------------------------------------------
(310) 25 (217) 75
--------------------------------------------------------------
Cash and cash
equivalents
Increase (decrease) (150) 29 (238) 34
Balance, beginning of
period 259 105 347 100
--------------------------------------------------------------
Balance, end of period $109 $134 $109 $134
--------------------------------------------------------------
Notes to Consolidated Financial Statements
--------------------------------------------------------------
1. SUMMARY OF ACCOUNTING POLICIES Reference is made to the company's most recently issued Annual Report, which includes information necessary or useful to understanding the company's businesses and financial statement presentation. In particular, the company's significant accounting policies and practices are presented as Note 1 to the Consolidated Financial Statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge included in that Report. The company's accounting policies and methods of their application are consistent with those of the most recent annual financial statements, except as may be described elsewhere in these financial statements. The quarterly financial statements are unaudited. Financial information in this Report reflects any adjustments (consisting only of normal recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. adjustments) that are, in the opinion of management, necessary to a fair statement of results for the interim periods in accordance with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting in Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of . The results reported in these consolidated financial statements should not be regarded as necessarily indicative indicative: see mood. of results that may be expected for the entire year. Certain prior year amounts have been restated or reclassified to conform to Verb 1. conform to - satisfy a condition or restriction; "Does this paper meet the requirements for the degree?" fit, meet coordinate - be co-ordinated; "These activities coordinate well" the current year's presentation. 2. REVENUE AND EXPENSE RECOGNITION Revenue from loans and investments, less a provision for uncollectible Adj. 1. uncollectible - not capable of being collected; "a bad (or uncollectible) debt" bad invalid - having no cogency or legal force; "invalid reasoning"; "an invalid driver's license" interest, fees, commissions or other amounts is recorded on the accrual basis A method of accounting that reflects expenses incurred and income earned for Income Tax purposes for any one year. Taxpayers who use the accrual method must include in their taxable income any money that they have the right to receive as payment for services, once it . In cases where management doubts the future collectibility, no further interest income is recorded. Provisions are established in instances where, in the opinion of management, there is reasonable doubt concerning the repayment of principal and interest. Where necessary, provisions against assets are made on a specific or general basis in light of known or probable PROBABLE. That which has the appearance of truth; that which appears to be founded in reason. credit or market risk. Gains on the exchange of assets Exchange of assets Acquisition of another company by purchase of its assets in exchange for cash or stock. are deferred until realized by sale. Gains resulting from the exercise of options and other participation rights are recognized only when the securities acquired are sold. Commissions from property brokerage BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. are recognized at the time a firm offer is negotiated. Revenues from the sale of electricity are recorded based upon output delivered and capacity provided at rates as specified spec·i·fy tr.v. spec·i·fied, spec·i·fy·ing, spec·i·fies 1. To state explicitly or in detail: specified the amount needed. 2. To include in a specification. 3. under contract terms or prevailing market rates. Electricity sales revenue is recognized when power is provided. Revenue and income on development properties are recognized on a percentage of completion basis. Group revenues and operating cash flows Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. include all revenue and cash flow of the company, its subsidiaries and its equity accounted investees. 3. CHANGE IN ACCOUNTING POLICIES In the first quarter of 2001, the company adopted the new accounting standard issued by the Canadian Institute of Chartered Accountants The Canadian Institute of Chartered Accountants (CICA) is the umbrella body for the Chartered Accountant profession in Canada and Bermuda. Membership of the CICA totals 70,000 Chartered Accountants and 8,500 students. on Earnings Per Share. The new section harmonizes Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. standards with the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. standards for the calculation of diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of . All earnings per share numbers have been retroactively ret·ro·ac·tive adj. Influencing or applying to a period prior to enactment: a retroactive pay increase. [French rétroactif, from Latin restated and the changes are not significant.
4. SHAREHOLDERS' EQUITY
September 30 December 31
MILLIONS 2001 2000
==============================================================
Convertible notes $99 $99
Class A Preference shares 982 732
Class A Class B common shares 4,208 4,082
--------------------------------------------------------------
$5,289 $4,913
--------------------------------------------------------------
5. COMMON SHARES OUTSTANDING
September 30 December 31
2001 2000
==============================================================
Class A and Class B common
shares issued 170,421,272 169,375,803
Unexercised options 3,480,917 3,012,707
Reserved for conversion of
subordinated notes 3,106,847 3,116,782
--------------------------------------------------------------
Total fully diluted Class
A and Class B common shares 177,009,036 175,505,292
--------------------------------------------------------------
Exercisable options 2,001,387 1,965,037
--------------------------------------------------------------
6. INCOME AND GAIN ON SALE OF DISCONTINUED OPERATIONS Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. In March 2000, the company sold its investment in Canadian Hunter Hun·ter , John 1728-1793. British surgeon who founded pathological anatomy in England. hunter a horse used for hunting. Exploration Inc. for gross proceeds of $619 million. After providing for taxes and other costs in connection with the sale, the company realized a net gain of $250 million. Brascan's share of Canadian Hunter's income in 2000 prior to its sale was $10 million. 7. SEGMENTED INCOME STATEMENT The company's business segments are based on the industry sectors which the company uses to manage its businesses and assess their operating performance.
Three months ended Nine months ended
September 30 September 30
MILLIONS, EXCEPT PER
SHARE AMOUNTS 2001 2000 2001 2000
==============================================================
Operating income
Property operations $37 $25 $129 $81
Energy operations 27 16 74 56
Financial and other
operations 44 41 134 112
Investment and
other income 26 38 63 87
------------------------------------
134 120 400 336
Natural resource
operations (22) 36 (4) 123
------------------------------------
112 156 396 459
------------------------------------
Unallocated expenses
Interest expense 23 27 73 80
Minority interests 16 17 48 50
Operating and
other costs 3 6 9 32
------------------------------------
42 50 130 162
------------------------------------
Income from continuing
operations 70 106 266 297
Income and gain on sale
of discontinued
operations - - - 260
--------------------------------------------------------------
Net income $70 $106 $266 $557
--------------------------------------------------------------
Per diluted Class A
and Class B common share
Income from continuing
operations $0.35 $0.55 $1.35 $1.51
Net income $0.35 $0.55 $1.35 $2.96
--------------------------------------------------------------
8. SEGMENTED BALANCE SHEET ANALYSIS
Brascan's segmented balance sheets, showing the equity investment
in each business segment as at September 30, 2001 and December 31,
2000, were as follows:
September 30 December 31
MILLIONS 2001 2000
==============================================================
Operating assets
Property operations $1,441 $1,332
Energy operations 836 692
Financial and other operations 1,803 1,775
Natural resource operations 2,177 2,209
Financial and other assets 1,152 1,137
--------------------------------------------------------------
$7,409 $7,145
--------------------------------------------------------------
Liabilities
Corporate borrowings $1,249 $1,360
Accounts payable and deferred credits 265 266
Capital base and other
shareholders'interests
Minority interests 606 606
Shareholders' equity 5,289 4,913
--------------------
5,895 5,519
--------------------------------------------------------------
$7,409 $7,145
--------------------------------------------------------------
9. CASH FLOW FROM OPERATIONS
Three months ended Nine months ended
September 30 September 30
MILLIONS 2001 2000 2001 2000
==============================================================
Income from continuing
operations $70 $106 $266 $297
Add (deduct)
non-cash items:
Depreciation and
amortization 10 10 30 27
Minority interests 31 40 102 120
Equity income in excess
of dividends received 24 (45) (19) (129)
Other (16) (8) (21) 21
--------------------------------------------------------------
Cash flow from
operations $119 $103 $358 $336
--------------------------------------------------------------
10. NET ASSET VALUE
The composition of the company's net asset value by business
sector and the principal affiliates operating in each sector at
September 30, 2001 and December 31, 2000 are set out in the following
table:
Number of September 30 December 31
Common 2001 2000
Shares And
MILLION, EXCEPT Equivalents
PER SHARE AMOUNTS Affiliate
===============================================================
Operating assets
Property
operations Brookfield 78.1 $2,270 $2,062
Energy
operations Great Lakes 121.1 1,709 1,534
Financial and
other operations Trilon 106.1 1,440 1,247
Brascan Brazil 56.0 580 640
Natural resource
operations Noranda 94.1 1,364 1,407
Nexfor 53.9 375 337
Financial and
other assets 1,152 1,137
--------------------------------------------------------------
$8,890 $8,364
--------------------------------------------------------------
Liabilities
Corporate borrowings $1,249 $1,360
Accounts payable and deferred credits 158 142
Capital base and other
shareholders'interests
Minority interests 606 606
Preference shares 982 732
Class A and Class B common shares and
convertible notes 5,895 5,524
--------------------------------------------------------------
$8,890 $8,364
--------------------------------------------------------------
Per fully diluted Class A and Class B
common share $33.98 $32.02
--------------------------------------------------------------
Net asset values are derived de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. by valuing the company's publicly traded affiliates at their quoted market values at the end of the reporting period, and by valuing Brascan Brazil Brazil (brəzĭl`), Port. Brasil, officially Federative Republic of Brazil, republic (2005 est. pop. 186,113,000), 3,286,470 sq mi (8,511,965 sq km), E South America. at a 25% discount from the estimated domestic market value. The net asset value of Great Lakes Great Lakes, group of five freshwater lakes, central North America, creating a natural border between the United States and Canada and forming the largest body of freshwater in the world, with a combined surface area of c.95,000 sq mi (246,050 sq km). is after eliminating $744 million of affiliate Affiliate Relationship between two companies when one company owns substantial interest, but less than a majority of the voting stock of another company, or when two companies are both subsidiaries of a third company. See: Subsidiaries, parent company. preference shares and is based on the market price of the company's shares immediately prior to Brascan's acquisition of the minority shareholdings. These net asset values do not reflect underlying values or control premiums attributable to these businesses, nor the transaction costs Transaction Costs Costs incurred when buying or selling securities. These include brokers' commissions and spreads (the difference between the price the dealer paid for a security and the price they can sell it). or taxes that may result from their sale. Restructuring and tax provisions are excluded in determining the underlying values, as these largely relate to accounting adjustments and tax timing differences. Currency and other general financial provisions of $100 million have, however, been deducted de·duct v. de·duct·ed, de·duct·ing, de·ducts v.tr. 1. To take away (a quantity) from another; subtract. 2. To derive by deduction; deduce. v.intr. . Values used for the company's financial and other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. and loans and accounts payable are included at their recorded book values. For more information, please visit our web site at www.brascancorp.com or contact the following individuals: |
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