Brascan Reports 25% Increase In First Quarter Cash Flow From Operations To $0.99 Per Share.Business Editors TORONTO--(BUSINESS WIRE)--April 25, 2002 Brascan Corporation (TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). : 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) .A, NYSE NYSE See: New York Stock Exchange : BNN)
-- Investors, analysts and other interested parties can access
Brascan's Supplementary Information Package and Corporate Profile,
which form the basis of this release, on Brascan's website under
Investor Information/Financial Reports at www.brascancorp.com.
Brascan's Annual General Meeting and Q1 conference call can be
accessed via webcast on April 26, 2002 at 10:30 a.m. EST and 2:00 p.m.,
respectively, at www.brascancorp.com or via teleconference at
1-888-793-1722 or replay at 416-626-4100 with reservation number
20507414. --
Brascan Corporation (TSE: BNN.A, NYSE: BNN) today reported a 25% increase in 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 per share to $0.99 in the first quarter, up from $0.79 per share during the same period in 2001. Total cash flow from operations increased to a record $182 million, compared with $151 million in 2001. ----------------------------------------------------------------- For the First Quarter Ended March 31 Cdn$ millions, except per share information 2002 2001 2000 ----------------------------------------------------------------- Cash flow from operations $ 182 $ 151 $ 96 Cash flow from operations per share $0.99 $0.79 $0.48 Net income from continuing operations $ 102 $ 89 $ 87 Net income per share $0.51 $0.44 $0.43 ----------------------------------------------------------------- Bruce Flatt, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Brascan, stated: "Our strong performance in the first quarter of 2002 reflects our efforts to create value by building sustainable cash flows. During the first quarter, we improved our operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: and reduced our average cost of capital. We also furthered our strategy of transforming Brascan into a focused operating company operating company A business that engages in transactions with outsiders. with an offer to acquire the publicly held common shares of Trilon Financial Corporation." Net income for the quarter was $0.51 per share compared with $0.44 per share last year. Total net income was $102 million compared with $89 million in 2001. Income prior to non-cash adjustments related to the company's natural resource investments increased 24% to $103 million or $0.51 per share, consistent with the growth in cash flow from operations. STRATEGIC INITIATIVES During the first quarter of 2002, we undertook a number of significant initiatives to further the company's growth strategy, strengthen our competitive position and increase cash flows in order to enhance shareholder value. These include: An agreement to acquire four hydroelectric power hydroelectric power: see power, electric; water power. hydroelectric power Electricity produced from generators driven by water turbines that convert the energy in falling or fast-flowing water to mechanical energy. generating plants, storage reservoirs and related infrastructure from Ontario Power Generation Ontario Power Generation (OPG) is a public company whose shares are wholly owned by the Government of Ontario. It is responsible for approximately 70% of the electricity generation in the province of Ontario, Canada [1]. Inc. for $340 million. The four power generating stations are located on the Mississagi River The Mississagi River is a river in central Ontario, Canada, which originates in Mississagi Lake and flows 270 km to empty into Lake Huron at Blind River, Ontario. The river's delta is a "bird's foot" delta, a type not commonly found on the Great Lakes. 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 , which permits them to be operated in conjunction with the company's 12 other power stations in the adjacent area. The water storage dams help to maximize the peaking operation of these power stations. This transaction, which adds 488 megawatts ("MW") of generating capacity, is expected to close during May 2002. Acquiring six hydroelectric power generating plants in northern Maine. These plants located on the Penobscot River Penobscot River River, central Maine, U.S. The Penobscot, which flows south into Penobscot Bay, is the state's longest river—about 350 mi (560 km). It is navigable for 60 mi (97 km) to Bangor. , were acquired for US$156.5 million in February 2002. They have a capacity of 126 MW and produce approximately 730 gigawatt gig·a·watt n. Abbr. GW One billion (109) watts. hours ("GWh") of power annually. The system also includes an interconnection in·ter·con·nect v. in·ter·con·nect·ed, in·ter·con·nect·ing, in·ter·con·nects v.intr. To be connected with each other: The two buildings interconnect. v.tr. into the New England New England, name applied to the region comprising six states of the NE United States—Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut. The region is thought to have been so named by Capt. transmission grid and eleven water storage dams, minimizing water spillage and providing flexibility in the timing of generation. Together, these two transactions expand our total generating capacity to over 1,600 MW across our system comprised of 32 power stations, 31 of which are hydroelectric, located in Ontario, Quebec, Maine, British Columbia British Columbia, province (2001 pop. 3,907,738), 366,255 sq mi (948,600 sq km), including 6,976 sq mi (18,068 sq km) of water surface, W Canada. Geography and Louisiana. The acquisition of these high quality assets with low operating costs operating costs npl → gastos mpl operacionales , long life expectancy Life Expectancy 1. The age until which a person is expected to live. 2. The remaining number of years an individual is expected to live, based on IRS issued life expectancy tables. and important interconnections between the northeast 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. and Canada, strengthens our position as one of North America's lowest cost generators of electricity. An offer to acquire all the shares of Trilon Financial Corporation. This transaction, valued at $775 million or $17 per share for the 45.6 million shares not currently owned by Brascan, will be paid for in cash and Brascan common and preferred shares Preferred shares Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock. , subject to a maximum aggregate cash payment of $388 million and a maximum issuance of 11.4 million Brascan common shares. This offer has been endorsed by Trilon's Independent Committee and is expected to close on May 16, 2002. Completion of this initiative will further our objective of owning 100% of our principal operating businesses where feasible, in order to fully integrate the available resources and provide a stronger platform for future growth. Selling a one-half interest in the 1.1 million square foot Exchange Tower office property in downtown Toronto Downtown Toronto is the heart of the City of Toronto, Ontario, Canada. It is approximately bounded by Bloor Street (including areas slightly north of Bloor around Yonge Street) to the north, Lake Ontario to the south, Bayview Avenue - Don Valley Parkway to the east, and Bathurst for $155 million. This and other similar transactions reflect our strategy of proactively managing assets and surfacing value through partnerships with institutional investors Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. seeking stable cash flow returns. Completing the financing of our 300 Madison Avenue Madison Avenue, celebrated street of Manhattan, borough of New York City. It runs from Madison Square (23d St.) to the Madison Bridge over the Harlem River (138th St.). In the 1940s and 50s, some of the major U.S. office development project in Midtown mid·town n. A central portion of a city, between uptown and downtown. midtown Noun US & Canad the centre of a town Manhattan. The financing is comprised of two series of pass-through certificates Pass-Through Certificates (PTCs) are instruments that evidence the ownership of two or more Equipment Trust Certificates. In other words, Equipment Trust Certificates may be bundled into a pass-through structure as a means of diversifying the asset pool and/or increasing the size . The US$400 million Series I have a maturity of 30 years and a fixed rate of 7.262%. The balance of the financing, US$160 million, was committed to financing under a commercial paper conduit conduit /con·du·it/ (kon´doo-it) channel. ileal conduit the surgical anastomosis of the ureters to one end of a detached segment of ileum, the other end being used to form a stoma on the facility and will amortize amortize To write off gradually and systematically a given amount of money within a specific number of time periods. For example, an accountant amortizes the cost of a long-term asset by deducting a portion of that cost against income in each period. over the first ten years. Renaming our power generation and financial operations, Brascan Power and Brascan Financial, respectively, in order to derive increased synergies from our integrated operating platform. CAPITAL TRANSACTIONS We are committed to increasing the return on shareholder capital. To this end, we continue to 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. our common shares when they trade meaningfully below our estimate of underlying value. During the first four months of 2002, 3.7 million Class A common shares were repurchased under the company's normal course issuer bid. This follows the repurchase of 10.2 million shares in 2000 and 2001. On April 17, 2002, we received approval for an expanded normal course issuer bid, allowing the company to acquire up to a further 13.9 million Class A common shares, representing approximately 10% of the public float, during the period from April 19, 2002 to April 18, 2003. On April 19, 2002, we issued $125 million of 8.30% unsecured junior subordinated debentures subordinated debenture An unsecured bond with a claim to assets that is subordinate to all existing and future debt. Thus, in the event that the issuer encounters financial difficulties and must be liquidated, all other claims must be satisfied before due June 30, 2051 with the proceeds to be used for general corporate purposes. These preferred securities are listed on The Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. under the symbol BNN.PR.T and represent a non-participating form of long-term capital which lowers the overall cost of capital for common shareholders. OPERATING HIGHLIGHTS Our operational focus is directed at strengthening and increasing cash flows. During the first quarter of 2002 we achieved our operating targets in each of our businesses. Commercial property operations generated $317 million of operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. , compared with $292 million in the same period in 2001. Commercial property income from the same properties was 6% higher than in 2001. These results include $64 million and $38 million during 2002 and 2001, respectively, of property gains and lease termination income before allocations to other shareholders, offset by lower ongoing property income following the sale of property interests during 2001. This strong performance is a result of our proactive lease management over the last two years, which has delivered a sustainable and growing stream of cash flow with contractual rent step-ups. During the first quarter, we leased approximately 500,000 square feet of space, including 226,000 square feet of accelerated expiries despite a generally slower leasing environment. This represents approximately 40% of total lease space expiring during 2002, resulting in occupancy across the office property portfolio of 97% at the end of the quarter, with an average lease term of 10 years. In 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 , where tenants are continuing to return to their premises in lower Manhattan Lower Manhattan is the southernmost part of the island of Manhattan, the main island and center of business and government of the City of New York. Lower Manhattan is generally defined as the area delineated on the north by Chambers Street, on the west by the Hudson River (North , new office leasing is gaining momentum following the pause created by the events of September 11th, 2001. This has been aided by government incentives to tenants which renew or commit to new space in lower Manhattan. We are fortunate at this time to have lease contracts in place covering 100% of our assets in lower Manhattan. Financial operations contributed $84 million of operating cash flow. The contribution in the first quarter of 2001 was $78 million, prior to a securities gain of $20 million. These results reflect continued strength in our merchant banking activities and growth in our asset management services and capital markets activities. Asset management operations generated $9 million in cash flow this quarter, compared with $7 million in the same period in 2001. Merchant banking operations contributed $14 million in cash flow, an increase of $2 million over the same period last year. This improvement was driven by a higher level of merchant banking loans outstanding, which included over $200 million in new loans advanced or extended. Our residential brokerage services group continued to benefit from increased home sales volumes in most markets, contributing $4 million in cash flow, up from $1 million in the same period last year. Five new Royal LePage Royal LePage is a Canadian real estate franchiser and owner-operator with more than 600 locations and over 12,000 Realtors in Canada.[1] Founded in 1913 by Albert E. LePage, Royal LePage is now owned by the Royal LePage Franchise Services Fund (TSX: RSF.un). franchise locations were added during the quarter, bringing the total franchise network to 449 locations. Power generating operations produced $51 million of operating cash flow, a 65% increase from $31 million in the same period last year. Electricity generation increased by 57% to 1,630 GWh compared to 1,036 GWh during the same period in 2001. Improved precipitation precipitation, in chemistry 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 all but one of our watersheds led to higher power Higher power is a term used in a 12-step program, such as Alcoholics Anonymous, to describe "a power greater than yourself." Although many participants equate their higher power with God, a belief in God or in formal religion is not mandatory; the higher power is intended as a generation. Results for the first quarter of 2002 also include three months' contribution from Powell River Powell River may refer to:
Residential property operations contributed $29 million to our operating cash flow. The low interest rate environment continued to fuel consumer demand for new homes across 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. . Residential home deliveries currently exceed 70% of planned 2002 sales with the highest backlog ever at this point in the year. Our operations in the San Francisco Bay San Francisco Bay, 50 mi (80 km) long and from 3 to 13 mi (4.8–21 km) wide, W Calif.; entered through the Golden Gate, a strait between two peninsulas. and Southland south·land or South·land n. A region in the south of a country or an area. south  land·er n.Noun 1. areas of California were particularly strong, with sales representing 74% and 81% of plan respectively for the year. Assets under development were advanced on schedule and upon completion will contribute meaningfully to operating cash flow: -- Noranda and its 57% owned subsidiary, Falconbridge, began working more closely together to reduce costs and improve returns through business synergies. In addition, Noranda announced the permanent closure of its Gaspe copper smelter in Canada, the closure of an aluminum wheel facility in the United States and a number of new senior management appointments. Positive exploration results were achieved, particularly in the search for additional nickel reserves to support the company's operations in Sudbury, Ontario. Also during the quarter, Noranda created the Noranda Income Fund to own the CEZinc processing plant, generating total cash proceeds of $400 million. -- Nexfor solidified its position as a low-cost, North American producer of building products with the acquisition of three oriented strandboard mills from International Paper in the southern United States for US$250 million, expanding its market presence and increasing opportunities for new, value added products. This acquisition positions Nexfor as the second largest OSB producer with a strong top quartile cost profile. Natural resource investments contributed $25 million to cash flows, representing dividends received from Noranda and Nexfor, which is in line with their contribution in the first quarter of 2001. In anticipation of a turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. from record low base metal and building product prices, as well as continued industry consolidation, Noranda and Nexfor have made progress in streamlining their operations, upgrading assets and maximizing production during the first quarter of 2002: -- Noranda and its 57% owned subsidiary, Falconbridge, began working more closely together to reduce costs and improve returns through business synergies. In addition, Noranda announced the permanent closure of its Gaspe copper smelter in Canada, the closure of an aluminum wheel facility in the United States and a number of new senior management appointments. Positive exploration results were achieved, particularly in the search for additional nickel reserves to support the company's operations in Sudbury, Ontario. Also during the quarter, Noranda created the Noranda Income Fund to own the CEZinc processing plant, generating total cash proceeds of $400 million. -- Nexfor solidified its position as a low-cost, North American producer of building products with the acquisition of three oriented strandboard mills from International Paper in the southern United States for US$250 million, expanding its market presence and increasing opportunities for new, value added products. This acquisition positions Nexfor as the second largest OSB producer with a strong top quartile cost profile. ADDITIONAL INFORMATION A Supplementary Information Package with more detailed financial information is posted on Brascan's website and should be read in conjunction with this press release. The Supplementary Information Package contains management's estimates of underlying values based on cash flows on a business unit basis. DIVIDEND DECLARATION On April 25, 2002, the Board of Directors declared a quarterly common share dividend of $0.25 per share, payable May 31, 2002 to shareholders of record on May 1, 2002. Information on all the company's common and preferred share dividends can be found on Brascan's website under Stock Information. OUTLOOK "As we look out over the next few years, our priorities remain firmly focused on owning, managing and building businesses which generate sustainable and increasing cash flows. We entered 2002 in the strongest operating and financial position in the company's history providing us with the ability to pursue exciting growth opportunities. With a solid foundation in our three operating businesses - real estate, 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 power generation - as well as cost benefits and improved pricing expected in our natural resource investments, we are confident in our ability to continue to create value for shareholders by achieving our goal of 15% growth in cash flow from operations and a 20% cash return on equity", concluded Bruce Flatt. Brascan Corporation is a leading North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. company which owns, manages and builds businesses that generate sustainable cash flows. Current operations are largely in the real estate, financial and power generation sectors. Total assets exceed $22 billion and include 55 commercial properties and 31 hydroelectric generating facilities. In addition, Brascan holds investments in the resource sector. Brascan is listed on The Toronto Stock Exchange under the symbol BNN.A 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. For more information, please visit our web site at www.brascancorp.com or contact: Katherine C. Vyse Vice-President, Investor Relations and Communications Tel: 416-369-8246 e-mail: kvyse@brascancorp.com Note: This press 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, 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 achievement 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 general economic conditions, local real estate conditions, timely re-leasing of occupied square footage upon expiration EXPIRATION. Cessation; end. As, the expiration of, a lease, of a contract, or statute. 2. In general, the expiration of a contract puts an end to all the engagements of the parties, except to those which arise from the non- fulfillment of obligations created , 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 40-F filed with the Securities and Exchange Commission. The company undertakes no obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise.
CONSOLIDATED STATEMENT OF INCOME
----------------------------------------------------------------
Restated
(Note 1)
---------
Three months ended
March 31 March 31 March 31
Cdn$millions, except per
share amounts 2002 2001 2001
----------------------------------------------------------------
Total revenues $1,132 $1,038 $ 333
----------------------------
Net operating income
Commercial property operations 317 292 39
Financial operations 84 98 99
Power generating operations 51 31 31
Residential property operations 29 23 1
Other 21 23 4
----------------------------------------------------------------
502 467 174
Expenses
Interest expense 178 198 83
Minority share of income before
non-cash items 147 119 32
Other operating costs 20 23 4
----------------------------------------------------------------
Income before non-cash items 157 127 55
Depreciation and amortization 44 38 10
Taxes and other provisions 46 40 -
Minority share of non-cash items (36) (35) -
Equity accounted loss (income) 1 (5) (44)
----------------------------------------------------------------
Net income $ 102 $89 $89
================================================================
Net income per common share
Diluted $ 0.51 $ 0.44 $ 0.44
Basic $ 0.52 $ 0.44 $ 0.44
================================================================
CONSOLIDATED STATEMENT OF CASH FLOW FROM OPERATIONS
----------------------------------------------------------------
Restated
(Note 1)
--------
Three months ended
March 31 March 31 March 31
Cdn$millions, except per share
amounts 2002 2001 2001
----------------------------------------------------------------
Income before non-cash items $157 $127 $55
Dividends from Noranda Inc. 19 19 19
Dividends from Nexfor Inc. 6 5 5
----------------------------------------------------------------
Cash flow from operations $182 $151 $79
----------------------------------------------------------------
Cash flow from operations
per common share $0.99 $0.79 $0.39
================================================================
CONSOLIDATED BALANCE SHEET
---------------------------------------------------------
March 31 December 31
Cdn$millions 2002 2001
---------------------------------------------------------
Assets
Cash and cash equivalents $ 565 $ 607
Accounts receivable and other 2,218 2,202
Operating assets
Commercial properties 9,501 9,580
Financial operations 3,130 3,137
Power generating plants 1,759 1,511
Residential properties 1,210 1,110
Assets under development 1,732 1,631
Investment in Noranda Inc.
and Nexfor Inc. 2,132 2,151
---------------------------------------------------------
$22,247 $21,929
=========================================================
Liabilities
Non-recourse borrowings
Property specific mortgages $ 7,235 $ 7,160
Other debt of subsidiaries 3,236 3,161
Corporate borrowings 1,294 1,313
Accounts and other payables 1,897 1,718
Shareholders' interests
Minority interests of others
in assets 2,783 2,720
Preferred equity
Corporate 1,107 1,107
Subsidiaries 489 489
Common equity 4,206 4,261
---------------------------------------------------------
$22,247 $21,929
=========================================================
Note 1 Effective December 31, 2001, the company commenced consolidating the results of Brookfield Properties Brookfield Properties Corporation TSX: BPO NYSE: BPO is a Toronto-based North American commercial real estate company. Brookfield Asset Management owns 50% of its outstanding common shares. Corporation. As a result, the 2001 restated statement of income has been presented for comparative purposes giving effect to consolidating the results of Brookfield since January 1, 2001 at the company's ownership level in that year. The consolidation of Brookfield has no effect on net income, net income per share or retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. . |
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