Attached files
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| 8-K - 8-K - BROOKFIELD HOMES CORP | t68632e8vk.htm |
Exhibit 99.1
Filed by Brookfield Homes Corporation
Pursuant to Rule 425 under the Securities Act of 1933
And deemed filed pursuant to Rule 14a-12 under the Securities Exchange Act of 1934
Subject Company: Brookfield Homes Corporation
Commission File No.: 001-31524
Pursuant to Rule 425 under the Securities Act of 1933
And deemed filed pursuant to Rule 14a-12 under the Securities Exchange Act of 1934
Subject Company: Brookfield Homes Corporation
Commission File No.: 001-31524
|
NEWS RELEASE |
BROOKFIELD HOMES REPORTS 2010 YEAR END RESULTS
Investors, analysts and other interested parties can access Brookfield Homes Corporation’s
Supplemental Information Package on the company’s website under the Investor Relations/Financial
Reports section at www.brookfieldhomes.com.
Fairfax, Virginia, February 16, 2011 — (BHS: NYSE) Brookfield Homes Corporation (“Brookfield
Homes”) today announced net new orders and financial results for the quarter and year ended
December 31, 2010:
| Three Months Ended Dec. 31 | Years Ended Dec. 31 | |||||||||||||||
| Unit Activity | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Home closings
|
186 | 268 | 575 | 703 | ||||||||||||
Net new home orders
|
101 | 129 | 473 | 756 | ||||||||||||
Active selling communities (end of period)
|
19 | 25 | 19 | 25 | ||||||||||||
Backlog of homes (units at end of period)
|
85 | 187 | 85 | 187 | ||||||||||||
Average home selling price
|
$ | 499,000 | $ | 505,000 | $ | 511,000 | $ | 488,000 | ||||||||
Lot sales to homebuilders
|
155 | 235 | 370 | 469 | ||||||||||||
| * | Unit information includes unconsolidated entities |
| • | The overall average selling price remained stable for the fourth quarter ended December 31, 2010, compared to the same period in 2009, while home closings decreased by 31% over the same period. In addition, the overall cancellation rate was 21% for the year ended December 31, 2010, compared to 19% in 2009. |
| • | Net new orders for the fourth quarter ended December 31, 2010 were 101 units from 19 selling communities, compared to 129 units from 25 selling communities for the same quarter in 2009. |
| Results of Operations | Three Months Ended Dec. 31 | Years Ended Dec. 31 | ||||||||||||||
| (Millions, except per share amounts) | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Housing revenue
|
$ | 92 | $ | 134 | $ | 292 | $ | 340 | ||||||||
Total revenue
|
123 | 145 | 339 | 376 | ||||||||||||
Impairments and write-offs
|
— | 6 | — | 37 | ||||||||||||
Gross margin
|
18 | (12 | ) | 55 | (2 | ) | ||||||||||
Net income/(loss) attributable to Brookfield Homes Corporation
|
5 | (17 | ) | 4 | (28 | ) | ||||||||||
Loss per common share — diluted*
|
$ | — | $ | (0.81 | ) | $ | (0.54 | ) | $ | (1.54 | ) | |||||
| * | Diluted loss per share is after preferred dividends |
2
| • | Revenue for the year ended December 31, 2010 totaled $339 million, compared to $376 million for the year ended December 31, 2009. The decrease in revenue is a result of fewer homes closed in 2010. Land sales to other homebuilders contributed $47 million to revenues in 2010. |
| • | The company did not record any impairments for the year ended December 31, 2010, compared to $37 million during the year ended December 31, 2009. The 2009 impairments related to housing and land inventory and write-offs of option deposits, and impairments on investments in unconsolidated entities. |
| • | Net income attributable to Brookfield Homes Corporation for the year ended December 31, 2010 was $4 million or a diluted loss of $0.54 per share after preferred share dividends, compared to a net loss of $28 million or a diluted loss of $1.54 per share for the year ended December 31, 2009. |
| • | Cash flow from operating activities was $89 million for the year ended December 31, 2010, compared to $137 million for the year ended December 31, 2009. A portion of this cash flow was utilized to reduce the company’s debt, and as a result debt to total capitalization at December 31, 2010 was 39%, an improvement from 42% at December 31, 2009, and 71% at December 31, 2008. |
Operating Highlights and Recent Developments
| • | The company has exceeded its goal to entitle a total of 1,500 lots during the two year period ended December 31, 2010 —1,061 lots were entitled in 2009, and 671 lots were entitled during 2010. |
| • | Brookfield Homes currently sells from 19 active communities compared to 25 at December 31, 2009. |
| • | At December 31, 2010, the company owned or controlled 26,817 lots, an increase of 2,572 lots from December 31, 2009. |
| • | A summary of lots owned or controlled under option, by region, follows: |
| Housing & Land | Unconsolidated Entities | Total Lots | Total Lots | |||||||||||||||||||||
| (Lots) | Owned* | Options | Owned | Options | 12/31/2010 | 12/31/2009 | ||||||||||||||||||
Northern California |
3,273 | 4,950 | — | — | 8,223 | 6,951 | ||||||||||||||||||
Southland/Los Angeles |
880 | 320 | 775 | 2,759 | 4,734 | 3,262 | ||||||||||||||||||
San Diego/Riverside |
8,709 | — | 52 | — | 8,761 | 8,853 | ||||||||||||||||||
Washington D.C. Area |
2,497 | 1,165 | 1,184 | — | 4,846 | 4,916 | ||||||||||||||||||
Corporate and Other |
196 | — | 57 | — | 253 | 263 | ||||||||||||||||||
Total December 31, 2010 |
15,555 | 6,435 | 2,068 | 2,759 | 26,817 | |||||||||||||||||||
Entitled Lots |
11,308 | 1,165 | 2,014 | 1,395 | 15,882 | 14,454 | ||||||||||||||||||
Unentitled Lots |
4,247 | 5,270 | 54 | 1,364 | 10,935 | 9,791 | ||||||||||||||||||
| 15,555 | 6,435 | 2,068 | 2,759 | 26,817 | 24,245 | |||||||||||||||||||
Total December 31, 2009 |
14,233 | 6,279 | 1,746 | 1,987 | 24,245 | |||||||||||||||||||
| * | Includes consolidated options |
Outlook
The outlook for the California and Washington, DC area markets in 2011, while cautiously optimistic
heading into the traditional spring selling season, is tempered by the impact of continued economic
weakness, high unemployment and foreclosures. The company anticipates that the majority of
foreclosures or distress inventories in our market areas will be absorbed by the end of 2011, which
in turn will result in higher demand for new homes. In addition, there is a very limited supply of
finished lots, and Brookfield is strategically well positioned to benefit from increased demand.
3
Combination with BPO Residential
On October 5, 2010, Brookfield Properties Corporation (“Brookfield Office Properties”) and
Brookfield Homes announced that they had entered into a definitive agreement to combine Brookfield
Homes and the North American residential land and housing division of Brookfield Office Properties
(“BPO Residential”) into Brookfield Residential Properties Inc. (“Brookfield Residential”).
Completion of the transaction is subject to regulatory approval in the United States and Canada,
the approval of the holders of a majority of the outstanding Brookfield Homes’ common stock and
other customary closing conditions. Brookfield Homes’ stockholders of record on February 21, 2011
will be entitled to vote at the Brookfield Homes’ stockholders meeting scheduled for March 25,
2011. Brookfield Asset Management Inc. beneficially owns, through Brookfield Residential,
sufficient shares to approve the transaction and has agreed to vote in favor of the transaction at
the Brookfield Homes’ stockholders meeting.
Brookfield Residential has filed a registration statement on Form F-4 with the U.S. Securities and
Exchange Commission (“SEC”), which was most recently amended on February 10, 2011 and which
includes a proxy statement/prospectus and other relevant documents concerning the proposed
transaction. Shareholders of Brookfield Homes are urged to read the proxy statement/prospectus and
any amendments thereto, and any other relevant documents filed with the SEC because they will
contain important information relating to Brookfield Homes, BPO Residential and the proposed
transaction. The document can be obtained free of charge at the website maintained by the SEC at
www.sec.gov. In addition, you may obtain documents filed with the SEC by Brookfield Homes,
including periodic reports and current reports, free of charge by requesting them in writing from
Brookfield Homes, 8500 Executive Park Avenue, Suite 300, Fairfax, Virginia 22031, Attention: Linda
Northwood, or by telephone at (858) 481-2567; e-mail: investorrelations@brookfieldhomes.com.
The respective directors and executive officers of Brookfield Homes, Brookfield Office Properties
and Brookfield Residential and other persons may be deemed to be participants in the solicitation
of proxies in connection with the proposed transaction. Information regarding Brookfield Homes’
directors and executive officers is available in its proxy statement filed with the SEC on February
26, 2010. Other information regarding the participants in the proxy solicitation and a description
of their direct and indirect interests, by security holdings or otherwise, are included in the
proxy statement/prospectus and other relevant materials filed with the SEC in connection with the
transaction.
* * * * * * * * * * * * *
Brookfield Homes Corporation
Brookfield Homes Corporation is a land developer and homebuilder. We entitle and develop land for
our own communities and sell lots to third parties. We also design, construct and market
single-family and multi-family homes primarily to move-up homebuyers. Our portfolio includes over
26,000 lots owned and controlled in the California and Washington D.C. Area markets.
Contact Information:
Linda Northwood
Director, Investor Relations
Tel: 858-481-2567
Email: lnorthwood@brookfieldhomes.com
Director, Investor Relations
Tel: 858-481-2567
Email: lnorthwood@brookfieldhomes.com
* * * * * * * * * * * * *
4
This news release shall not constitute an offer to sell or the solicitation of an offer to buy
any securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.
The securities referenced herein have not been registered under the United States Securities Act of
1933, as amended, or any state securities laws, and may not be offered or sold within the United
States absent registration or an applicable exemption from the registration requirements of such
Act or laws.
Note: Certain statements in this press release that are not historical facts, including, without
limitation, information concerning the potential combination with BPO Residential, and the benefits
thereof, information concerning possible or assumed future results of operations of the company,
the company’s 2011 outlook, and those statements preceded by, followed by, or that include the
words “believe,” “planned,” “anticipate,” “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. There can be no assurance
that the proposed transaction will be consummated or that the anticipated benefits will be
realized. The proposed transaction is subject to various regulatory approvals and the fulfillment
of certain conditions, and there can be no assurance that such approvals will be obtained and/or
such conditions will be met. Factors that could cause actual results to differ materially from
those set forward in the forward-looking statements include, but are not limited to: failure to
obtain required regulatory and shareholder approvals; failure to realize anticipated benefits of
the merger; 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.
5
Brookfield Homes Corporation
Consolidated Statements of Operations
Consolidated Statements of Operations
| Three Months Ended | Years Ended | |||||||||||||||
| December 31 | December 31 | |||||||||||||||
| (thousands, except per share amounts) (unaudited) | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Revenue |
||||||||||||||||
Housing |
$ | 92,346 | $ | 133,811 | $ | 292,095 | $ | 339,625 | ||||||||
Land |
30,591 | 11,346 | 46,771 | 36,355 | ||||||||||||
Total revenue |
122,937 | 145,157 | 338,866 | 375,980 | ||||||||||||
Direct cost of sales |
||||||||||||||||
Housing |
(77,284 | ) | (111,836 | ) | (243,301 | ) | (294,493 | ) | ||||||||
Land |
(28,032 | ) | (38,507 | ) | (40,686 | ) | (59,308 | ) | ||||||||
Impairment of housing and land inventory and
write-off of option deposits |
— | (6,225 | ) | — | (23,963 | ) | ||||||||||
| 17,621 | (11,411 | ) | 54,879 | (1,784 | ) | |||||||||||
Selling, general and administrative expense |
(16,893 | ) | (15,561 | ) | (55,585 | ) | (52,339 | ) | ||||||||
Equity / (loss) in earnings from unconsolidated entities |
93 | (262 | ) | (192 | ) | 1,331 | ||||||||||
Impairment of investments in unconsolidated entities |
— | (109 | ) | — | (12,995 | ) | ||||||||||
Other income |
7,286 | 3,276 | 8,055 | 13,191 | ||||||||||||
Income / (loss) before income taxes |
8,107 | (24,067 | ) | 7,157 | (52,596 | ) | ||||||||||
Income tax (expense) / recovery |
(3,450 | ) | 7,761 | (3,706 | ) | 20,134 | ||||||||||
Net income / (loss) |
$ | 4,657 | $ | (16,306 | ) | $ | 3,451 | $ | (32,462 | ) | ||||||
Net (loss) / income attributable to non-controlling
interest & other interests in consolidated subsidiaries |
(198 | ) | 371 | (976 | ) | (4,753 | ) | |||||||||
Net income / (loss) attributable to Brookfield Homes
Corporation |
$ | 4,855 | $ | (16,677 | ) | $ | 4,427 | $ | (27,709 | ) | ||||||
Loss per common share |
||||||||||||||||
Basic and diluted |
$ | — | $ | (0.81 | ) | $ | (0.54 | ) | $ | (1.54 | ) | |||||
Weighted average common shares outstanding |
||||||||||||||||
Basic and diluted |
29,665 | 27,039 | 29,087 | 26,838 | ||||||||||||
6
Brookfield Homes Corporation
Condensed Consolidated Balance Sheets
Condensed Consolidated Balance Sheets
| As at | ||||||||
| December 31, | December 31, | |||||||
| (thousands, except per share amounts) (unaudited) | 2010 | 2009 | ||||||
Assets |
||||||||
Housing and land inventory
|
$ | 801,409 | $ | 835,263 | ||||
Investments in unconsolidated entities
|
124,369 | 92,477 | ||||||
Receivables and other assets
|
24,826 | 61,744 | ||||||
Restricted cash
|
7,366 | 7,485 | ||||||
Deferred income taxes
|
32,631 | 40,112 | ||||||
| $ | 990,601 | $ | 1,037,081 | |||||
Liabilities and Equity |
||||||||
Project specific and other financings
|
$ | 331,794 | $ | 381,567 | ||||
Accounts payable and other liabilities
|
135,264 | 122,190 | ||||||
Total liabilities
|
467,058 | 503,757 | ||||||
Other interests in consolidated subsidiaries
|
42,461 | 47,011 | ||||||
Total equity
|
481,082 | 486,313 | ||||||
| $ | 990,601 | $ | 1,037,081 | |||||
Debt to equity capitalization
|
39% | 42% | ||||||
Book value per share, as converted and diluted
|
$ | 7.36 | $ | 7.58 | ||||
7
Brookfield Homes Corporation
Consolidated Statements of Cash Flows
Consolidated Statements of Cash Flows
| Three Months Ended | Years Ended | |||||||||||||||
| December 31 | December 31 | |||||||||||||||
| (thousands) (unaudited) | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Cash flows from / (used in) operating activities |
||||||||||||||||
Net income / (loss)
|
$ | 4,657 | $ | (16,306 | ) | $ | 3,451 | $ | (32,462 | ) | ||||||
Adjustments to reconcile net income / (loss) to net cash
from operating activities: |
||||||||||||||||
(Undistributed) / distributed income from unconsolidated entities
|
(102 | ) | 271 | 204 | (1,091 | ) | ||||||||||
Deferred income taxes
|
6,444 | 28,882 | 7,481 | 19,326 | ||||||||||||
Impairment of housing and land inventory and
write-off of option deposits
|
— | 6,225 | — | 23,963 | ||||||||||||
Impairment of investments in unconsolidated entities
|
— | 109 | — | 12,995 | ||||||||||||
Stock option compensation costs
|
363 | 207 | 1,105 | 675 | ||||||||||||
Other changes in operating assets and liabilities: |
||||||||||||||||
(Increase) / decrease in receivables and other assets
|
(5,812 | ) | (31,330 | ) | 36,918 | 27,439 | ||||||||||
Decrease in housing and land inventory
|
52,603 | 73,381 | 31,915 | 90,648 | ||||||||||||
(Decrease) / increase in accounts payable and other liabilities
|
(3,506 | ) | 7,181 | 7,473 | (4,303 | ) | ||||||||||
Net cash provided by operating activities
|
54,647 | 68,620 | 88,547 | 137,190 | ||||||||||||
Cash flows from / (used in) investing activities |
||||||||||||||||
Net investments in unconsolidated entities
|
4,992 | 1,985 | (35,421 | ) | (1,863 | ) | ||||||||||
Restricted cash
|
(15 | ) | (2 | ) | 119 | (7,485 | ) | |||||||||
Net cash provided by / (used in) investing activities
|
4,977 | 1,983 | (35,302 | ) | (9,348 | ) | ||||||||||
Cash flows from / (used in) financing activities |
||||||||||||||||
Net repayments under project specific and other financings
|
(60,266 | ) | (71,737 | ) | (49,773 | ) | (376,233 | ) | ||||||||
Net contributions / (distributions) from non-controlling interest
|
715 | 1,134 | (3,492 | ) | 2,137 | |||||||||||
Preferred stock issuance, net of issuance costs
|
— | — | — | 249,688 | ||||||||||||
Preferred stock dividends paid in cash
|
(73 | ) | — | (73 | ) | (3,500 | ) | |||||||||
Exercise of stock options
|
— | — | 93 | 66 | ||||||||||||
Net cash used in financing activities
|
(59,624 | ) | (70,603 | ) | (53,245 | ) | (127,842 | ) | ||||||||
Decrease in cash and cash equivalents
|
— | — | — | — | ||||||||||||
Cash and cash equivalents at beginning of period
|
— | — | — | — | ||||||||||||
Cash and cash equivalents at end of period
|
$ | — | $ | — | $ | — | $ | — | ||||||||
Supplemental cash flow information |
||||||||||||||||
Interest paid
|
$ | 8,117 | $ | 8,777 | $ | 31,042 | $ | 36,484 | ||||||||
Income taxes recovered
|
$ | — | $ | 2,263 | $ | 42,766 | $ | 63,286 | ||||||||