EX-99.1 3 y55158ex99-1.txt PRESS RELEASE DATED NOVEMBER 8, 2001 EXHIBIT 99.1 BRASCAN NEWS RELEASE STOCK SYMBOL: BNN TSE/NYSE BRASCAN ANNOUNCES THIRD QUARTER EARNINGS OF $70 MILLION STRONG PERFORMANCE FROM THREE OF FOUR BUSINESS SECTORS TORONTO, NOVEMBER 8, 2001 - Brascan Corporation today announced income from continuing operations for the nine months ended September 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 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 Harding, Chairman of Brascan, commented that "THE BENEFITS OF OUR DIVERSIFIED 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 re-leasing 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 made exceptional progress in returning tenants to their office premises in downtown New York. One Liberty Plaza opened for occupancy on October 24, 2001, 36 days ahead of plan, and Merrill Lynch 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 were partly offset by lower precipitation levels in northern Ontario and western Quebec. 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 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 and zinc 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. 2 Brascan Corporation With the mining industry being challenged by the recent severe drop in base metal prices, Noranda has intensified its efforts to achieve productivity improvements and reduce costs. In October, steps were taken to reduce administrative and development costs by approximately $60 million annually. Progress also continues to be made in implementing Six Sigma and other productivity enhancement programs, with over 1,000 people now trained in this highly disciplined approach to management. Cash flow from operations 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. Third Quarter 2001 Press Release 3 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 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 for general corporate purposes, including increasing its interests in its principal business units. These shares commenced trading on The Toronto Stock Exchange on September 17, 2001 under the symbol BNN.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 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 4 Brascan Corporation years commencing November 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 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 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 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 OUR EXISTING OPERATIONS IN ACCORDANCE 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. The Company's goal is to build long-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 under the symbol BNN. For more information, please visit our web site at www.brascancorp.com or contact the following individuals:
MEDIA: INVESTOR AND FINANCIAL ANALYSTS: Robert J. Harding Richard Legault Katherine C. Vyse Chairman Senior Vice-President and Vice-President 416-363-9491 Chief Financial Officer Investor Relations 416-956-5183 416-369-8246
-------------------------------------------------------------------------------- A conference call has been arranged for investors and analysts to discuss Brascan's third quarter results with senior management on Thursday, November 8 at 2:00 p.m. (ENT). The call can be accessed by dialing 416-641-6693 (local and overseas) or 1-800-937-4595 (toll free in North America) at approximately 1:50 p.m. A taped rebroadcast of the teleconference will be available until December 6, 2001 by calling 416-626-4100 and entering reservation 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 -------------------------------------------------------------------------------- Third Quarter 2001 Press Release 5 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" 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 achievements expressed or implied 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 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. 6 Brascan Corporation CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
Three months ended September 30 Nine months ended 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 AND 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 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 ====== ====== ====== ======
CONSOLIDATED STATEMENT OF RETAINED EARNINGS (UNAUDITED)
Three months ended September 30 Nine months ended 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 ====== ====== ====== ======
Third Quarter 2001 Press Release 7 CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Three months ended September 30 Nine months ended 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 ======= ======= ======= =======
8 Brascan Corporation 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 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 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 in Canada. The results reported in these consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. Certain prior year amounts have been restated or reclassified to conform to the current year's presentation. 2. REVENUE AND EXPENSE RECOGNITION Revenue from loans and investments, less a provision for uncollectible interest, fees, commissions or other amounts is recorded on the accrual basis. 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 credit or market risk. Gains on the exchange of assets 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 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 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 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 on Earnings Per Share. The new section harmonizes Canadian standards with the United States standards for the calculation of diluted earnings per share. All earnings per share numbers have been retroactively 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 and Class B common shares 4,208 4,082 ------------ ----------- $ 5,289 $ 4,913 ============ ===========
Third Quarter 2001 Press Release 9 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 In March 2000, the company sold its investment in Canadian Hunter 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 September 30 Nine months ended 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 ---------- ------- ------- ------
10 Brascan Corporation 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 September 30 Nine months ended 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 ======== ===== ===== =====
Third Quarter 2001 Press Release 11 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 Common Shares SEPTEMBER 30 December 31 MILLIONS, EXCEPT PER SHARE AMOUNTS Affiliate and Equivalents 2001 2000 ------------------------------------ ----------- ----------------------- ------------ ----------- 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 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 at a 25% discount from the estimated domestic market value. The net asset value of Great Lakes is after eliminating $744 million of affiliate 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 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. Values used for the company's financial and other assets and loans and accounts payable are included at their recorded book values. 12 Brascan Corporation