SECURITIES AND EXCHANGE COMMISSION
ON FORM F-1 TO
UNDER
THE SECURITIES ACT OF 1933
Ontario, Canada (State or other jurisdiction of incorporation or organization) | 1520 (Primary Standard Industrial Classification Number) | Not applicable (I.R.S. Employer Identification Number) |
Calgary, Alberta T3E 6L1
(403) 231-8900
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Attention: Craig Laurie
3 World Financial Center
200 Vesey Street
New York, NY 10281
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Lawrence Chernin, Esq. Goodmans LLP 333 Bay Street, Suite 3400 Toronto, Ontario, Canada M5H 2S7 (416) 979-2211 | Alan Norris President and CEO Brookfield Residential Properties Inc. 4906 Richard Road, S.W. Calgary, Alberta T3E 6L1 (403) 231-8900 | Richard B. Raymer, Esq. Hodgson Russ LLP 150 King St. West, Suite 2309 P.O. Box 205 Toronto, Ontario, Canada M5H 1J9 (416) 595-5021 |
The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. |
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F-1 |
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Rights Distribution: | Brookfield Office Properties is offering 51,500,000 Brookfield Residential common shares that it received in exchange for its contribution of BPO Residential to Brookfield Residential. Brookfield Office Properties will distribute to each holder of its common shares on the record date other than Brookfield Asset Management, at no cost, one right for each Brookfield Office Properties share held by the shareholder. The number of Brookfield Residential common shares that will be purchasable on exercise of a right will be equal to a fraction, the numerator of which will be 51,500,000 and the denominator of which will be the number of Brookfield Office Properties common shares outstanding at 5:00 p.m. on the record date for the rights distribution. Brookfield Office Properties will act as an underwriter with respect to the offering of Brookfield Residential common shares under the terms of the rights. | |
Purpose of the Rights Distribution: | Brookfield Office Properties participated in the transactions in order to divest its residential and housing business and further its strategic repositioning as a global pure-play office property company. The rights distribution and sale of Brookfield Residential common shares is the final step in Brookfield Office Properties’ divestiture of BPO Residential. | |
Brookfield Office Properties has entered into an agreement with Brookfield Asset Management under which Brookfield Asset Management has agreed to purchase the number of Brookfield Residential common shares that it would have been entitled to purchase if it had received its pro rata share of rights as a shareholder under the rights distribution together with any shares not purchased under the rights distribution, in each case at the same price per share provided for under the rights, thereby providing certainty that Brookfield Office Properties will receive cash proceeds of approximately $515 million for its divestiture of BPO Residential. The distribution of rights will also give holders of Brookfield Office Properties’ common shares the opportunity to retain an ongoing stake in BPO Residential on the same terms as Brookfield Asset Management should they wish to do so. | ||
See “Details of the Offering — Purpose of the Offering.” | ||
Record Date: | [ ], 2011 (as at 5:00 p.m. (Toronto time)). | |
Expiry Date: | [ ], 2011. |
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Expiry Time: | 4:00 p.m. (Toronto time) on the expiry date.Rights not exercised by the expiry time will be void, of no value and will cease to be exercisable for Brookfield Residential common shares. | |
Purchase Price: | $10.00 per Brookfield Residential common share. | |
Description of Rights: | Each right will entitle a holder thereof that is resident in (i) Canada or the United States, or (ii) provided certain conditions described in this prospectus are met, a jurisdiction outside of Canada and the United States, to purchase Brookfield Residential common shares at the purchase price until the expiry time. The actual number of Brookfield Residential common shares that will be purchasable on exercise of a right will be equal to a fraction, the numerator of which will be 51,500,000 and the denominator of which will be the number of Brookfield Office Properties shares outstanding at 5:00 p.m. on the record date for the rights distribution. Rights not exercised by the expiry time will be void, of no value and will cease to be exercisable for Brookfield Residential common shares. No fractional Brookfield Residential common shares will be sold. | |
CIBC Mellon Trust Company, as the subscription agent, will hold the gross proceeds from the offering in trust for the rights holders that have submitted payment for Brookfield Residential common shares under the terms of a rights agency agreement with Brookfield Office Properties. Brookfield Office Properties will have no proprietary interest in the proceeds or any interest earned on the proceeds unless and until the offering has closed. The subscription agent may, but is not required to, invest the proceeds from its deposit department, the deposit department of an affiliate, or a deposit department of a Canadian chartered bank. If the offering is terminated for any reason, the subscription agent will return to each purchaser an amount equal to the purchase price paid plus the purchaser’s pro rata share of any interest earned on the aggregate amount of funds deposited with the subscription agent pursuant to the offering, less any applicable withholding taxes; provided that each purchaser will only receive its pro rata share of interest earned on the aggregate amount of funds deposited with the subscription agent pursuant to the offering if such amount is greater than $10.00. Upon completion of the offering, the gross proceeds held in trust, together with any interest earned on the proceeds, less any applicable withholding taxes, will be released to Brookfield Office Properties as soon as is practicable. At that time, each exercised right will be exchanged for approximately [ ] Brookfield Residential common shares without payment of additional consideration and without any further action on the part of the holder of the right. | ||
See “Details of the Offering — Issue of Rights.” | ||
Exercise of Rights: | The subscription agent will mail a rights certificate evidencing the total number of rights to which a Brookfield Office Properties common shareholder is entitled, together with a copy of this prospectus, to each registered Brookfield Office Properties shareholder with an address of record in Canada or the United States. In order to exercise the rights represented by the rights certificate, the holder of the rights must complete and deliver the rights certificate, together with the purchase price for each Brookfield Residential common share that the |
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holder wishes to purchase, to the subscription agent in accordance with the instructions set out under “General Purchase Information.” | ||
Brookfield Office Properties shareholders who hold their shares through a participant in a book-based system administered by Clearing and Depository Services, referred to as CDS, or The Depository Trust Company, referred to as DTC, will not receive physical certificates evidencing their ownership of rights but may exercise their rights by: (i) instructing the participant holding such rights to exercise all or a specified number of such rights; and (ii) forwarding to the participant the purchase price for each Brookfield Residential common share that the holder wishes to purchase under the terms of the offering. Brookfield Office Properties common shareholders who hold their shares through a participant should contact their participant to determine how to exercise these rights. See “General Purchase Information — Beneficial Shareholders.” | ||
Subject to certain statutory withdrawal and rescission rights available only to purchasers resident in Canada, purchasers may not revoke or change the exercise of rights after they send in their rights certificates, relevant purchase forms and payment. See “Purchasers’ Statutory Rights of Rescission and Withdrawal” and “Risk Factors.” | ||
Listing and Trading: | The rights will be in fully transferable form. | |
Brookfield Office Properties intends to list the rights under the symbols “BPO.RT” and “BPO RT” on the Toronto Stock Exchange and on the New York Stock Exchange, respectively. The listing of the rights on each of the Toronto Stock Exchange and the New York Stock Exchange is subject to the fulfillment of all listing requirements of the Toronto Stock Exchange and New York Stock Exchange, respectively. If the respective listing requirements are fulfilled, Brookfield Office Properties expects that the rights will be listed on the Toronto Stock Exchange and the New York Stock Exchange on [ ], 2011. The rights will cease trading at noon (Toronto time) on the expiry date, in the case of the Toronto Stock Exchange, or at the close of trading (New York City time) on the day immediately preceding the expiry date, in the case of the New York Stock Exchange, unless Brookfield Office Properties terminates or extends the distribution. | ||
See “Details of the Offering — Listing and Trading.” | ||
Ineligible Holders: | The rights and the Brookfield Residential common shares underlying the rights are not qualified or registered under the securities laws of any jurisdiction outside of Canada and the United States. Rights certificates will not be sent to Brookfield Office Properties shareholders who reside neither in Canada nor the United States. Instead, such holders will be sent a copy of this prospectus with a letter advising them that their rights certificates will be issued to and held on their behalf by the subscription agent. Except as set out below, the subscription agent will, after [ ], 2011 and prior to the expiry time, attempt to sell such rights on the open market, on a best efforts basis, and the net proceeds thereof, if any, will be forwarded to such holders as described under “Details of the Offering — Ineligible Holders.” |
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Notwithstanding the preceding paragraph, Brookfield Office Properties shareholders who reside neither in Canada nor the United States and who have satisfactorily demonstrated to Brookfield Office Properties, in its sole discretion, by [ ], 2011, that the exercise of the rights and the purchase of the Brookfield Residential common shares upon the exercise of the rights: (i) are not prohibited by applicable securities laws; and (ii) do not require Brookfield Office Properties or Brookfield Residential to file any documents, make any application, or pay any amount in any jurisdiction outside of Canada and the United States, will be entitled to direct the subscription agent to exercise their rights on their behalf. Such shareholders will be required to submit by the expiry time payment in full for each Brookfield Residential common share purchased. See “Details of the Offering — Ineligible Holders.” | ||
Brookfield Office Properties shareholders who reside neither in Canada nor the United States should be aware that the acquisition and disposition of rights and Brookfield Residential common shares may have tax consequences in jurisdictions other than Canada and the United States which are not described in this prospectus. Accordingly, such shareholders should consult their own tax advisors about the specific tax consequences of acquiring, holding and disposing of rights or Brookfield Residential common shares. | ||
Standby Commitment: | Brookfield Asset Management has agreed to purchase, at the same price per share as under the rights distribution, the 26,265,000 Brookfield Residential common shares which it would have been entitled to purchase if it had received its pro rata share of rights as a shareholder under the rights distribution, together with any shares not purchased by the other shareholders under the rights. There is no fee payable to Brookfield Asset Management or any of its affiliates for the standby commitment. See “Standby Commitment.” | |
Share Ownership: | As a result of the transactions, Brookfield Office Properties currently holds 51,500,000 Brookfield Residential common shares, or approximately 50.7% of Brookfield Residential common shares on a fully-diluted basis, and Brookfield Asset Management and its affiliates other than Brookfield Office Properties hold approximately an additional 40.6% of the Brookfield Residential common shares. Brookfield Office Properties will dispose of all of its Brookfield Residential common shares as a result of the offering and Brookfield Asset Management’s standby commitment, and it will cease to be a shareholder of Brookfield Residential. Following completion of the offering, Brookfield Asset Management and its affiliates will own between 66% and 91% of the outstanding Brookfield Residential common shares on a fully-diluted basis, depending upon how many Brookfield Residential common shares are purchased under the rights. | |
Use of Proceeds: | Brookfield Residential will not receive any proceeds from the offering. Brookfield Office Properties expects to receive cash proceeds of approximately $515 million as a result of the offering and the standby commitment. Brookfield Office Properties intends to use the net proceeds of the offering for general corporate purposes. See “Use of Proceeds.” |
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Certain Risks Related to the Rights | See “Risk Factors” for a description of risks related to the offering of Brookfield Residential common shares under the rights and for a description of risks related to the rights distribution. | |
Material Canadian Federal Income Tax Considerations: | Each holder of Brookfield Office Properties common shares who receives rights from Brookfield Office Properties pursuant to the offering will be considered to have received a taxable shareholder benefit to the extent of the fair market value of such rights. In the case of holders who are residents of Canada, the benefit will be treated as ordinary income for purposes of theIncome Tax Act(Canada). In the case of holders who are not residents of Canada, the benefit will be deemed to be a dividend and subject to Canadian withholding tax. The amount of the taxable shareholder benefit (and, in the case of Brookfield Office Properties common shareholders not resident in Canada, the amount of the dividend) will be equal to the fair market value of the rights at the time of the distribution of the rights. | |
Management of Brookfield Office Properties is of the opinion that the fair market value of the rights is nominal. However, this determination will not be binding on any holders of the rights or the Canada Revenue Agency. | ||
The above discussion of material Canadian federal income tax consequences is qualified in its entirety by the discussion below under the heading “Material Canadian Federal Income Tax Considerations.” Holders of Brookfield Office Properties common shares should consult their own advisors to determine the particular tax consequences to them arising from the receipt, expiration, exercise, and disposition of rights in light of their particular circumstances, including the application and effect of federal, provincial, foreign, and other tax laws. | ||
Material United States Federal Income Tax Consequences forU.S. Holders of Brookfield OfficeProperties Common Shares: | For a U.S. holder of Brookfield Office Properties common shares, (a) the receipt of a right will be treated as a taxable distribution; (b) the sale or other disposition of a right generally will give rise to a taxable gain or loss; (c) the exercise of a right will not be a taxable transaction; and (d) the lapse of a right without exercise may give rise to a loss for U.S. federal income tax purposes. The basis of a U.S. holder in a right will generally equal the fair market value of such right on the date of distribution. | |
Management of Brookfield Office Properties is of the opinion that the fair market value of the rights is nominal. However, this determination is not binding on any of the U.S. holders of Brookfield Office Properties common shares or the U.S. Internal Revenue Service. | ||
The above discussion of material U.S. federal income tax consequences is qualified in its entirety by the discussion below under the heading “Material United States Federal Income Tax Consequences to U.S. Holders of Brookfield Office Properties Common Shares.” U.S. holders of Brookfield Office Properties common shares should consult their own tax advisors to determine the particular tax consequences to them arising from the receipt, expiry, exercise, and disposition of rights in light of their particular circumstances, including the application and effect of federal, state, local, foreign, and other tax laws. | ||
Subscription Agent: | CIBC Mellon Trust Company. See “Details of the Offering — Subscription Agent.” |
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• | the business and results of operations of Brookfield Residential will be materially and adversely affected by weakness in general economic, real estate and other conditions; | |
• | rising mortgage rates or decreases in the availability of mortgage financing will discourage people from buying new homes; | |
• | laws and regulations related to property development and related to the environment subject Brookfield Residential to additional costs and delays which could adversely affect its business and results of operations; | |
• | if Brookfield Residential is not able to develop and market its master-planned communities successfully, its business and results of operations will be adversely affected; | |
• | difficulty in retaining qualified trades workers, or obtaining required materials and supplies, will adversely affect the business and results of operations of Brookfield Residential; | |
• | homebuilding is subject to home warranty and construction defect claims in the ordinary course of business and furthermore Brookfield Residential will sometimes face liabilities when it acts as a general contractor, and Brookfield Residential will sometimes be responsible for losses when it hires general contractors; | |
• | if Brookfield Residential is not able to raise capital on favorable terms, its business and results of operations will be adversely affected; | |
• | Brookfield Residential’s debt and leverage could adversely affect its financial condition; | |
• | Brookfield Residential’s business and results of operations will be adversely affected if poor relations with the residents of its communities negatively impacts its sales; | |
• | increased insurance risk will adversely affect Brookfield Residential’s business; | |
• | tax law changes in the United States could make home ownership more expensive or less attractive; | |
• | Residential homebuilding is a competitive industry, and competitive conditions may adversely affect Brookfield Residential’s results of operations; |
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• | the integration of Brookfield Homes and BPO Residential following the transactions may be difficult and costly, which may result in Brookfield Residential not operating as effectively as expected or in a failure to achieve the anticipated benefits of the transactions; | |
• | the transaction and integration costs that will be incurred in connection with the transactions may result in Brookfield Residential failing to achieve the anticipated benefits of the transactions; and | |
• | the trading price of Brookfield Residential’s securities could fluctuate significantly and could be adversely affected because Brookfield Asset Management and its affiliates, upon completion of the rights distribution, will beneficially own between approximately 66% and 91% of the outstanding Brookfield Residential common shares on a fully diluted basis. |
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• | costs and delays in implementing common systems and procedures; | |
• | diversion of management resources from the business of the combined company; and | |
• | retaining and integrating management and other key employees of the combined company. |
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Year Ended December 31 | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
($ millions, except per share amounts) | ||||||||||||
Pro Forma Statement of Operations Data | ||||||||||||
Total revenue | $ | 954 | $ | 754 | $ | 1,027 | ||||||
Impairment of housing and land inventory and write-offs of option deposits | — | 41 | 118 | |||||||||
Impairment of investments in unconsolidated entities | — | 13 | 38 | |||||||||
Net income to Brookfield Residential | 130 | 39 | 47 | |||||||||
Diluted earnings per share | $ | 1.27 | $ | 0.39 | $ | 0.46 |
As at | ||||
December 31, | ||||
2010 | ||||
Pro Forma Balance Sheet Data | ||||
Housing and land inventory(1) | $ | 2,331 | ||
Total assets | 2,565 | |||
Total debt(2) | 1,306 | |||
Total liabilities | 1,637 | |||
Total equity | 928 |
Year Ended December 31 | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Pro Forma Operating Data | ||||||||||||
Home closings (units) | 1,600 | 1,351 | 1,495 | |||||||||
Lots sold to homebuilders (units) | 2,312 | 1,682 | 2,422 | |||||||||
Lots controlled | 108,643 | 109,915 | 111,947 |
(1) | Housing and land inventory includes investment in unconsolidated entities. | |
(2) | Total debt at December 31, 2010 includes the addition of $481 million of transactional debt. |
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Year Ended December 31 | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
($ millions, except per share amounts) | ||||||||||||||||||||
Statement of Operations Data | ||||||||||||||||||||
Revenue(1) | $ | 339 | $ | 376 | $ | 449 | $ | 583 | $ | 872 | ||||||||||
Impairment of housing and land inventory and write-offs of option deposits | — | 24 | 115 | 88 | 10 | |||||||||||||||
Impairment of investments in unconsolidated entities | — | 13 | 38 | 15 | — | |||||||||||||||
Net income / (loss) | 3 | (33 | ) | (133 | ) | 23 | 167 | |||||||||||||
Net income / (loss) attributable to Brookfield Homes Corporation | 4 | (28 | ) | (116 | ) | 16 | 148 | |||||||||||||
Diluted (loss) / earnings per share | (0.54 | ) | (1.54 | ) | (4.33 | ) | 0.58 | 5.45 | ||||||||||||
Cash dividends per common share | — | — | 0.20 | 0.40 | 0.40 |
Year Ended December 31 | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Balance Sheet Data | ||||||||||||||||||||
Housing and land inventory(2) | $ | 926 | $ | 928 | $ | 1,055 | $ | 1,236 | $ | 1,225 | ||||||||||
Total assets | 991 | 1,037 | 1,207 | 1,351 | 1,401 | |||||||||||||||
Total debt(3) | 332 | 382 | 749 | 735 | 618 | |||||||||||||||
Total liabilities(4) | 510 | 551 | 944 | 969 | 1,030 | |||||||||||||||
Total equity(4) | 481 | 486 | 263 | 382 | 371 |
Year Ended December 31 | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Supplemental Financial Data | ||||||||||||||||||||
Cash provided by / (used in): | ||||||||||||||||||||
Operating activities | $ | 89 | $ | 137 | $ | 66 | $ | (44 | ) | $ | 26 | |||||||||
Investing activities | (36 | ) | (9 | ) | (32 | ) | (58 | ) | (47 | ) | ||||||||||
Financing activities | (53 | ) | (128 | ) | (43 | ) | 24 | (91 | ) | |||||||||||
Operating Data | ||||||||||||||||||||
Home closings (units) | 575 | 703 | 750 | 839 | 1,181 | |||||||||||||||
Lots sold to homebuilders (units) | 370 | 469 | 616 | 1,328 | 834 | |||||||||||||||
Lots controlled | 26,817 | 24,245 | 24,109 | 25,371 | 27,616 |
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(1) | To conform to the current year presentation, for years prior to 2007, revenue excludes other income. | |
(2) | Housing and land inventory includes investment in unconsolidated entities and consolidated land inventory not owned. | |
(3) | To conform to the current year presentation, for years prior to 2007, total debt excludes deferred compensation which is now shown as a component of accounts payable and other liabilities. Total debt is defined as project specific financings and revolving and other financings. | |
(4) | To conform to the current year presentation, for years prior to 2009, total liabilities exclude noncontrolling interest of unconsolidated entities which is now shown as a component of total equity. |
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Year Ended December 31 | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
(US$ millions, except per share amounts) | ||||||||||||||||||||
Statement of Operations Data | ||||||||||||||||||||
Revenue | $ | 632 | $ | 384 | $ | 588 | $ | 686 | $ | 414 | ||||||||||
Impairment of land inventory | — | 17 | 3 | — | — | |||||||||||||||
Net income attributable to Equity Holders | 128 | 67 | 162 | 151 | 70 |
Year Ended December 31 | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Balance Sheet Data | ||||||||||||||||||||
Housing and land inventory(1) | $ | 1,393 | $ | 1,379 | $ | 1,267 | $ | 1,304 | $ | 783 | ||||||||||
Total assets | 1,645 | 1,619 | 1,749 | 1,772 | 973 | |||||||||||||||
Total debt | 694 | 602 | 719 | 755 | 350 | |||||||||||||||
Total liabilities | 847 | 808 | 892 | 1,005 | 509 | |||||||||||||||
Total equity | 799 | 811 | 857 | 767 | 464 |
Year Ended December 31 | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Supplemental Financial Data | ||||||||||||||||||||
Cash provided by / (used in): | ||||||||||||||||||||
Operating activities | $ | 129 | $ | 118 | $ | 2 | $ | (96 | ) | $ | (138 | ) | ||||||||
Investing activities | (1 | ) | (5 | ) | (1 | ) | — | (10 | ) | |||||||||||
Financing activities | (132 | ) | (107 | ) | (6 | ) | 101 | 145 |
Year Ended December 31 | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Operating Data | ||||||||||||||||||||
Home closings (units) | 1,025 | 648 | 745 | 1,050 | 818 | |||||||||||||||
Lots sold (units) | 1,942 | 1,213 | 1,806 | 2,722 | 2,882 | |||||||||||||||
Lots Controlled (units)(2) | 81,826 | 85,670 | 87,838 | 85,438 | 65,504 |
(1) | Housing and land inventory includes land and housing inventory and investment in unconsolidated entity. | |
(2) | Lots controlled include multi-family, commercial, and industrial acres converted to lots based on a conversion factor of four to seven lots per acre depending on region. |
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Brookfield | ||||||||||||||||||||
Brookfield | Residential | |||||||||||||||||||
Homes | BPO | Reclassification | Pro Forma | Pro Forma | ||||||||||||||||
Corporation | Residential | Adjustments(a) | Adjustment | Combined | ||||||||||||||||
(All dollar amounts are in thousands of U.S. dollars) | ||||||||||||||||||||
ASSETS | ||||||||||||||||||||
Housing and land inventory | $ | 801,409 | $ | 1,392,538 | $ | — | $ | — | $ | 2,193,947 | ||||||||||
Investments in unconsolidated entities | 124,369 | 12,834 | — | — | 137,203 | |||||||||||||||
Receivables and other assets | 24,826 | — | 193,146 | — | 217,972 | |||||||||||||||
Receivables | — | 139,425 | (139,425 | ) | — | — | ||||||||||||||
Other assets | — | 34,721 | (34,721 | ) | — | — | ||||||||||||||
Due from affiliates | — | 19,000 | (19,000 | ) | — | — | ||||||||||||||
Deferred income taxes | 32,631 | 42,594 | — | (70,729 | )(f) | 4,496 | ||||||||||||||
Restricted cash | 7,366 | — | — | — | 7,366 | |||||||||||||||
Cash | — | 4,345 | — | — | 4,345 | |||||||||||||||
$ | 990,601 | $ | 1,645,457 | $ | — | $ | (70,729 | ) | $ | 2,565,329 | ||||||||||
LIABILITIES AND EQUITY | ||||||||||||||||||||
Project specific debt and other financings | $ | 331,794 | $ | — | $ | 693,545 | $ | 280,817 | (b) | $ | 1,306,156 | |||||||||
Secured debt | — | 67,819 | (67,819 | ) | — | — | ||||||||||||||
Bank indebtedness | — | 421,686 | (421,686 | ) | — | — | ||||||||||||||
Due to affiliates | — | 204,040 | (204,040 | ) | — | — | ||||||||||||||
Accounts payable and other liabilities | 135,264 | 153,192 | — | 400 | (c) | 288,856 | ||||||||||||||
Other interests in consolidated subsidiaries | 42,461 | — | — | — | 42,461 | |||||||||||||||
Total equity | 481,082 | 798,720 | — | (280,817 | )(b) | 927,856 | ||||||||||||||
(400 | )(c) | |||||||||||||||||||
(70,729 | )(f) | |||||||||||||||||||
$ | 990,601 | $ | 1,645,457 | $ | — | $ | (70,729 | ) | $ | 2,565,329 | ||||||||||
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Brookfield | ||||||||||||||||||||
Brookfield | Residential | |||||||||||||||||||
Homes | BPO | Reclassification | Pro Forma | Pro Forma | ||||||||||||||||
Corporation | Residential | Adjustments(a) | Adjustment | Combined | ||||||||||||||||
(All dollar amounts are in thousands of U.S. dollars, except per share amounts) | ||||||||||||||||||||
Revenue | ||||||||||||||||||||
Housing | $ | 292,095 | $ | 307,257 | $ | — | $ | — | $ | 599,352 | ||||||||||
Land | 46,771 | 308,051 | — | — | 354,822 | |||||||||||||||
Interest and other | — | 17,056 | (17,056 | ) | — | — | ||||||||||||||
338,866 | 632,364 | (17,056 | ) | — | 954,174 | |||||||||||||||
Direct Cost of Sales | ||||||||||||||||||||
Housing | (243,301 | ) | (251,617 | ) | — | — | (494,918 | ) | ||||||||||||
Land | (40,686 | ) | (160,481 | ) | — | — | (201,167 | ) | ||||||||||||
54,879 | 220,266 | (17,056 | ) | — | 258,089 | |||||||||||||||
Selling, general and administrative expense | (55,585 | ) | (34,817 | ) | — | — | (90,402 | ) | ||||||||||||
Equity in earnings from unconsolidated entities | (192 | ) | (69 | ) | — | — | (261 | ) | ||||||||||||
Other income/(expense) | 8,055 | — | 13,949 | — | 22,004 | |||||||||||||||
Depreciation | — | (3,107 | ) | 3,107 | — | — | ||||||||||||||
(Loss)/income before income taxes | 7,157 | 182,273 | — | — | 189,430 | |||||||||||||||
Income tax expense | (3,706 | ) | (54,709 | ) | — | — | (58,415 | ) | ||||||||||||
Net (loss)/income | 3,451 | 127,564 | — | — | 131,015 | |||||||||||||||
Net loss attributable to noncontrolling interests | (976 | ) | (488 | ) | — | — | (1,464 | ) | ||||||||||||
Net income to Brookfield Residential | $ | 4,427 | $ | 128,052 | $ | — | $ | — | $ | 129,551 | ||||||||||
(Loss)/Earnings Per Share attributable to Brookfield Residential Common Shareholders | ||||||||||||||||||||
Basic(d) | $ | (0.54 | ) | n/a | n/a | $ | 1.28 | |||||||||||||
Diluted(d) | $ | (0.54 | ) | n/a | n/a | $ | 1.27 | |||||||||||||
Weighted Average Common Shares Outstanding | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
Basic(d) | 29,087 | n/a | n/a | 101,300 | ||||||||||||||||
Diluted(d) | 29,087 | n/a | n/a | 102,120 |
26
Brookfield | ||||||||||||||||||||
Brookfield | Residential | |||||||||||||||||||
Homes | BPO | Reclassification | Pro Forma | Pro Forma | ||||||||||||||||
Corporation | Residential | Adjustments(a) | Adjustment | Combined | ||||||||||||||||
(All dollar amounts are in thousands of U.S. dollars, except per share amounts) | ||||||||||||||||||||
Revenue | ||||||||||||||||||||
Housing | $ | 339,625 | $ | 150,937 | $ | — | $ | — | $ | 490,562 | ||||||||||
Land | 36,355 | 227,187 | — | — | 263,542 | |||||||||||||||
Interest and other | — | 5,862 | (5,862 | ) | — | — | ||||||||||||||
375,980 | 383,986 | (5,862 | ) | — | 754,104 | |||||||||||||||
Direct Cost of Sales | ||||||||||||||||||||
Housing | (294,493 | ) | (131,387 | ) | — | — | (425,880 | ) | ||||||||||||
Land | (59,308 | ) | (118,274 | ) | — | — | (177,582 | ) | ||||||||||||
Impairments of housing and land inventory and write-off of option deposits | (23,963 | ) | (17,075 | ) | — | — | (41,038 | ) | ||||||||||||
(1,784 | ) | 117,250 | (5,862 | ) | — | 109,604 | ||||||||||||||
Selling, general and administrative expense | (52,339 | ) | (27,031 | ) | — | — | (79,370 | ) | ||||||||||||
Equity in earnings from unconsolidated entities | 1,331 | 1,309 | — | — | 2,640 | |||||||||||||||
Impairment of investments in unconsolidated entities | (12,995 | ) | — | — | — | (12,995 | ) | |||||||||||||
Other income/(expense) | 13,191 | — | 3,258 | — | 16,449 | |||||||||||||||
Depreciation | — | (2,604 | ) | 2,604 | — | — | ||||||||||||||
(Loss)/income before income taxes | (52,596 | ) | 88,924 | — | — | 36,328 | ||||||||||||||
Income tax recovery/(expense) | 20,134 | (22,593 | ) | — | — | (2,459 | ) | |||||||||||||
Net income/(loss) | (32,462 | ) | 66,331 | — | — | 33,869 | ||||||||||||||
Net loss attributable to noncontrolling interests | 4,753 | 818 | — | — | 5,571 | |||||||||||||||
Net (loss)/income to Brookfield Residential | $ | (27,709 | ) | $ | 67,149 | $ | — | $ | — | $ | 39,440 | |||||||||
(Loss)/Earnings Per Share attributable to Brookfield Residential Common Shareholders | ||||||||||||||||||||
Basic(d) | $ | (1.54 | ) | n/a | n/a | $ | 0.39 | |||||||||||||
Diluted(d) | $ | (1.54 | ) | n/a | n/a | $ | 0.39 | |||||||||||||
Weighted Average Common Shares Outstanding | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
Basic(d) | 26,838 | n/a | n/a | 101,300 | ||||||||||||||||
Diluted(d) | 26,838 | n/a | n/a | 101,874 |
27
Brookfield | ||||||||||||||||||||
Brookfield | Residential | |||||||||||||||||||
Homes | BPO | Reclassification | Pro Forma | Pro Forma | ||||||||||||||||
Corporation | Residential | Adjustments(a) | Adjustment | Combined | ||||||||||||||||
(All dollar amounts are in thousands of U.S. dollars, except per share amounts) | ||||||||||||||||||||
Revenue | ||||||||||||||||||||
Housing | $ | 415,311 | $ | 222,997 | $ | — | $ | — | $ | 638,308 | ||||||||||
Land | 33,692 | 354,729 | — | — | 388,421 | |||||||||||||||
Interest and other | — | 10,696 | (10,696 | ) | — | — | ||||||||||||||
449,003 | 588,422 | (10,696 | ) | — | 1,026,729 | |||||||||||||||
Direct Cost of Sales | ||||||||||||||||||||
Housing | (363,038 | ) | (180,012 | ) | — | — | (543,050 | ) | ||||||||||||
Land | (53,057 | ) | (142,686 | ) | — | — | (195,743 | ) | ||||||||||||
Impairments of housing and land inventory and write-off of option deposits | (115,124 | ) | (3,300 | ) | — | — | (118,424 | ) | ||||||||||||
(82,216 | ) | 262,424 | (10,696 | ) | — | 169,512 | ||||||||||||||
Selling, general and administrative expense | (69,498 | ) | (36,632 | ) | — | — | (106,130 | ) | ||||||||||||
Equity in earnings from unconsolidated entities | 3,302 | 1,229 | — | — | 4,531 | |||||||||||||||
Impairment of investments in unconsolidated entities | (37,863 | ) | — | — | — | (37,863 | ) | |||||||||||||
Other income/(expense) | (17,823 | ) | — | 8,435 | — | (9,388 | ) | |||||||||||||
Depreciation | — | (2,261 | ) | 2,261 | — | — | ||||||||||||||
(Loss)/income before income taxes | (204,098 | ) | 224,760 | — | — | 20,662 | ||||||||||||||
Income tax recovery/(expense) | 70,861 | (62,752 | ) | — | — | 8,109 | ||||||||||||||
Net (loss)/income | (133,237 | ) | 162,008 | — | — | 28,771 | ||||||||||||||
Net loss attributable to noncontrolling interests | 17,622 | 303 | — | — | 17,925 | |||||||||||||||
Net (loss)/income to Brookfield Residential | $ | (115,615 | ) | $ | 162,311 | $ | — | $ | — | $ | 46,696 | |||||||||
(Loss)/Earnings Per Share attributable to Brookfield Residential Common Shareholders | ||||||||||||||||||||
Basic(d) | $ | (4.33 | ) | n/a | n/a | $ | 0.46 | |||||||||||||
Diluted(d) | $ | (4.33 | ) | n/a | n/a | $ | 0.46 | |||||||||||||
Weighted Average Common Shares Outstanding | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
Basic(d) | 26,688 | n/a | n/a | 101,300 | ||||||||||||||||
Diluted(d) | 26,688 | n/a | n/a | 101,392 |
28
(a) | Reclassification on the Pro Forma Combined Condensed Balance Sheet and Pro Forma Combined Statements of Operations |
29
Year Ended December 31 | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Numerator: (in thousands of U.S. dollars) | ||||||||||||
Income attributable to Brookfield Residential | $ | 129,551 | $ | 39,440 | $ | 46,696 | ||||||
Less: Preferred stock dividends | (150 | ) | (104 | ) | — | |||||||
Income attributable to common shareholders | $ | 129,401 | $ | 39,336 | $ | 46,696 | ||||||
Denominator: (in thousands) | ||||||||||||
Basic average shares outstanding | 101,300 | 101,300 | 101,300 | |||||||||
Dilutive effect of stock options assumed to be exercised | 820 | 574 | 92 | |||||||||
Diluted average shares outstanding | 102,120 | 101,874 | 101,392 | |||||||||
Basic earnings per share | $ | 1.28 | $ | 0.39 | $ | 0.46 | ||||||
Diluted earnings per share | $ | 1.27 | $ | 0.39 | $ | 0.46 | ||||||
In thousands | ||||
Brookfield Residential’s holdings of convertible preferred stock | 9,922 | |||
Conversion factor | 3.571428571 | |||
Brookfield Residential’s holdings converted to common stock | 35,437 | |||
Brookfield Homes outstanding common stock | 29,669 | |||
Brookfield Homes common stock after conversion of preferred stock | 65,106 | |||
Conversion factor to Brookfield Residential | 0.76490053 | |||
Brookfield Residential common shares | 49,800 | |||
Contribution of BPO Residential | 51,500 | |||
Brookfield Residential basic average shares outstanding | 101,300 | |||
30
31
32
Principal Subsidiary | Market | Year of Entry | ||||
Brookfield Bay Area Holdings LLC | San Francisco Bay Area | 1996 | ||||
Brookfield Southland Holdings LLC | Southland / Los Angeles | 1996 | ||||
Brookfield San Diego Holdings LLC | San Diego / Riverside | 1996 | ||||
Brookfield Washington LLC | Washington D.C. Area | 1984 | ||||
Brookfield California Land Holdings LLC | California | 1998 |
33
34
(Units) | 2010 | 2009 | 2008 | |||||||||
Northern California | 66 | 121 | 139 | |||||||||
Southland/Los Angeles | 189 | 204 | 227 | |||||||||
San Diego/Riverside | 100 | 136 | 128 | |||||||||
Washington D.C. Area | 210 | 232 | 245 | |||||||||
Corporate and Other | 8 | 6 | 6 | |||||||||
573 | 699 | 745 | ||||||||||
Unconsolidated Entities | 2 | 4 | 5 | |||||||||
Total | 575 | 703 | 750 | |||||||||
2010 | 2009 | 2008 | ||||||||||||||||||||||
Average | Average | Average | ||||||||||||||||||||||
Sales | Price | Sales | Price | Sales | Price | |||||||||||||||||||
(Millions) | (Millions) | (Millions) | ||||||||||||||||||||||
Northern California | $ | 71 | $ | 1,084,000 | $ | 102 | $ | 845,000 | $ | 127 | $ | 913,000 | ||||||||||||
Southland/Los Angeles | 83 | 437,000 | 79 | 388,000 | 94 | 413,000 | ||||||||||||||||||
San Diego/Riverside | 54 | 543,000 | 69 | 507,000 | 68 | 533,000 | ||||||||||||||||||
Washington D.C. Area | 80 | 381,000 | 86 | 369,000 | 122 | 499,000 | ||||||||||||||||||
Corporate and Other | 4 | 440,000 | 4 | 635,000 | 4 | 689,000 | ||||||||||||||||||
Consolidated Average | $ | 292 | $ | 510,000 | $ | 340 | $ | 486,000 | $ | 415 | $ | 557,000 | ||||||||||||
35
36
• | selecting carefully the building materials that we use; | |
• | emphasizing to our employees and subcontractors that our homes be built to meet a high standard of quality and workmanship; | |
• | using only insured subcontractors to perform construction activities; | |
• | providingon-site quality control; and | |
• | providing after-sales service. |
Unconsolidated | Total | Total | ||||||||||||||||||||||
Housing & Land | Entities | December 31, | December 31, | |||||||||||||||||||||
(Units) | Owned(1) | Options | Owned | Options | 2010 | 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 | |||||||||||||||||||
Total December 31, 2009 | 14,233 | 6,279 | 1,746 | 1,987 | 24,245 | |||||||||||||||||||
(1) | Includes consolidated options. |
37
December 31, | December 31, | |||||||
(Book Value, $ Millions) | 2010 | 2009 | ||||||
Northern California | $ | 207 | $ | 201 | ||||
Southland/Los Angeles | 128 | 123 | ||||||
San Diego/Riverside | 314 | 336 | ||||||
Washington D.C. Area | 234 | 227 | ||||||
Corporate and Other | 43 | 41 | ||||||
Total | $ | 926 | $ | 928 | ||||
Total Controlled Lots (units) | 26,817 | 24,245 | ||||||
December 31, | December 31, | |||||||
(Book Value, $ Millions) | 2010 | 2009 | ||||||
Assets | $ | 303 | $ | 243 | ||||
Liabilities | $ | 56 | $ | 66 | ||||
Brookfield Homes’ net investment | $ | 124 | $ | 92 |
December 31, | December 31, | |||||||
(Book Value, $ Millions) | 2010 | 2009 | ||||||
Northern California | $ | — | $ | — | ||||
Southland/Los Angeles | 65 | 48 | ||||||
San Diego/Riverside | 2 | 3 | ||||||
Washington D.C. Area | 46 | 34 | ||||||
Corporate and Other | 11 | 7 | ||||||
Total | $ | 124 | $ | 92 | ||||
38
39
40
Year of | ||||||
Principal Subsidiary | Market | Commencement | ||||
Carma Developers LP | Alberta, Canada | 1958 | ||||
Brookfield Homes (Ontario) Limited | Ontario, Canada | 1956 | ||||
Carma Inc. | Colorado/Texas, USA | 1997 |
41
Home Closings | Lots Sold | Acreage Sold | ||||||||||
2010 | 1,025 | 1,942 | 38 | |||||||||
2009 | 648 | 1,213 | 412 | |||||||||
2008 | 745 | 1,806 | 342 |
Years Ended December 31 | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Housing Closings (Units): | ||||||||||||
Alberta | 778 | 522 | 440 | |||||||||
Ontario | 247 | 126 | 305 | |||||||||
Total | 1,025 | 648 | 745 | |||||||||
Land Sales (Lots): | ||||||||||||
(Single family) | ||||||||||||
Alberta | 1,754 | 1,154 | 1,580 | |||||||||
Ontario | — | — | 124 | |||||||||
United States | 188 | 59 | 102 | |||||||||
Total | 1,942 | 1,213 | 1,806 | |||||||||
Land Sales (Acres): | ||||||||||||
(Multi-family, Commercial and Industrial) | ||||||||||||
Alberta | 38 | 3 | 47 | |||||||||
Ontario | — | 404 | 295 | |||||||||
United States | — | 5 | — | |||||||||
Total | 38 | 412 | 342 | |||||||||
42
Years Ended December 31 | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Average selling price per Housing unit:(US$ thousands) | ||||||||||||
Alberta | $ | 292 | $ | 274 | $ | 306 | ||||||
Ontario | $ | 323 | $ | 285 | $ | 290 | ||||||
Average selling price per Lot:(US$ thousands) | ||||||||||||
Alberta | $ | 151 | $ | 158 | $ | 167 | ||||||
Ontario | $ | — | $ | — | $ | 116 | ||||||
United States | $ | 85 | $ | 73 | $ | 116 | ||||||
Average selling price per Acre:(US$ thousands) | ||||||||||||
Alberta | $ | 245 | $ | 169 | $ | 209 | ||||||
Ontario | $ | — | $ | 101 | $ | 64 | ||||||
United States | $ | — | $ | 250 | $ | — |
• | Understand the market and where growth will take place — where will future buyers work and where growth can take place on an economic basis. | |
• | Purchase land at lower prices in advance of growth — hold and add value through the entitlement process. | |
• | Work in markets where BPO Residential has a competitive advantage and where there are barriers to entry. | |
• | Be leaders in introducing new concepts, living styles, community planning, and amenities. | |
• | Develop communities that provide a mix of housing choices and price points — this increases absorption and provides opportunities for residents to remain in the community and purchase new homes as their needs change. | |
• | Purchase land in growth corridors taking a long range view where master-planned opportunities exist. | |
• | Look for additional opportunities within current markets that exist through changes in land use — for example, infill land development. | |
• | Finance raw land with equity and vendor take back mortgages where possible; utilizing debt for servicing costs to create finished lots and in homebuilding. A vendor take back mortgage is a financing agreement between the vendor and the purchaser, in which title is transferred to the purchaser and the vendor takes back a registered mortgage. | |
• | Establish and maintain relationships with strong homebuilders in each market. | |
• | Be the industry leader in the development and construction of affordable housing product in markets where BPO Residential operates. | |
• | Provide acreage for the construction of or construct commercial shopping centers in BPO Residential communities allowing residents local access to these retail resources. |
43
December 31, | December 31, | December 31, | ||||||||||
2010 | 2009 | 2008 | ||||||||||
Alberta | 45,808 | 49,388 | 48,548 | |||||||||
Ontario | 9,320 | 9,269 | 11,692 | |||||||||
United States | 26,698 | 27,013 | 27,598 | |||||||||
Total | 81,826 | 85,670 | 87,838 | |||||||||
December 31, | December 31, | December 31, | ||||||||||
2010 | 2009 | 2008 | ||||||||||
(US$ millions) | ||||||||||||
Alberta | $ | 942 | $ | 944 | $ | 833 | ||||||
Ontario | 113 | 106 | 94 | |||||||||
United States | 338 | 329 | 340 | |||||||||
Total | $ | 1,393 | $ | 1,379 | $ | 1,267 | ||||||
44
45
46
RESULTS OF OPERATIONS OF BROOKFIELD HOMES
• | ability to create shareholder value; | |
• | business goals and strategy; | |
• | strategies for shareholder value creation; | |
• | the stability of home prices; | |
• | effect of challenging conditions on us; | |
• | financing sources; | |
• | ability to generate sufficient cash flow from our assets in 2011, 2012 and 2013 to repay maturing project specific financings; | |
• | the visibility of our future cash flow; | |
• | expected backlog and closings; | |
• | sufficiency of our access to capital resources; | |
• | supply and demand equilibrium; | |
• | the timing of the effect of interest rate changes on our cash flows; | |
• | the effect on our business of existing lawsuits; and | |
• | whether or not our letters of credit or performance bonds will be drawn upon. |
• | changes in general economic, real estate and other conditions; | |
• | mortgage rate and availability changes; | |
• | availability of suitable undeveloped land at acceptable prices; | |
• | adverse legislation or regulation; |
47
• | 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; | |
• | ability to obtain regulatory approvals; | |
• | confidence levels of consumers; | |
• | ability to raise capital on favorable terms; | |
• | our debt and leverage; | |
• | adverse weather conditions and natural disasters; | |
• | relations with the residents of our communities; | |
• | risks associated with increased insurance costs or unavailability of adequate coverage; | |
• | ability to obtain surety bonds; | |
• | competitive conditions in the homebuilding industry, including product and pricing pressures; | |
• | ability to retain our executive officers; | |
• | relationships with our affiliates; and | |
• | additional risks and uncertainties, many of which are beyond our control, referred to in this prospectus and our other SEC filings. |
48
Years Ended December 31 | ||||||||||||
Selected Financial Information | 2010 | 2009 | 2008 | |||||||||
($US Millions) | ||||||||||||
Revenue: | ||||||||||||
Housing | $ | 292 | $ | 340 | $ | 415 | ||||||
Land | 47 | 36 | 34 | |||||||||
Total revenues | 339 | 376 | 449 | |||||||||
Direct cost of sales | (284 | ) | (354 | ) | (416 | ) | ||||||
Impairment of housing and land inventory and write-off of option deposits | — | (24 | ) | (115 | ) | |||||||
Gross margin/(loss) | 55 | (2 | ) | (82 | ) | |||||||
Selling, general and administrative expense | (56 | ) | (52 | ) | (69 | ) | ||||||
Equity in earnings from unconsolidated entities | — | 1 | 3 | |||||||||
Impairment of unconsolidated entities | — | (13 | ) | (38 | ) | |||||||
Other income/(expense) | 8 | 13 | (18 | ) | ||||||||
Income/(loss) before income taxes | 7 | (53 | ) | (204 | ) | |||||||
Income tax (expense)/recovery | (4 | ) | 20 | 71 | ||||||||
Net income/(loss) | 3 | (33 | ) | (133 | ) | |||||||
Loss attributable to noncontrolling interests | 1 | 5 | 17 | |||||||||
Net income/(loss) attributable to Brookfield Homes Corporation | $ | 4 | $ | (28 | ) | $ | (116 | ) | ||||
49
Years Ended December 31 | ||||||||||||
Segment Information | 2010 | 2009 | 2008 | |||||||||
Housing revenue ($US millions): | ||||||||||||
Northern California | $ | 71 | $ | 102 | $ | 127 | ||||||
Southland/Los Angeles | 83 | 79 | 94 | |||||||||
San Diego/Riverside | 54 | 69 | 68 | |||||||||
Washington D.C. Area | 80 | 86 | 122 | |||||||||
Corporate and Other | 4 | 4 | 4 | |||||||||
Total | $ | 292 | $ | 340 | $ | 415 | ||||||
Land revenue ($US millions): | ||||||||||||
Northern California | $ | — | $ | — | $ | 2 | ||||||
Southland/Los Angeles | 4 | — | — | |||||||||
San Diego/Riverside | 27 | 20 | 19 | |||||||||
Washington D.C. Area | 16 | 8 | 13 | |||||||||
Corporate and Other | — | 8 | — | |||||||||
Total | $ | 47 | $ | 36 | $ | 34 | ||||||
Impairment of housing and land inventory and write-off of option deposits ($US millions): | ||||||||||||
Northern California | $ | — | $ | — | $ | 21 | ||||||
Southland/Los Angeles | — | 3 | 16 | |||||||||
San Diego/Riverside | — | 1 | 42 | |||||||||
Washington D.C. Area | — | 13 | 36 | |||||||||
Corporate and Other | — | 7 | — | |||||||||
Total | $ | — | $ | 24 | $ | 115 | ||||||
Gross margin/(loss) ($US millions): | ||||||||||||
Northern California | $ | 12 | $ | 1 | $ | (18 | ) | |||||
Southland/Los Angeles | 14 | 5 | (3 | ) | ||||||||
San Diego/Riverside | 11 | (4 | ) | (42 | ) | |||||||
Washington D.C. Area | 19 | 4 | (17 | ) | ||||||||
Corporate and Other | (1 | ) | (8 | ) | (2 | ) | ||||||
Total | $ | 55 | $ | (2 | ) | $ | (82 | ) | ||||
50
Years Ended December 31 | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Home closings (units): | ||||||||||||
Northern California | 66 | 121 | 139 | |||||||||
Southland/Los Angeles | 189 | 204 | 227 | |||||||||
San Diego/Riverside | 100 | 136 | 128 | |||||||||
Washington D.C. Area | 210 | 232 | 245 | |||||||||
Corporate and Other | 8 | 6 | 6 | |||||||||
Consolidated Total | 573 | 699 | 745 | |||||||||
Unconsolidated Entities | 2 | 4 | 5 | |||||||||
Total | 575 | 703 | 750 | |||||||||
Average selling price ($US): | ||||||||||||
Northern California | $ | 1,084,000 | $ | 845,000 | $ | 913,000 | ||||||
Southland/Los Angeles | 437,000 | 388,000 | 413,000 | |||||||||
San Diego/Riverside | 543,000 | 507,000 | 533,000 | |||||||||
Washington D.C. Area | 381,000 | 369,000 | 499,000 | |||||||||
Corporate and Other | 440,000 | 635,000 | 689,000 | |||||||||
Consolidated Average | 510,000 | 486,000 | 557,000 | |||||||||
Unconsolidated Entities | 817,000 | 821,000 | 1,288,000 | |||||||||
Average | $ | 511,000 | $ | 488,000 | $ | 562,000 | ||||||
Lots controlled (units at end of year): | ||||||||||||
Northern California | 3,273 | 2,001 | 1,108 | |||||||||
Southland/Los Angeles | 1,655 | 1,235 | 1,417 | |||||||||
San Diego/Riverside | 8,761 | 8,853 | 6,605 | |||||||||
Washington D.C. Area | 3,681 | 3,627 | 3,681 | |||||||||
Corporate and Other | 253 | 263 | 273 | |||||||||
17,623 | 15,979 | 13,084 | ||||||||||
Lots under option(1) | 9,194 | 8,266 | 11,025 | |||||||||
Total | 26,817 | 24,245 | 24,109 | |||||||||
(1) | Includes proportionate share of lots under option related to unconsolidated entities. |
51
Years Ended December 31 | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Incentives | % of Gross | Incentives | % of Gross | |||||||||||||
Recognized | Revenues | Recognized | Revenues | |||||||||||||
($ millions) | ||||||||||||||||
Northern California | $ | 9 | 11 | % | $ | 27 | 26 | % | ||||||||
Southland/Los Angeles | 4 | 4 | % | 5 | 7 | % | ||||||||||
San Diego/Riverside | 3 | 5 | % | 4 | 6 | % | ||||||||||
Washington D.C. Area | 7 | 8 | % | 21 | 24 | % | ||||||||||
Corporate and Other | — | — | — | — | ||||||||||||
Total | $ | 23 | 7 | % | $ | 57 | 17 | % | ||||||||
Years Ended December 31 | ||||||||||||||||||||||||
2010 | 2009 | |||||||||||||||||||||||
Projects | Fair Value | Projects | Fair Value | |||||||||||||||||||||
Tested for | Projects | of Projects | Tested for | Projects | of Projects | |||||||||||||||||||
Impairment | Impaired | Impaired | Impairment | Impaired | Impaired | |||||||||||||||||||
($ millions) | ||||||||||||||||||||||||
Northern California | 7 | — | $ | — | 6 | 1 | $ | — | ||||||||||||||||
Southland/Los Angeles | 4 | — | — | 4 | 1 | 14 | ||||||||||||||||||
San Diego/Riverside | 14 | — | — | 15 | — | — | ||||||||||||||||||
Washington D.C. Area | 15 | — | — | 18 | 3 | 5 | ||||||||||||||||||
Corporate and Other | 2 | — | — | 3 | 2 | 6 | ||||||||||||||||||
Total | 42 | — | $ | — | 46 | 7 | $ | 25 | ||||||||||||||||
52
Years Ended December 31 | ||||||||
2010 | 2009 | |||||||
($ millions) | ||||||||
General and administrative expenses | $ | 36 | $ | 30 | ||||
Sales and marketing expenses | 18 | 22 | ||||||
Stock compensation | 3 | 4 | ||||||
Change in fair value of equity swap contracts | (1 | ) | (4 | ) | ||||
$ | 56 | $ | 52 | |||||
Years Ended December 31 | ||||||||
2010 | 2009 | |||||||
($ millions) | ||||||||
Change in fair value of interest rate swap contracts | $ | (1 | ) | $ | 11 | |||
Other | 9 | 2 | ||||||
$ | 8 | $ | 13 | |||||
53
Years Ended December 31 | ||||||||
2010 | 2009 | |||||||
Northern California | 51 | 135 | ||||||
Southland/Los Angeles | 140 | 218 | ||||||
San Diego/Riverside | 94 | 151 | ||||||
Washington D.C. Area | 176 | 263 | ||||||
Corporate and Other | 10 | (14 | ) | |||||
Consolidated Total | 471 | 753 | ||||||
Unconsolidated Entities | 2 | 3 | ||||||
Total | 473 | 756 | ||||||
Backlog December 31 | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Units | $ millions | Units | $ millions | |||||||||||||
Northern California | 9 | $ | 10 | 24 | $ | 24 | ||||||||||
Southland/Los Angeles | 20 | 6 | 69 | 29 | ||||||||||||
San Diego/Riverside | 17 | 10 | 23 | 11 | ||||||||||||
Washington D.C. Area | 37 | 17 | 71 | 24 | ||||||||||||
Corporate and Other | 1 | 1 | — | — | ||||||||||||
Consolidated Total | 84 | 44 | 187 | 88 | ||||||||||||
Unconsolidated Entities | 1 | 1 | — | — | ||||||||||||
Total | 85 | $ | 45 | 187 | $ | 88 | ||||||||||
Years Ended December 31 | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Units | % | Units | % | |||||||||||||
Northern California | 14 | 22 | % | 19 | 12 | % | ||||||||||
Southland/Los Angeles | 22 | 14 | % | 49 | 18 | % | ||||||||||
San Diego/Riverside | 26 | 22 | % | 30 | 16 | % | ||||||||||
Washington D.C. Area | 62 | 26 | % | 62 | 19 | % | ||||||||||
Corporate and Other | — | — | 20 | 250 | % | |||||||||||
Total | 124 | 21 | % | 180 | 19 | % | ||||||||||
54
Years Ended December 31 | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Incentives | % of Gross | Incentives | % of Gross | |||||||||||||
Recognized | Revenues | Recognized | Revenues | |||||||||||||
($ millions) | ||||||||||||||||
Northern California | $ | 27 | 26 | % | $ | 37 | 29 | % | ||||||||
Southland/Los Angeles | 5 | 7 | % | 8 | 8 | % | ||||||||||
San Diego/Riverside | 4 | 6 | % | 4 | 5 | % | ||||||||||
Washington D.C. Area | 21 | 24 | % | 24 | 20 | % | ||||||||||
Corporate and Other | — | — | — | — | ||||||||||||
Total | $ | 57 | 17 | % | $ | 73 | 18 | % | ||||||||
55
Years Ended December 31 | ||||||||||||||||||||||||
2009 | 2008 | |||||||||||||||||||||||
Projects | Fair Value | Projects | Fair Value | |||||||||||||||||||||
Tested for | Projects | of Projects | Tested for | Projects | of Projects | |||||||||||||||||||
Impairment | Impaired | Impaired | Impairment | Impaired | Impaired | |||||||||||||||||||
($ millions) | ||||||||||||||||||||||||
Northern California | 6 | 1 | $ | — | 9 | 3 | $ | 91 | ||||||||||||||||
Southland/Los Angeles | 4 | 1 | 14 | 6 | 3 | 49 | ||||||||||||||||||
San Diego/Riverside | 15 | — | — | 14 | 3 | 91 | ||||||||||||||||||
Washington D.C. Area | 18 | 3 | 5 | 22 | 13 | 79 | ||||||||||||||||||
Corporate and Other | 3 | 2 | 6 | 2 | — | — | ||||||||||||||||||
Total | 46 | 7 | $ | 25 | 53 | 22 | $ | 310 | ||||||||||||||||
Years Ended December 31 | ||||||||
2009 | 2008 | |||||||
($ millions) | ||||||||
Housing | $ | 45 | $ | 52 | ||||
Land | (23 | ) | (19 | ) | ||||
Impairment charges/write-downs | (24 | ) | (115 | ) | ||||
$ | (2 | ) | $ | (82 | ) | |||
56
Years Ended December 31 | ||||||||
2009 | 2008 | |||||||
($ millions) | ||||||||
General and administrative expenses | $ | 30 | $ | 35 | ||||
Sales and marketing expenses | 22 | 30 | ||||||
Stock compensation | 4 | (7 | ) | |||||
Change in fair value of equity swap contracts | (4 | ) | 11 | |||||
$ | 52 | $ | 69 | |||||
Years Ended December 31 | ||||||||
2009 | 2008 | |||||||
($ millions) | ||||||||
Change in fair value of interest rate swap contracts | $ | 11 | $ | (19 | ) | |||
Other | 2 | 1 | ||||||
$ | 13 | $ | (18 | ) | ||||
57
Years Ended December 31 | ||||||||
2009 | 2008 | |||||||
Northern California | 135 | 122 | ||||||
Southland/Los Angeles | 218 | 237 | ||||||
San Diego/Riverside | 151 | 128 | ||||||
Washington D.C. Area | 263 | 233 | ||||||
Corporate and Other | (14 | ) | 7 | |||||
Consolidated Total | 753 | 727 | ||||||
Unconsolidated Entities | 3 | 2 | ||||||
Total | 756 | 729 | ||||||
Backlog December 31 | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Units | $ millions | Units | $ millions | |||||||||||||
Northern California | 24 | $ | 24 | 10 | $ | 9 | ||||||||||
Southland/Los Angeles | 69 | 29 | 55 | 23 | ||||||||||||
San Diego/Riverside | 23 | 11 | 8 | 4 | ||||||||||||
Washington D.C. Area | 71 | 24 | 40 | 35 | ||||||||||||
Corporate and Other | — | — | 20 | 14 | ||||||||||||
Consolidated Total | 187 | 88 | 133 | 85 | ||||||||||||
Unconsolidated Entities | — | — | 1 | 1 | ||||||||||||
Total | 187 | $ | 88 | 134 | $ | 86 | ||||||||||
Years Ended December 31 | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Units | % | Units | % | |||||||||||||
Northern California | 19 | 12 | % | 25 | 17 | % | ||||||||||
Southland/Los Angeles | 49 | 18 | % | 45 | 16 | % | ||||||||||
San Diego/Riverside | 30 | 16 | % | 28 | 18 | % | ||||||||||
Washington D.C. Area | 62 | 19 | % | 88 | 27 | % | ||||||||||
Corporate and Other | 20 | 250 | % | 7 | 44 | % | ||||||||||
Total | 180 | 19 | % | 193 | 21 | % | ||||||||||
58
Maturities | ||||||||||||||||
2011 | 2012 | 2013 | Total | |||||||||||||
Northern California | $ | 9 | $ | — | $ | — | $ | 9 | ||||||||
Southland/Los Angeles | 8 | 18 | — | 26 | ||||||||||||
San Diego/Riverside | 74 | 10 | 2 | 86 | ||||||||||||
Washington D.C. Area | 36 | 7 | — | 43 | ||||||||||||
Corporate and Other | 108 | 60 | — | 168 | ||||||||||||
December 31, 2010 | $ | 235 | $ | 95 | $ | 2 | $ | 332 | ||||||||
59
December 31, | December 31, | |||||||
2010 | 2009 | |||||||
Housing units, including models | 430 | 361 | ||||||
Finished lots | 1,253 | 1,710 | ||||||
Lots commenced grading | 2,290 | 1,991 | ||||||
Raw lots | 13,650 | 8,685 | ||||||
17,623 | 12,747 | |||||||
60
Actual as of | ||||||||
Covenant | December 31, 2010 | |||||||
Tangible net worth ($US millions) | $ | 325 | $ | 523 | ||||
Net indebtedness to capitalization | 65 | % | 46 | % | ||||
Net indebtedness to tangible net worth | 2.50 to 1 | 0.80 to 1 |
Actual as of | ||||||||
Covenant | December 31, 2010 | |||||||
Minimum stockholders’ equity ($US millions) | $ | 300 | $ | 481 | ||||
Net debt to capitalization | 70 | % | 39 | % |
Payment Due by Period | ||||||||||||||||||||
Less than | 1-3 | 3-5 | More than | |||||||||||||||||
Total | 1 Year | Years | Years | 5 Years | ||||||||||||||||
($ millions) | ||||||||||||||||||||
Project specific and other financings(a) | $ | 332 | $ | 235 | $ | 97 | $ | — | $ | — | ||||||||||
Operating lease obligations(b) | 6 | 2 | 4 | — | — | |||||||||||||||
Purchase agreements(c) | 151 | 27 | 20 | 104 | — | |||||||||||||||
Total(d) | $ | 489 | $ | 264 | $ | 121 | $ | 104 | $ | — | ||||||||||
(a) | Amounts are included on the Consolidated Balance Sheets. See Note 6 of the Notes to our Consolidated Financial Statements included in this prospectus for additional information regarding project specific and other financings and related matters. | |
(b) | Amounts relate to non-cancelable operating leases involving office space, design centers and model homes. | |
(c) | Amounts represent our expected acquisition of land under options or purchase agreements. See Note 2 to our Consolidated Financial Statements included in this prospectus for additional information regarding purchase agreements. | |
(d) | Amounts do not include interest due to the floating nature of our debt. See Note 6 to our Consolidated Financial Statements included in this prospectus for additional information regarding our floating rate debt. |
61
62
63
64
December 31 | September 30 | June 30 | March 31 | |||||||||||||||||||||||||||||
2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | |||||||||||||||||||||||||
($ millions, except home closings and per share amounts) | ||||||||||||||||||||||||||||||||
Total revenue | $ | 123 | $ | 145 | $ | 75 | $ | 99 | 95 | $ | 95 | 46 | $ | 37 | ||||||||||||||||||
Gross margin/(loss) | 18 | (12 | ) | 13 | 5 | 17 | 5 | 7 | — | |||||||||||||||||||||||
Net income/(loss) | 5 | (17 | ) | (1 | ) | (4 | ) | 3 | — | (3 | ) | (12 | ) | |||||||||||||||||||
Net income/(loss) attributable to Brookfield Homes Corporation | 5 | (17 | ) | (1 | ) | (1 | ) | 3 | — | (3 | ) | (10 | ) | |||||||||||||||||||
Diluted (loss)/earnings per share(1) | — | (0.81 | ) | (0.19 | ) | (0.22 | ) | (0.08 | ) | (0.12 | ) | (0.27 | ) | (0.39 | ) | |||||||||||||||||
Home closings (units)(2) | 186 | 268 | 98 | 192 | 210 | 169 | 81 | 74 | ||||||||||||||||||||||||
Cash provided by/( used in) operating activities | 55 | 68 | (9 | ) | 28 | 21 | 16 | 21 | 25 | |||||||||||||||||||||||
Total assets | 991 | 1,037 | 1,049 | 1,130 | 1,010 | 1,141 | 1,009 | 1,157 | ||||||||||||||||||||||||
Total debt | 332 | 382 | 392 | 471 | 353 | 490 | 365 | 725 |
(1) | Quarterly andyear-to-date computations of per share amounts are made independently. Therefore, the sum of per share amounts for the quarters may not agree with per share amounts for the year. | |
(2) | Includes unconsolidated entities. |
65
RESULTS OF OPERATIONS OF BPO RESIDENTIAL
66
67
Years Ended December 31 | ||||||||||||||||||||
Selected Financial Information | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||
(US$ millions) | ||||||||||||||||||||
Revenue: | ||||||||||||||||||||
Land | $ | 308 | $ | 227 | $ | 355 | $ | 378 | $ | 230 | ||||||||||
Housing | 307 | 151 | 223 | 296 | 173 | |||||||||||||||
Total Revenues | 615 | 378 | 578 | 674 | 403 | |||||||||||||||
Direct cost of sales | 412 | 250 | 323 | 432 | 292 | |||||||||||||||
Impairment of land inventory | — | 17 | 3 | — | — | |||||||||||||||
Gross margin | 203 | 111 | 252 | 242 | 111 | |||||||||||||||
Selling, general and administrative | 35 | 27 | 37 | 37 | 24 | |||||||||||||||
Other Income | 14 | 3 | 8 | 10 | 9 | |||||||||||||||
Equity in earnings of unconsolidated entity | — | 2 | 1 | 2 | 3 | |||||||||||||||
Income Before Taxes | 182 | 89 | 224 | 217 | 99 | |||||||||||||||
Income Tax Expense | 55 | 23 | 63 | 66 | 29 | |||||||||||||||
Net Income | 127 | 66 | 161 | 151 | 70 | |||||||||||||||
Non-Controlling Interest | 1 | 1 | 1 | — | — | |||||||||||||||
Net Income attributable to Equity Holders | $ | 128 | $ | 67 | $ | 162 | $ | 151 | $ | 70 | ||||||||||
68
�� | ||||||||||||||||||||
Years Ended December 31 | ||||||||||||||||||||
Segment Information | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||
(US$ millions) | ||||||||||||||||||||
Land Revenue (includes multi-family acre sales): | ||||||||||||||||||||
Alberta | $ | 292 | $ | 184 | $ | 310 | $ | 343 | $ | 219 | ||||||||||
Ontario | — | 38 | 33 | 18 | — | |||||||||||||||
United States | 16 | 5 | 12 | 17 | 11 | |||||||||||||||
Total | $ | 308 | $ | 227 | $ | 355 | $ | 378 | $ | 230 | ||||||||||
Housing Revenue: | ||||||||||||||||||||
Alberta | $ | 227 | $ | 115 | $ | 135 | $ | 215 | $ | 100 | ||||||||||
Ontario | 80 | 36 | 88 | 81 | 73 | |||||||||||||||
Total | $ | 307 | $ | 151 | $ | 223 | $ | 296 | $ | 173 | ||||||||||
Impairment — land inventory: | ||||||||||||||||||||
United States | $ | — | $ | 17 | $ | 3 | $ | — | $ | — | ||||||||||
Total | $ | — | $ | 17 | $ | 3 | $ | — | $ | — | ||||||||||
Gross Margin/(loss): | ||||||||||||||||||||
Alberta | $ | 204 | $ | 104 | $ | 231 | $ | 228 | $ | 99 | ||||||||||
Ontario | 10 | 32 | 34 | 20 | 12 | |||||||||||||||
United States | (11 | ) | (25 | ) | (13 | ) | (6 | ) | — | |||||||||||
Total | $ | 203 | $ | 111 | $ | 252 | $ | 242 | $ | 111 | ||||||||||
69
Years Ended December 31 | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Housing Closings (Units): | ||||||||||||||||||||
Alberta | 778 | 522 | 440 | 773 | 538 | |||||||||||||||
Ontario | 247 | 126 | 305 | 277 | 280 | |||||||||||||||
Total | 1,025 | 648 | 745 | 1,050 | 818 | |||||||||||||||
Land Sales (Lots): | ||||||||||||||||||||
(Single family) | ||||||||||||||||||||
Alberta | 1,754 | 1,154 | 1,580 | 2,344 | 2,667 | |||||||||||||||
Ontario | — | — | 124 | 152 | — | |||||||||||||||
United States | 188 | 59 | 102 | 226 | 215 | |||||||||||||||
Total | 1,942 | 1,213 | 1,806 | 2,722 | 2,882 | |||||||||||||||
Land Sales (Acres): | ||||||||||||||||||||
(Multi-family, Commercial and Industrial) | ||||||||||||||||||||
Alberta | 38 | 3 | 47 | 85 | 63 | |||||||||||||||
Ontario | — | 404 | 295 | — | — | |||||||||||||||
United States | — | 5 | — | — | — | |||||||||||||||
Total | 38 | 412 | 342 | 85 | 63 | |||||||||||||||
Average selling price per Housing unit: | ||||||||||||||||||||
(US$ thousands) | ||||||||||||||||||||
Alberta | $ | 292 | $ | 274 | $ | 306 | $ | 278 | $ | 186 | ||||||||||
Ontario | $ | 323 | $ | 285 | $ | 290 | $ | 291 | $ | 261 | ||||||||||
Average selling price per Lot: | ||||||||||||||||||||
(US$ thousands) | ||||||||||||||||||||
Alberta | $ | 151 | $ | 158 | $ | 167 | $ | 99 | $ | 70 | ||||||||||
Ontario | $ | — | $ | — | $ | 116 | $ | 117 | $ | — | ||||||||||
United States | $ | 85 | $ | 73 | $ | 116 | $ | 78 | $ | 47 | ||||||||||
Average selling price per Acre: | ||||||||||||||||||||
(US$ thousands) | ||||||||||||||||||||
Alberta | $ | 245 | $ | 169 | $ | 209 | $ | 192 | $ | 131 | ||||||||||
Ontario | $ | — | $ | 101 | $ | 64 | $ | — | $ | — | ||||||||||
United States | $ | — | $ | 250 | $ | — | $ | — | $ | — |
70
Years Ended December 31 | ||||||||||||||||||||
Segment Information | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||
(US$ millions) | ||||||||||||||||||||
Housing Inventory: | ||||||||||||||||||||
Alberta | $ | 47 | $ | 54 | $ | 49 | $ | 57 | $ | 35 | ||||||||||
Ontario | 39 | 48 | 40 | 28 | 23 | |||||||||||||||
Total | $ | 86 | $ | 102 | $ | 89 | $ | 85 | $ | 58 | ||||||||||
Serviced Land: | ||||||||||||||||||||
Alberta | $ | 417 | $ | 414 | $ | 377 | $ | 436 | $ | 284 | ||||||||||
Ontario | 13 | — | 7 | 24 | 4 | |||||||||||||||
United States | 67 | 67 | 76 | 47 | 34 | |||||||||||||||
Total | $ | 497 | $ | 481 | $ | 460 | $ | 507 | $ | 322 | ||||||||||
Raw Land: | ||||||||||||||||||||
Alberta | $ | 478 | $ | 477 | $ | 407 | $ | 424 | $ | 223 | ||||||||||
Ontario | 61 | 57 | 46 | 65 | 52 | |||||||||||||||
United States | 271 | 262 | 265 | 211 | 124 | |||||||||||||||
Total | $ | 810 | $ | 796 | $ | 718 | $ | 700 | $ | 399 | ||||||||||
Years Ended December 31 | ||||||||||||||||||||
Segment Information | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||
(US$ millions) | ||||||||||||||||||||
Housing Inventory (Units): | ||||||||||||||||||||
Alberta | 314 | 430 | 259 | 398 | 566 | |||||||||||||||
Ontario | 160 | 341 | 388 | 239 | 186 | |||||||||||||||
Total | 474 | 771 | 647 | 637 | 752 | |||||||||||||||
Serviced Land (Lots): | ||||||||||||||||||||
Alberta | 4,621 | 4,263 | 4,889 | 5,646 | 5,321 | |||||||||||||||
Ontario | 188 | — | 180 | 330 | 350 | |||||||||||||||
United States | 1,114 | 1,213 | 1,266 | 1,152 | 972 | |||||||||||||||
Total | 5,923 | 5,476 | 6,335 | 7,128 | 6,643 | |||||||||||||||
Raw Land (Acres): | ||||||||||||||||||||
Alberta | 5,839 | 6,385 | 6,200 | 5,955 | 4,913 | |||||||||||||||
Ontario | 1,492 | 1,488 | 1,854 | 2,184 | 1,637 | |||||||||||||||
United States | 6,396 | 6,450 | 6,583 | 5,721 | 3,474 | |||||||||||||||
Total | 13,727 | 14,323 | 14,637 | 13,860 | 10,024 | |||||||||||||||
71
Years Ended December 31 | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Incentives | % of Gross | Incentives | % of Gross | |||||||||||||
Recognized | Revenues | Recognized | Revenues | |||||||||||||
(US$ millions) | ||||||||||||||||
Alberta | $ | 4 | 2 | % | $ | 4 | 3 | % | ||||||||
Ontario | 5 | 6 | % | 5 | 11 | % | ||||||||||
US | — | — | — | — | ||||||||||||
Total | $ | 9 | 3 | % | $ | 9 | 4 | % | ||||||||
Years Ended December 31 | ||||||||
2010 | 2009 | |||||||
(US$ millions) | ||||||||
Land | $ | 148 | $ | 109 | ||||
Housing | 55 | 19 | ||||||
Impairment charges/write-offs | — | (17 | ) | |||||
Total | $ | 203 | $ | 111 | ||||
72
Years Ended December 31 | ||||||||||||||||||||||||||||||||
2010 | 2009 | |||||||||||||||||||||||||||||||
Projects | Fair Value | Projects | Fair Value of | |||||||||||||||||||||||||||||
Total | Tested for | Projects | of Projects | Total | Tested for | Projects | Projects | |||||||||||||||||||||||||
Projects | Impairment | Impaired | Impaired | Projects | Impairment | Impaired | Impaired | |||||||||||||||||||||||||
(US$ millions) | ||||||||||||||||||||||||||||||||
Alberta | 32 | 32 | — | $ | — | 32 | 32 | — | $ | — | ||||||||||||||||||||||
Ontario | 8 | 8 | — | — | 8 | 8 | — | — | ||||||||||||||||||||||||
US: | ||||||||||||||||||||||||||||||||
Denver | 7 | 7 | — | — | 7 | 7 | 4 | 10 | ||||||||||||||||||||||||
Austin | 3 | 3 | — | — | 3 | 3 | — | — | ||||||||||||||||||||||||
Total | 50 | 50 | — | $ | — | 50 | 50 | 4 | $ | 10 | ||||||||||||||||||||||
73
Years Ended | ||||||||
December 31 | ||||||||
2010 | 2009 | |||||||
(US$ millions) | ||||||||
Interest | $ | 12 | $ | 5 | ||||
Other | 2 | (2 | ) | |||||
Total | $ | 14 | $ | 3 | ||||
Years Ended | ||||||||
December 31 | ||||||||
2010 | 2009 | |||||||
(US$ millions) | ||||||||
General and administrative expenses | $ | 28 | $ | 23 | ||||
Sales and marketing expenses | 7 | 4 | ||||||
Total | $ | 35 | $ | 27 | ||||
Years Ended | ||||||||
December 31 | ||||||||
2010 | 2009 | |||||||
(US$ millions) | ||||||||
Alberta | $ | 292 | $ | 184 | ||||
Ontario | — | 38 | ||||||
United States | 16 | 5 | ||||||
Total | $ | 308 | $ | 227 | ||||
Years Ended | ||||||||
December 31 | ||||||||
2010 | 2009 | |||||||
(US$ millions) | ||||||||
Alberta | $ | 41 | $ | 78 | ||||
Ontario | 63 | 32 | ||||||
United States | — | — | ||||||
Total | $ | 104 | $ | 110 | ||||
74
Balance | Credit | |||||||||
December 31, 2010 | Outstanding | Available | Interest rate | |||||||
(US$ millions) | ||||||||||
Syndicate Facilities: | ||||||||||
Carma Developers LP: | ||||||||||
TD Bank Financial Group | $ | 233 | $ | 281 | Prime + 1.65% | |||||
Bank of Nova Scotia | 109 | 117 | Prime + 1.25% | |||||||
ATB Financial | 51 | 53 | Prime + 0.5% | |||||||
Brookfield Homes (Ontario) Ltd: | ||||||||||
Royal Bank of Canada | 29 | 33 | Prime + 0.75% | |||||||
Unsecured Credit Facilities/Advances: | ||||||||||
Carma Inc: | ||||||||||
Brookfield Properties Inc. | 202 | 250 | Prime + 0.5% | |||||||
Brookfield Homes (Ontario) Ltd: | ||||||||||
Brookfield Properties Corporation | 2 | — | Prime | |||||||
75
Maturities | ||||||||||||||||||||
2011 | 2012 | 2013 | 2014 | 2015 | ||||||||||||||||
(US$ millions) | ||||||||||||||||||||
Alberta | $ | 2 | $ | — | $ | — | $ | — | $ | — | ||||||||||
Ontario | 10 | 5 | 1 | — | 1 | |||||||||||||||
United States | 34 | 14 | 1 | — | — | |||||||||||||||
Total | $ | 46 | $ | 19 | $ | 2 | $ | — | $ | 1 | ||||||||||
December 31, 2010 | December 31, 2009 | |||||||
(US$ millions) | ||||||||
Development Recovery Receivables | $ | 83 | $ | 82 | ||||
Real Estate Receivables | 35 | 40 | ||||||
Sundry and Miscellaneous Receivables | 21 | 10 | ||||||
$ | 139 | $ | 132 | |||||
76
Years Ended December 31 | ||||||||
2010 | 2009 | |||||||
Housing Inventory Turnover | 2.69 | 1.37 |
77
2010 | 2009 | |||||||
Completed homes, including models | 104 | 75 | ||||||
Homes under construction | 271 | 297 | ||||||
Homes with foundation/slabs | 99 | 399 | ||||||
Total housing units | 474 | 771 | ||||||
Lots ready for house construction | 5,923 | 5,476 | ||||||
Undeveloped land (acres) | 13,727 | 14,323 | ||||||
78
Actual as of | ||||||||
December 31, | ||||||||
Covenant | 2010 | |||||||
Tangible net worth: | ||||||||
Alberta (CDN$ millions) | $ | 250 | $ | 403 | ||||
Ontario (CDN$ millions) | $ | 50 | $ | 119 | ||||
United States | $ | 80 | $ | 215 | ||||
Net debt to tangible net worth: | ||||||||
Alberta | 1.75:1 | 0.98:1 | ||||||
Ontario | 3.50:1 | 0.40:1 | ||||||
United States | 1.25:1 | 0.27:1 | ||||||
Interest coverage ratio: | ||||||||
Ontario | 3.00:1 | 4.60:1 |
Payment Due by Period | ||||||||||||||||||||
Less than | 1-3 | 3-5 | More than | |||||||||||||||||
Total | 1 Year | Years | Years | 5 Years | ||||||||||||||||
(US$ millions) | ||||||||||||||||||||
Project specific and revolving and other financings(a) | $ | 489 | $ | 467 | $ | 21 | $ | 1 | — | |||||||||||
Operating lease obligations(b) | 28 | 4 | 12 | 12 | — | |||||||||||||||
Purchase agreements(c) | 56 | 56 | — | — | — | |||||||||||||||
Total(d) | $ | 573 | $ | 527 | $ | 33 | $ | 13 | — | |||||||||||
(a) | Amounts are included on the Balance Sheets. See Note 7 and Note 8 of the Notes to the BPO Residential Financial Statements included in this prospectus for additional information regarding project specific and other financings and related matters. | |
(b) | Amounts relate to non-cancelable operating leases involving office space, design centers and model homes. | |
(c) | Amounts represent our expected acquisition of land under options or purchase agreements. See Note 12 to the Financial Statements included in this Form for additional information regarding purchase agreements. | |
(d) | Amounts do not include interest due to the floating nature of our debt. See Note 7 and Note 8 to the BPO Residential Financial Statements included in this prospectus for additional information regarding our floating rate debt. |
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Dec 31 | Sept 30 | Jun 30 | Mar 31 | Dec 31 | Sept 30 | Jun 30 | Mar 31 | |||||||||||||||||||||||||
2010 | 2010 | 2010 | 2010 | 2009 | 2009 | 2009 | 2009 | |||||||||||||||||||||||||
(US$ millions) | ||||||||||||||||||||||||||||||||
Total Revenue | 176 | $ | 165 | $ | 183 | $ | 91 | $ | 195 | $ | 80 | $ | 61 | $ | 42 | |||||||||||||||||
Gross Margin | 55 | 57 | 61 | 30 | 60 | 23 | 14 | 15 | ||||||||||||||||||||||||
Net Income | 37 | 34 | 39 | 18 | 44 | 9 | 6 | 8 | ||||||||||||||||||||||||
Home Closings (Units) | 460 | 151 | 270 | 144 | 326 | 116 | 121 | 85 | ||||||||||||||||||||||||
Lot Sales (Units) | 474 | 405 | 601 | 462 | 571 | 283 | 201 | 158 | ||||||||||||||||||||||||
Cash from operating activities | 53 | 28 | 64 | (16 | ) | 89 | 31 | 25 | (26 | ) | ||||||||||||||||||||||
Total Assets | 1,645 | 1,874 | 1,650 | 1,657 | 1,619 | 1,609 | 1,871 | 1,736 | ||||||||||||||||||||||||
Total Liabilities | 847 | 881 | 772 | 811 | 808 | 876 | 907 | 872 |
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Name | Residence | Age | Position | |||||
Ian G. Cockwell | Oakville, Canada | 63 | Executive Vice Chairman, Director | |||||
Craig J. Laurie | Hoboken, NJ | 39 | Executive Vice President and Chief Financial Officer | |||||
Bruce T. Lehman | Newport Beach, CA | 58 | Director | |||||
Patricia M. Newson | Calgary, Canada | 54 | Director | |||||
Alan Norris | Calgary, Canada | 54 | President and Chief Executive Officer, Director | |||||
Timothy R. Price | Toronto, Canada | 68 | Director | |||||
David M. Sherman | New York, NY | 53 | Director | |||||
Robert L. Stelzl | Los Angeles, CA | 65 | Independent Chair, Director | |||||
Michael D. Young | Dallas, TX | 66 | Director |
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• | overseeing long-term strategic planning and reviewing and approving the annual business plan of Brookfield Residential; | |
• | assessing the principal risks of Brookfield Residential’s business and reviewing, approving and monitoring the systems in place to manage these risks; | |
• | reviewing major strategic initiatives to determine whether Brookfield Residential’s proposed actions accord with long-term business strategies; | |
• | appointing the Chief Executive Officer, overseeing the selection of other members of senior management and reviewing succession planning; |
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• | assessing management’s performance against approved business plans; | |
• | reviewing and approving the reports issued to shareholders, including annual and interim financial statements; | |
• | promoting the effective operation of the Board; and | |
• | utilization of capital resources, including the issuance of debt and equity securities and setting an appropriate dividend policy. |
Independence Status of the Director | ||||||||||||
Independent | Related | Management | Reason for Related Status | |||||||||
Ian G. Cockwell | X | X | Executive Officer | |||||||||
Bruce T. Lehman | X | — | ||||||||||
Patricia M. Newson | X | — | ||||||||||
Alan Norris | X | X | Executive Officer | |||||||||
Timothy R. Price | X | Chairman, Brookfield Funds | ||||||||||
David M. Sherman | X | — | ||||||||||
Robert L. Stelzl | X | — | ||||||||||
Michael D. Young | X | — |
• | an audit committee; | |
• | a governance and nominating committee; and | |
• | a management resources and compensation committee. |
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• | the integrity of Brookfield Residential’s financial statements; | |
• | Brookfield Residential’s independent auditor’s qualifications and independence; | |
• | the performance of Brookfield Residential’s independent auditors; and | |
• | compliance with the Brookfield Residential Code of Business Conduct and Ethics. |
• | develop, update as necessary and recommend to the Board corporate governance principles and policies; | |
• | monitor compliance with such principles and policies; | |
• | review the effectiveness of the Board’s operations and its relations with management; | |
• | evaluate the performance of the Board, its committees and individual directors; | |
• | identify individuals qualified to become members of the Board; and | |
• | approve and recommend director candidates to the Board. |
• | appointment and compensation of Brookfield Residential’s executive officers; | |
• | job descriptions and annual objectives of Brookfield Residential’s executive officers; | |
• | performance of the President and Chief Executive Officer and other executive officers; | |
• | administration of Brookfield Residential’s equity incentive plans; and | |
• | review and recommend director compensation. |
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• | The position description for the Independent Chair includes, among other things, responsibility for preparing the agenda for each Board meeting in consultation with the Chief Executive Officer and Chief Financial Officer; ensuring directors receive the information required to perform their duties; ensuring an appropriate Board committee structure; ensuring that an appropriate system is in place to evaluate the performance of the Board as a whole, its committees and its individual directors; and, working with the Chief Executive Officer and senior management of Brookfield Residential to monitor progress on strategic planning, policy implementation and succession planning. | |
• | The position description for the Independent Chair also includes responsibility for presiding over all private sessions of the independent directors and ensuring that matters raised during such meetings are reviewed with management and acted upon in a timely fashion and acting as a liaison among the independent directors and the other directors. | |
• | The position description for each of the Board committee chairs includes, among other things, responsibility for setting committee meeting agendas; chairing committee meetings; and working with the respective committee and management to ensure, to the greatest extent possible, the effective functioning of the committee. |
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• | each person who beneficially owns more than 5% of the outstanding shares of Brookfield Residential common stock; | |
• | each director of Brookfield Residential; | |
• | the chief executive officer of Brookfield Residential; and | |
• | the directors and executive officers of Brookfield Residential, as a group. |
Brookfield Residential Common | Brookfield Residential Common | |||||||||||||||
Shares Beneficially Owned | Shares Beneficially Owned | |||||||||||||||
Before The Offering(1) | After The Offering(1) | |||||||||||||||
Number of | Percentage of | Number of | Percentage | |||||||||||||
Name of Beneficial Owner | Shares | Class(2) | Shares | of Class | ||||||||||||
Brookfield Asset Management Inc.(3) | 92,658,120 | (4)(6) | 91.43 | [ | ](7) | [ | ](7) | |||||||||
Brookfield Place, 181 Bay Street | ||||||||||||||||
Suite 300, P.O. Box 762 | ||||||||||||||||
Toronto, Ontario M5J 2T3 | ||||||||||||||||
Brookfield Properties Corporation | 51,500,000 | 50.82 | — | — | ||||||||||||
Brookfield Place, 181 Bay Street | ||||||||||||||||
Suite 300, P.O. Box 762 | ||||||||||||||||
Toronto, Ontario M5J 2T3 | ||||||||||||||||
Ian G. Cockwell | 93,657,452 | (5)(6) | 92.42 | [ | ](7)(9) | [ | ](7)(9) | |||||||||
Craig J. Laurie | 2,363 | * | 2,363 | * | ||||||||||||
Bruce T. Lehman | 1,529 | * | 1,529 | * | ||||||||||||
Patricia M. Newson | — | * | — | — | ||||||||||||
Alan Norris | 2,294 | * | [ | ](8) | * | |||||||||||
Timothy R. Price | 15,116 | * | [ | ](8) | * | |||||||||||
David M. Sherman | 6,501 | * | 6,501 | * | ||||||||||||
Robert L. Stelzl | 2,753 | * | [ | ](8) | * | |||||||||||
Michael D. Young | 6,501 | * | 6,501 | * | ||||||||||||
All directors and officers as a group (9 persons) | 93,694,509 | 92.45 | [ | ] | [ | ] |
* | Less than 1%. | |
(1) | Under the rules of the SEC governing the determination of beneficial ownership of securities, a person is deemed to be a “beneficial owner” of a security if that person has or shares “voting power,” which includes the power to vote or to direct the voting of the security, or “investment power,” which includes the power to dispose |
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of or to direct the disposition of the security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Under these rules, more than one person may be deemed a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which the person has no economic interest. | ||
(2) | The percentages are calculated based on the 101,343,186 Brookfield Residential common shares that were outstanding as of March 31, 2011. | |
(3) | Brookfield Asset Management is an asset management company listed on the New York Stock Exchange, the Toronto Stock Exchange and the NYSE Euronext. Brookfield Residential has been advised by Brookfield Asset Management that its major shareholder is Partners Limited, referred to as Partners. Partners and its shareholders, collectively own, directly or indirectly, exercise control or direction over, have contractual arrangements, such as options, to acquire or otherwise hold beneficial or economic interests in approximately 127 million Class A Limited Voting Shares, representing approximately 19% of the outstanding Class A Limited Voting Shares of Brookfield Asset Management on a fully diluted basis, and 85,120 Class B Limited Voting Shares, representing 100% of the Class B Limited Voting Shares of Brookfield Asset Management. Messrs. Cockwell, Norris and Price, who are directors and/or officers of Brookfield Residential, are also shareholders of Partners and may be deemed to share beneficial ownership of Brookfield Residential common shares with Brookfield Asset Management. There are approximately 40 shareholders of Partners, none of whom hold more than a 20% effective equity interest. To the extent any of such shareholders is deemed to be a beneficial owner of Brookfield Residential common shares held by Brookfield Asset Management, such person disclaims beneficial ownership of those shares. | |
(4) | Beneficial ownership includes shares held indirectly through Partners, which is described in Note 3 above. | |
(5) | Includes 42,158,120 shares beneficially owned by Brookfield Asset Management. Mr. Cockwell disclaims beneficial ownership of common shares held beneficially by Brookfield Asset Management. | |
(6) | Includes 51,500,000 shares beneficially owned by Brookfield Office Properties. Brookfield Asset Management and Mr. Cockwell disclaim beneficial ownership of common shares beneficially owned by Brookfield Office Properties. | |
(7) | Brookfield Asset Management, which owns approximately 50.7% of the outstanding Brookfield Office Properties common shares, has agreed to purchase, at the same price per share as under the rights distribution, the number of Brookfield Residential common shares that it would have been entitled to purchase if it had received its pro rata portion of rights as a shareholder under the rights distribution and any Brookfield Residential common shares not purchased under the rights. As a result, following completion of the transactions and the offering, Brookfield Asset Management and its affiliates will own between 66% and 91% of the outstanding Brookfield Residential common shares on a fully-diluted basis, depending upon how many Brookfield Residential common shares are purchased under the rights. | |
(8) | The number of Brookfield Residential common shares beneficially owned assumes the exercise of all the rights received as shareholders of Brookfield Office Properties. | |
(9) | Includes [ ] shares beneficially owned by Brookfield Asset Management after the rights offering. Mr. Cockwell disclaims beneficial ownership of Brookfield Residential common shares owned beneficially by Brookfield Asset Management. |
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• | an unlimited number of shares, without par value; and | |
• | an unlimited number of preferred shares of preferred shares, without par value (which are referred to as the Brookfield Residential preferred shares), of which 76,945 shares are designated as Brookfield Residential 8% convertible preferred shares, series A. Brookfield Residential has no present plans to designate or issue any other preferred shares. |
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• | approximately 101.5 million Brookfield Residential common shares on an as-converted basis; and | |
• | 70,002 Brookfield Residential 8% convertible preferred shares, series A. |
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At December 31, 2010 Before | At December 31, 2010 After | |||||||
Giving Effect to the Merger | Giving Effect to the Merger | |||||||
and Contribution | and Contribution | |||||||
(All dollar amounts are in thousands of U.S. Dollars) | ||||||||
Project specific debt and other financings | 331,794 | 1,306,156 | ||||||
Accounts payable and other liabilities | 125,342 | 288,856 | ||||||
Other interests in consolidated subsidiaries | 42,461 | 42,461 | ||||||
Total equity | 491,004 | 927,856 | ||||||
Total Capitalization | 990,601 | 2,565,329 | ||||||
Common Shares (unlimited) | 53,808,461 | 101,299,912 |
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• | agreed to purchase from Brookfield Office Properties, under the same purchase terms provided for in the rights, the number Brookfield Residential common shares that it would have been entitled to purchase if Brookfield Office Properties had issued rights pro rata to it; and | |
• | agreed to purchase, under the same purchase terms provided for in the rights, all of the Brookfield Residential common shares that are not purchased by Brookfield Office Properties rights holders at the expiry time. |
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By Mail: | By Hand or Courier: | |
CIBC Mellon Trust Company P.O. Box 1036 Adelaide Street Postal Station Toronto, Ontario, Canada M5C 2K4 Attention: Corporate Restructures | CIBC Mellon Trust Company 199 Bay Street Commerce Court West, Securities Level Toronto, Ontario, Canada M5L 1G9 Attention: Corporate Restructures Toni Taccogna |
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• | Purchase Brookfield Residential common shares pursuant to the exercise of the right. See “— Purchase Brookfield Residential common shares — Form 1.” | |
• | Sell or transfer rights. See “— Sale and Transfer of Rights — Form 2.” | |
• | Divide, combine or exchange rights certificates. See “— Divide or Combine Rights Certificates — Form 3.” |
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Brookfield Properties Corporation Three World Financial Center 200 Vesey Street, 11th Floor New York, New York 10281 | Brookfield Properties Corporation Brookfield Place, Suite 300 181 Bay Street, P.O. Box 762 Toronto, Ontario M5J 2T3 |
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U.S. HOLDERS OF BROOKFIELD OFFICE PROPERTIES COMMON SHARES
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• | an individual who is a citizen or resident of the U.S.; | |
• | a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) organized under the laws of the U.S., any state thereof, or the District of Columbia; | |
• | an estate whose income is subject to U.S. federal income taxation regardless of its source; or | |
• | a trust (i) that is subject to the primary supervision of a court within the U.S. and the control of one or more U.S. persons for all substantial decisions or (ii) that has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person. |
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FOR U.S. HOLDERS OF BROOKFIELD RESIDENTIAL COMMON SHARES
116
• | U.S. Holders that are tax exempt organizations, qualified retirement plans, individual retirement accounts, or other tax-deferred accounts; | |
• | U.S. Holders that are financial institutions, insurance companies, real estate investment trusts, or regulated investment companies; | |
• | U.S. Holders that are dealers in securities or currencies or U.S. Holders that are traders in securities that elect to apply amark-to-market accounting method; |
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• | U.S. Holders that have a “functional currency” other than the U.S. dollar; | |
• | U.S. Holders that own Brookfield Residential common shares as part of a straddle, hedging transaction, conversion transaction, constructive sale, or other arrangement involving more than one position; | |
• | U.S. Holders that acquired Brookfield Residential common shares in connection with the exercise of employee stock options or otherwise as compensation for services; | |
• | U.S. Holders that hold Brookfield Residential common shares other than as a capital asset within the meaning of Section 1221 of the Code; | |
• | U.S. tax expatriates subject to Sections 877 or 877A of the Code; or | |
• | U.S. Holders that own (directly, indirectly, or by attribution) 10% or more of the total combined voting power of the outstanding Brookfield Residential common shares. |
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• | fails to provide an accurate taxpayer identification number (generally onForm W-9); | |
• | is notified by the IRS that backup withholding is required; or | |
• | in certain circumstances, fails to comply with applicable certification requirements. |
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FOR SECURITIES ACT LIABILITIES
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Page | ||||
F-3 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
F-7 | ||||
F-8 | ||||
F-26 | ||||
Financial Statements: | ||||
F-27 | ||||
F-28 | ||||
F-29 | ||||
F-30 | ||||
F-50 | ||||
Financial Statements: | ||||
F-51 | ||||
F-52 | ||||
F-53 | ||||
F-54 | ||||
F-55 | ||||
F-56-F-67 |
F-1
![(DELOITTE)](https://capedge.com/proxy/POS AM/0000950123-11-033055/o69758o6975800.gif)
F-3
(formerly known as Brookfield BHS Holdings Inc. and 1831174 Ontario Inc.)
As at December 31 | ||||||||||||
Note | 2010 | 2009 | ||||||||||
(All dollar amounts are | ||||||||||||
in thousands of U.S. dollars) | ||||||||||||
ASSETS | ||||||||||||
Housing and land inventory | 2 | $ | 801,409 | $ | 835,263 | |||||||
Investments in unconsolidated entities | 3 | 124,369 | 92,477 | |||||||||
Receivables and other assets | 4 | 24,826 | 61,744 | |||||||||
Restricted cash | 5 | 7,366 | 7,485 | |||||||||
Deferred income taxes | 8 | 32,631 | 40,112 | |||||||||
$ | 990,601 | $ | 1,037,081 | |||||||||
LIABILITIES AND EQUITY | ||||||||||||
Project specific and other financings | 6 | $ | 331,794 | $ | 381,567 | |||||||
Accounts payable and other liabilities | 7 | 125,342 | 122,190 | |||||||||
Total liabilities | 457,136 | 503,757 | ||||||||||
Other interests in consolidated subsidiaries | 10 | 42,461 | 47,011 | |||||||||
Commitments, contingent liabilities and other | 14 | — | — | |||||||||
Common stock — unlimited shares authorized, 53,808,461 shares issued and outstanding | 11 | 159,823 | 151,894 | |||||||||
Retained earnings | 237,507 | 234,766 | ||||||||||
Noncontrolling interest | 10 | 93,674 | 99,653 | |||||||||
Total equity | 491,004 | 486,313 | ||||||||||
$ | 990,601 | $ | 1,037,081 | |||||||||
F-4
(formerly known as Brookfield BHS Holdings Inc. and 1831174 Ontario Inc.)
Years Ended December 31 | ||||||||||||||||
Note | 2010 | 2009 | 2008 | |||||||||||||
(All dollar amounts are in thousands of U.S. dollars) | ||||||||||||||||
Revenue | ||||||||||||||||
Housing | $ | 292,095 | $ | 339,625 | $ | 415,311 | ||||||||||
Land | 46,771 | 36,355 | 33,692 | |||||||||||||
338,866 | 375,980 | 449,003 | ||||||||||||||
Direct Cost of Sales | ||||||||||||||||
Housing | (243,301 | ) | (294,493 | ) | (363,038 | ) | ||||||||||
Land | (40,686 | ) | (59,308 | ) | (53,057 | ) | ||||||||||
Impairment of housing and land inventory and write-off of option deposits | 2 | — | (23,963 | ) | (115,124 | ) | ||||||||||
54,879 | (1,784 | ) | (82,216 | ) | ||||||||||||
Selling, general and administrative expense | (55,585 | ) | (52,339 | ) | (69,498 | ) | ||||||||||
(Loss) / equity in earnings from unconsolidated entities | 3 | (192 | ) | 1,331 | 3,302 | |||||||||||
Impairment of investments in unconsolidated entities | 3 | — | (12,995 | ) | (37,863 | ) | ||||||||||
Other income / (expense) | 10, 14 | (e) | 8,055 | 13,191 | (17,823 | ) | ||||||||||
Income / (Loss) Before Income Taxes | 7,157 | (52,596 | ) | (204,098 | ) | |||||||||||
Income tax (expense) / recovery | 8 | (3,706 | ) | 20,134 | 70,861 | |||||||||||
Net Income / (Loss) | 3,451 | (32,462 | ) | (133,237 | ) | |||||||||||
Net income / (loss) attributable to noncontrolling interest and other interests in consolidated subsidiaries | 10 | 710 | (15,714 | ) | (65,984 | ) | ||||||||||
Net Income / (Loss) Attributable to Brookfield Residential Properties Inc. | $ | 2,741 | $ | (16,748 | ) | $ | (67,253 | ) | ||||||||
Earnings / (Loss) Per Share attributable to Brookfield Residential Properties Inc. common stockholders — Basic and Diluted | 12 | $ | 0.05 | $ | (0.31 | ) | $ | (1.25 | ) | |||||||
F-5
(formerly known as Brookfield BHS Holdings Inc. and 1831174 Ontario Inc.)
Years Ended December 31 | ||||||||||||||||
Note | 2010 | 2009 | 2008 | |||||||||||||
(All dollar amounts are in thousands of U.S. dollars) | ||||||||||||||||
Common Stock | ||||||||||||||||
Opening balance | $ | 151,894 | $ | (100,486 | ) | $ | (98,570 | ) | ||||||||
Increase / (reduction) in investment | 7,929 | 252,380 | (1,916 | ) | ||||||||||||
Ending balance | 159,823 | 151,894 | (100,486 | ) | ||||||||||||
Retained Earnings | ||||||||||||||||
Opening balance | 234,766 | 251,514 | 318,767 | |||||||||||||
Net income / (loss) attributable to Brookfield Residential Properties Inc. | 2,741 | (16,748 | ) | (67,253 | ) | |||||||||||
Ending balance | 237,507 | 234,766 | 251,514 | |||||||||||||
Total Brookfield Residential Properties Inc. stockholders’ equity | $ | 397,330 | $ | 386,660 | $ | 151,028 | ||||||||||
Noncontrolling Interest | ||||||||||||||||
Opening balance | $ | 99,653 | $ | 111,491 | $ | 161,201 | ||||||||||
Net income / (loss) attributable to noncontrolling interest | 554 | (11,399 | ) | (48,362 | ) | |||||||||||
Reduction in investment | (6,804 | ) | (5,305 | ) | (2,487 | ) | ||||||||||
Contributions | 271 | 4,866 | 1,139 | |||||||||||||
Ending balance | $ | 93,674 | $ | 99,653 | $ | 111,491 | ||||||||||
Total Equity | $ | 491,004 | $ | 486,313 | $ | 262,519 | ||||||||||
F-6
(formerly known as Brookfield BHS Holdings Inc. and 1831174 Ontario Inc.)
Years Ended December 31 | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(All dollar amounts are in thousands of U.S. dollars) | ||||||||||||
Cash Flows From / (Used in) Operating Activities | ||||||||||||
Net income / (loss) | $ | 3,451 | $ | (32,462 | ) | $ | (133,237 | ) | ||||
Adjustments to reconcile net income / (loss) to net cash from operating activities: | ||||||||||||
Distributed / (undistributed) income from unconsolidated entities | 204 | (1,091 | ) | (1,902 | ) | |||||||
Deferred income taxes | 7,481 | 19,326 | (3,495 | ) | ||||||||
Impairment of housing and land inventory and write-off of option deposits | — | 23,963 | 115,124 | |||||||||
Impairment of investments in unconsolidated entities | — | 12,995 | 37,863 | |||||||||
Stock option compensation costs | 1,105 | 675 | — | |||||||||
Other changes in operating assets and liabilities: | ||||||||||||
Decrease / (increase) in receivables and other assets | 36,918 | 27,439 | (48,677 | ) | ||||||||
Decrease in housing and land inventory | 31,915 | 90,648 | 132,269 | |||||||||
Increase / (decrease) in accounts payable and other liabilities | 7,473 | (4,303 | ) | (31,539 | ) | |||||||
Net cash provided by operating activities | 88,547 | 137,190 | 66,406 | |||||||||
Cash Flows From / (Used in) Investing Activities | ||||||||||||
Investments in unconsolidated entities | (43,087 | ) | (11,222 | ) | (28,344 | ) | ||||||
Distribution from unconsolidated entities | 7,666 | 9,359 | 3,046 | |||||||||
Restricted cash | 119 | (7,485 | ) | — | ||||||||
Acquisition of additional interest in unconsolidated entities | — | — | (6,844 | ) | ||||||||
Net cash used in investing activities | (35,302 | ) | (9,348 | ) | (32,142 | ) | ||||||
Cash Flows From / (Used in) Financing Activities | ||||||||||||
Net repayments under revolving project specific and other financing | (49,773 | ) | (128,171 | ) | (46,742 | ) | ||||||
(Distributions to) / contributions from noncontrolling interest and other interests in consolidated subsidiaries | (3,565 | ) | 263 | 3,217 | ||||||||
Exercise of stock options | 93 | 66 | 129 | |||||||||
Net cash used in financing activities | (53,245 | ) | (127,842 | ) | (43,396 | ) | ||||||
Decrease in cash and cash equivalents | — | — | (9,132 | ) | ||||||||
Cash and cash equivalents at beginning of year | — | — | 9,132 | |||||||||
Cash and cash equivalents at end of year | $ | — | $ | — | $ | — | ||||||
Supplemental Cash Flow Information | ||||||||||||
Interest paid | $ | 31,042 | $ | 36,484 | $ | 57,754 | ||||||
Income taxes recovered | 42,766 | 63,286 | 22,299 | |||||||||
Acquisitions of Unconsolidated Entities’ Assets and Liabilities | ||||||||||||
Increase in housing and land inventory | — | $ | 14,521 | $ | 97,828 | |||||||
Reduction in investment in unconsolidated entities | — | 9,604 | 33,960 | |||||||||
Liabilities assumed | — | 51 | 63,868 |
F-7
Note 1. | Significant Accounting Policies |
(a) | Basis of Presentation |
(b) | Housing and Land Inventory |
F-8
(c) | Unconsolidated Entities |
(d) | Use of Estimates |
(e) | Cash and Cash Equivalents |
(f) | Restricted Cash |
(g) | Income Taxes |
F-9
(h) | Stock-Based Compensation |
(i) | Other Comprehensive Income |
(j) | Earnings/(Loss) Per Share |
(k) | Advertising Costs |
(l) | Warranty Costs |
(m) | Variable Interest Entities |
F-10
(n) | Derivative Financial Instruments and Hedging Activities |
(o) | Recent Accounting Pronouncements |
F-11
Note 2. | Housing and Land Inventory |
December 31 | ||||||||
2010 | 2009 | |||||||
Housing inventory | $ | 261,611 | $ | 359,132 | ||||
Model homes | 18,631 | 32,542 | ||||||
Land and land under development | 521,167 | 443,589 | ||||||
$ | 801,409 | $ | 835,263 | |||||
Number | Total Exercise | |||||||
Year of Expiry | of Lots | Price | ||||||
2011 | 680 | $ | 26,910 | |||||
2012 | 320 | 20,187 | ||||||
Thereafter | 5,435 | 104,491 | ||||||
6,435 | $ | 151,588 | ||||||
F-12
Note 3. | Investments in Unconsolidated Entities |
December 31 | ||||||||
2010 | 2009 | |||||||
Assets | ||||||||
Housing and land inventory | $ | 294,526 | $ | 235,864 | ||||
Other assets | 7,976 | 6,722 | ||||||
$ | 302,502 | $ | 242,586 | |||||
Liabilities and Equity | ||||||||
Project specific financings | $ | 33,173 | $ | 52,175 | ||||
Accounts payable and other liabilities | 22,362 | 14,082 | ||||||
Equity | ||||||||
The Company interest | 124,369 | 92,477 | ||||||
Others’ interest | 122,598 | 83,852 | ||||||
$ | 302,502 | $ | 242,586 | |||||
December 31 | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Revenue and Expenses | ||||||||||||
Revenue | $ | 12,709 | $ | 12,663 | $ | 21,547 | ||||||
Cost of sales | (15,088 | ) | (13,414 | ) | (15,581 | ) | ||||||
Other income / (expense) | 2,776 | (4,081 | ) | (2,548 | ) | |||||||
Net income / (loss) | $ | 397 | $ | (4,832 | ) | $ | 3,418 | |||||
The Company’s share of net (loss) / income | $ | (192 | ) | $ | 1,331 | $ | 3,302 | |||||
Impairment of investments in unconsolidated entities | $ | — | $ | (12,995 | ) | $ | (37,863 | ) | ||||
F-13
Note 4. | Receivables and Other Assets |
December 31 | ||||||||
2010 | 2009 | |||||||
Proceeds and escrow receivable | $ | 4,943 | $ | 1,414 | ||||
Refundable deposits | 989 | 4,815 | ||||||
Notes receivable | 2,425 | 2,425 | ||||||
Prepaid expense | 725 | 2,970 | ||||||
Miscellaneous receivables | 9,353 | 5,261 | ||||||
Swap contract (Note 13(f)) | 2,238 | 674 | ||||||
Other assets | 865 | 4,183 | ||||||
Taxes receivable | 3,288 | 40,002 | ||||||
$ | 24,826 | $ | 61,744 | |||||
Note 5. | Restricted Cash |
Note 6. | Project Specific and Other Financings |
F-14
Note 7. | Accounts Payable and Other Liabilities |
December 31 | ||||||||
2010 | 2009 | |||||||
Trade payables and cost to complete accruals | $ | 38,881 | $ | 37,518 | ||||
Warranty costs (Note 13(c)) | 10,529 | 13,126 | ||||||
Customer deposits | 1,987 | 3,357 | ||||||
Stock-based compensation (Note 9) | 8,076 | 5,878 | ||||||
Loans from other interests in consolidated subsidiaries | 14,168 | 17,118 | ||||||
Accrued and deferred compensation | 3,464 | 3,268 | ||||||
Swap contracts (Note 13(e)) | 15,206 | 14,192 | ||||||
Consolidated land option contracts (Note 2) | 25,206 | 25,434 | ||||||
Other | 7,825 | 2,299 | ||||||
$ | 125,342 | $ | 122,190 | |||||
Note 8. | Income Taxes |
December 31 | ||||||||
2010 | 2009 | |||||||
Differences relating to housing and land inventory | $ | 5,468 | $ | 23,388 | ||||
Compensation deductible for tax purposes when paid | 3,271 | 2,641 | ||||||
Differences related to derivative instruments | 4,927 | 5,235 | ||||||
Loss carry-forwards | 18,965 | 8,848 | ||||||
$ | 32,631 | $ | 40,112 | |||||
F-15
December 31 | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Current | $ | (3,775 | ) | $ | (39,460 | ) | $ | (67,366 | ) | |||
Deferred | 7,481 | 19,326 | (3,495 | ) | ||||||||
Income tax expense / (recovery) | $ | 3,706 | $ | (20,134 | ) | $ | (70,861 | ) | ||||
December 31 | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Statutory federal rate | 35.0 | % | 35.0 | % | 35.0 | % | ||||||
State income tax | 3.0 | % | 3.0 | % | 3.0 | % | ||||||
Uncertain tax liability reversals | — | 2.9 | % | — | ||||||||
Interest and other penalties | 7.7 | % | — | — | ||||||||
Other | — | 1.2 | % | — | ||||||||
Effective rate | 45.7 | % | 42.1 | % | 38.0 | % | ||||||
Note 9. | Stock-Based Compensation |
F-16
2010 | 2009 | |||||||
Dividend yield | 0.0 | % | 0.0 | % | ||||
Volatility rate | 72 | % | 74 | % | ||||
Risk-free interest rate | 3.7 | % | 2.9 | % | ||||
Expected option life (years) | 7.5 | 7.5 |
December 31, 2010 | December 31, 2009 | December 31, 2008 | ||||||||||||||||||||||
Weighted | Weighted | Weighted | ||||||||||||||||||||||
Average | Average | Average | ||||||||||||||||||||||
Per Common | Per Common | Per Common | ||||||||||||||||||||||
Share Exercise | Share Exercise | Share Exercise | ||||||||||||||||||||||
Shares | Price | Shares | Price | Shares | Price | |||||||||||||||||||
Outstanding, beginning of year | 2,155,000 | $ | 10.21 | 875,000 | $ | 30.57 | 782,319 | $ | 30.11 | |||||||||||||||
Granted | 579,000 | 7.79 | 1,670,000 | 2.65 | 210,000 | 15.90 | ||||||||||||||||||
Exercised | (38,000 | ) | 2.46 | (25,000 | ) | 2.65 | (117,319 | ) | 1.28 | |||||||||||||||
Cancelled | (59,000 | ) | 6.16 | (365,000 | ) | 24.92 | — | — | ||||||||||||||||
Outstanding, end of year | 2,637,000 | $ | 9.88 | 2,155,000 | $ | 10.21 | 875,000 | $ | 30.57 | |||||||||||||||
Options exercisable, end of year | 507,000 | $ | 26.39 | 339,200 | $ | 29.35 | 304,400 | $ | 30.39 | |||||||||||||||
December 31, 2010 | ||||||||
Weighted | ||||||||
Average Fair | ||||||||
Shares | Value per Share | |||||||
Unvested options outstanding, December 31, 2009 | 1,815,800 | $ | 1.51 | |||||
Granted | 579,000 | 5.38 | ||||||
Vested | (206,800 | ) | 1.11 | |||||
Cancelled | (58,000 | ) | 3.44 | |||||
Unvested options outstanding, December 31, 2010 | 2,130,000 | $ | 2.49 | |||||
F-17
Options | Weighted | |||||||||||
Outstanding at | Average | Options | ||||||||||
December | Remaining | Exercisable at | ||||||||||
Exercise Prices per Share | 31, 2010 | Contract Life | December 31, 2010 | |||||||||
$1.74 | 38,000 | 2.2 | 38,000 | |||||||||
$21.94 | 70,000 | 3.2 | 70,000 | |||||||||
$36.25 | 94,000 | 4.2 | 94,000 | |||||||||
$52.00 | 90,000 | 5.2 | 72,000 | |||||||||
$36.41 | 160,000 | 6.2 | 96,000 | |||||||||
$15.90 | 145,000 | 7.2 | 58,000 | |||||||||
$2.65 | 1,491,000 | 8.2 | 79,000 | |||||||||
$7.34 | 255,000 | 9.2 | — | |||||||||
$8.23 | 294,000 | 9.8 | — | |||||||||
2,637,000 | 7.7 | 507,000 | ||||||||||
F-18
December 31, 2010 | ||||
Outstanding, January 1, 2010 | 936,109 | |||
Granted | 23,846 | |||
Redeemed | (13,757 | ) | ||
Cancelled | — | |||
Outstanding, December 31, 2010 | 946,198 | |||
Deferred Share Units Vested, December 31, 2010 | 610,804 | |||
Note 10. | Other Interests in Consolidated Subsidiaries and Noncontrolling Interest |
December 31 | ||||||||
2010 | 2009 | |||||||
Other interests in consolidated subsidiaries, beginning of year | $ | 47,011 | $ | 49,839 | ||||
Net loss attributable to other interests in consolidated subsidiaries | (976 | ) | (4,316 | ) | ||||
(Distributions to) / contributions from other interests in consolidated subsidiaries | (3,574 | ) | 1,488 | |||||
Other interests in consolidated subsidiaries, end of year | $ | 42,461 | $ | 47,011 | ||||
Note 11. | Stockholders’ Equity |
F-19
Years Ended December 31 | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Numerator: | ||||||||||||
Net income/(loss) attributable to Brookfield Residential Properties Inc. | $ | 2,741 | $ | (16,748 | ) | $ | (67,253 | ) | ||||
Denominator: | ||||||||||||
Basic and diluted average common shares outstanding | 53,808 | 53,808 | 53,808 | |||||||||
Basic and diluted earnings/(loss) per share | $ | 0.05 | $ | (0.31 | ) | $ | (1.25 | ) | ||||
Note 13. | Commitments, Contingent Liabilities and Other |
2010 | 2009 | |||||||
Balance, at beginning of year | $ | 13,126 | $ | 13,123 | ||||
Payments made during the year | (1,765 | ) | (2,459 | ) | ||||
Warranties issued during the year | 1,705 | 2,491 | ||||||
Adjustments relating to pre-existing warranties | (2,537 | ) | (29 | ) | ||||
Balance, at end of year | $ | 10,529 | $ | 13,126 | ||||
F-20
Lease | ||||
Payments | ||||
2011 | $ | 1,851 | ||
2012 | $ | 1,762 | ||
2013 | $ | 1,070 | ||
2014 | $ | 558 | ||
Thereafter | $ | 222 |
Note 14. | Fair Value Measurements |
F-21
Fair Value Measurements | ||||
Using Significant | ||||
Observable Inputs (Level 2) | ||||
Interest rate swap contracts at December 31, 2010 | $ | (15,206 | ) |
Fair Value Measurements | ||||
Using Significant | ||||
Unobservable Inputs (Level 3) | ||||
Equity swap contract at December 31, 2010 | $ | 2,238 |
F-22
Note 15. | Segment Information |
Years Ended December 31 | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Revenues: | ||||||||||||
Northern California | $ | 71,570 | $ | 102,264 | $ | 128,878 | ||||||
Southland / Los Angeles | 86,554 | 79,125 | 93,828 | |||||||||
San Diego / Riverside | 81,014 | 89,502 | 86,745 | |||||||||
Washington D.C. Area | 96,208 | 93,558 | 135,416 | |||||||||
Corporate and Other | 3,520 | 11,531 | 4,136 | |||||||||
Total Revenues | $ | 338,866 | $ | 375,980 | $ | 449,003 | ||||||
Years Ended December 31 | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Segment Income/ (Loss) before income taxes: | ||||||||||||
Northern California | $ | 6,299 | $ | (6,475 | ) | $ | (29,213 | ) | ||||
Southland / Los Angeles | 8,406 | (4,926 | ) | (18,923 | ) | |||||||
San Diego / Riverside | 3,189 | (22,339 | ) | (87,571 | ) | |||||||
Washington D.C. Area | 7,920 | (11,722 | ) | (33,147 | ) | |||||||
Corporate and Other | (18,657 | ) | (7,134 | ) | (35,244 | ) | ||||||
Income / (loss) before Income Taxes | $ | 7,157 | $ | (52,596 | ) | $ | (204,098 | ) | ||||
December 31 | ||||||||
2010 | 2009 | |||||||
Housing and Land Assets:(1) | ||||||||
Northern California | $ | 206,994 | $ | 201,164 | ||||
Southland / Los Angeles | 127,682 | 122,504 | ||||||
San Diego / Riverside | 313,706 | 336,458 | ||||||
Washington D.C. Area | 234,255 | 226,768 | ||||||
Corporate and Other | 43,141 | 40,846 | ||||||
Total | $ | 925,778 | $ | 927,740 | ||||
(1) | Consists of housing and land inventory including investments in unconsolidated entities. |
F-23
Years Ended December 31 | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Equity / (Loss) in Earnings from Unconsolidated Entities: | ||||||||||||
Northern California | $ | 1,371 | $ | 2,382 | $ | — | ||||||
San Diego / Riverside | (1 | ) | — | 1,974 | ||||||||
Washington D.C. Area | (604 | ) | (317 | ) | 14 | |||||||
Corporate and Other | (958 | ) | (734 | ) | 1,314 | |||||||
Total | $ | (192 | ) | $ | 1,331 | $ | 3,302 | |||||
Impairment of Housing and Land Inventory: | ||||||||||||
Northern California | $ | — | $ | — | $ | 21,172 | ||||||
Southland / Los Angeles | — | 2,600 | 15,695 | |||||||||
San Diego / Riverside | — | 1,195 | 42,498 | |||||||||
Washington D.C. Area | — | 12,900 | 35,759 | |||||||||
Corporate and Other | — | 7,268 | — | |||||||||
Total | $ | — | $ | 23,963 | $ | 115,124 | ||||||
Impairment of Investments in Unconsolidated Entities: | ||||||||||||
San Diego / Riverside | $ | — | $ | (9,243 | ) | $ | (37,863 | ) | ||||
Washington D.C. Area | — | (3,435 | ) | — | ||||||||
Corporate and Other | — | (317 | ) | — | ||||||||
Total | $ | — | $ | (12,995 | ) | $ | (37,863 | ) | ||||
December 31 | ||||||||
2010 | 2009 | |||||||
Investments in Unconsolidated Entities: | ||||||||
Northern California | $ | — | $ | — | ||||
Southland / Los Angeles | 64,833 | 48,050 | ||||||
San Diego / Riverside | 2,050 | 2,694 | ||||||
Washington D.C. Area | 46,579 | 34,971 | ||||||
Corporate and Other | 10,907 | 6,762 | ||||||
Total | $ | 124,369 | $ | 92,477 | ||||
Note 16. | Transaction |
F-24
![(DELOITTE)](https://capedge.com/proxy/POS AM/0000950123-11-033055/o69758o6975800.gif)
Brookfield Place
181 Bay Street
Suite 1400
Toronto ON M5J 2V1
Canada
Fax:416-601-6151
www.deloitte.ca
F-26
As at December 31 | ||||||||||||
Note | 2010 | 2009 | ||||||||||
(All dollar amounts are in thousands of U.S. dollars) | ||||||||||||
Assets | ||||||||||||
Housing and land inventory | 2 | $ | 801,409 | $ | 835,263 | |||||||
Investments in unconsolidated entities | 3 | 124,369 | 92,477 | |||||||||
Receivables and other assets | 4 | 24,826 | 61,744 | |||||||||
Restricted cash | 5 | 7,366 | 7,485 | |||||||||
Deferred income taxes | 8 | 32,631 | 40,112 | |||||||||
$ | 990,601 | $ | 1,037,081 | |||||||||
Liabilities and Equity | ||||||||||||
Project specific and other financings | 6 | $ | 331,794 | $ | 381,567 | |||||||
Accounts payable and other liabilities | 7 | 135,264 | 122,190 | |||||||||
Total liabilities | 467,058 | 503,757 | ||||||||||
Other interests in consolidated subsidiaries | 10 | 42,461 | 47,011 | |||||||||
Commitments, contingent liabilities and other | 13 | — | — | |||||||||
Preferred stock — 10,000,000 shares authorized, 9,995,739 shares issued (December 31, 2009 — 10,000,000 shares authorized, 10,000,000 shares issued) | 11 | 249,582 | 249,688 | |||||||||
Common stock — 200,000,000 shares authorized, 32,088,997 shares issued (December 31, 2009 — 32,073,781 shares issued) | 11 | 321 | 321 | |||||||||
Additional paid-in capital | 11 | 143,317 | 142,106 | |||||||||
Treasury stock, at cost — 2,420,089 shares (December 31, 2009 — 3,671,482 shares) | 11 | (110,807 | ) | (166,113 | ) | |||||||
Retained earnings | 192,213 | 252,994 | ||||||||||
Noncontrolling interest | 10 | 6,456 | 7,317 | |||||||||
Total equity | 481,082 | 486,313 | ||||||||||
$ | 990,601 | $ | 1,037,081 | |||||||||
F-27
Years Ended December 31 | ||||||||||||||||
Note | 2010 | 2009 | 2008 | |||||||||||||
(All dollar amounts are in thousands of U.S. dollars, except per share amounts) | ||||||||||||||||
Revenue | ||||||||||||||||
Housing | $ | 292,095 | $ | 339,625 | $ | 415,311 | ||||||||||
Land | 46,771 | 36,355 | 33,692 | |||||||||||||
338,866 | 375,980 | 449,003 | ||||||||||||||
Direct Cost of Sales | ||||||||||||||||
Housing | (243,301 | ) | (294,493 | ) | (363,038 | ) | ||||||||||
Land | (40,686 | ) | (59,308 | ) | (53,057 | ) | ||||||||||
Impairment of housing and land inventory and write-off of option deposits | 2 | — | (23,963 | ) | (115,124 | ) | ||||||||||
54,879 | (1,784 | ) | (82,216 | ) | ||||||||||||
Selling, general and administrative expense | (55,585 | ) | (52,339 | ) | (69,498 | ) | ||||||||||
(Loss) / equity in earnings from unconsolidated entities | 3 | (192 | ) | 1,331 | 3,302 | |||||||||||
Impairment of investments in unconsolidated entities | 3 | — | (12,995 | ) | (37,863 | ) | ||||||||||
Other income / (expense) | 10, 13(e | ) | 8,055 | 13,191 | (17,823 | ) | ||||||||||
Income / (Loss) Before Income Taxes | 7,157 | (52,596 | ) | (204,098 | ) | |||||||||||
Income tax (expense) / recovery | 8 | (3,706 | ) | 20,134 | 70,861 | |||||||||||
Net Income / (Loss) | 3,451 | (32,462 | ) | (133,237 | ) | |||||||||||
Net loss attributable to noncontrolling interest and other interests in consolidated subsidiaries | 10 | (976 | ) | (4,753 | ) | (17,622 | ) | |||||||||
Net Income / (Loss) Attributable to Brookfield Homes Corporation | $ | 4,427 | $ | (27,709 | ) | $ | (115,615 | ) | ||||||||
Loss Per Share attributable to Brookfield Homes Corporation Common Stockholders | ||||||||||||||||
Basic | 12 | $ | (0.54 | ) | $ | (1.54 | ) | $ | (4.33 | ) | ||||||
Diluted | 12 | $ | (0.54 | ) | $ | (1.54 | ) | $ | (4.33 | ) | ||||||
Weighted Average Common Shares Outstanding (in thousands) | ||||||||||||||||
Basic | 12 | 29,087 | 26,838 | 26,688 | ||||||||||||
Diluted | 12 | 29,087 | 26,838 | 26,688 |
F-28
Years Ended December 31 | ||||||||||||||||
Note | 2010 | 2009 | 2008 | |||||||||||||
(All dollar amounts are in thousands of U.S. dollars) | ||||||||||||||||
Preferred Stock | ||||||||||||||||
Opening balance | $ | 249,688 | $ | — | $ | — | ||||||||||
Preferred stock issuance, net of issuance costs of $312 | 11 | — | 249,688 | — | ||||||||||||
Conversion of preferred stock | (106 | ) | — | — | ||||||||||||
Ending balance | 249,582 | 249,688 | — | |||||||||||||
Common Stock | 321 | 321 | 321 | |||||||||||||
Additional Paid-in Capital | ||||||||||||||||
Opening balance | 142,106 | 141,286 | 145,101 | |||||||||||||
Adjustment to stock-based compensation plan | — | 145 | — | |||||||||||||
Stock option compensation costs | 11 | 1,105 | 675 | — | ||||||||||||
Stock option compensation exercises | 11 | — | — | (3,815 | ) | |||||||||||
Conversion of preferred stock | 106 | — | — | |||||||||||||
Ending balance | 143,317 | 142,106 | 141,286 | |||||||||||||
Treasury Stock | ||||||||||||||||
Opening balance | (166,113 | ) | (238,957 | ) | (243,701 | ) | ||||||||||
Stock option exercises | 11 | 93 | 66 | 4,744 | ||||||||||||
Preferred stock dividends | 11 | 55,213 | 72,778 | — | ||||||||||||
Ending balance | (110,807 | ) | (166,113 | ) | (238,957 | ) | ||||||||||
Retained Earnings | ||||||||||||||||
Opening balance | 252,994 | 356,981 | 477,929 | |||||||||||||
Net income / (loss) attributable to Brookfield Homes Corporation | 4,427 | (27,709 | ) | (115,615 | ) | |||||||||||
Common stock dividends | 11 | — | — | (5,333 | ) | |||||||||||
Preferred stock dividends | 11 | (19,995 | ) | (13,500 | ) | — | ||||||||||
Treasury stock issued | 11 | (45,213 | ) | (62,778 | ) | — | ||||||||||
Ending balance | 192,213 | 252,994 | 356,981 | |||||||||||||
Total Brookfield Homes Corporation stockholders’ equity | $ | 474,626 | $ | 478,996 | $ | 259,631 | ||||||||||
Noncontrolling Interest | ||||||||||||||||
Opening balance | $ | 7,317 | $ | 2,888 | $ | 1,749 | ||||||||||
Net loss attributable to noncontrolling interest | 10 | (1,132 | ) | (437 | ) | — | ||||||||||
Contributions | 271 | 4,866 | 1,139 | |||||||||||||
Ending balance | $ | 6,456 | $ | 7,317 | $ | 2,888 | ||||||||||
Total Equity | $ | 481,082 | $ | 486,313 | $ | 262,519 | ||||||||||
F-29
Years Ended December 31 | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(All dollar amounts are in thousands of U.S. dollars) | ||||||||||||
Cash Flows From / (Used in) Operating Activities | ||||||||||||
Net income / (loss) | $ | 3,451 | $ | (32,462 | ) | $ | (133,237 | ) | ||||
Adjustments to reconcile net income / (loss) to net cash from operating activities: | ||||||||||||
Distributed / (undistributed) income from unconsolidated entities | 204 | (1,091 | ) | (1,902 | ) | |||||||
Deferred income taxes | 7,481 | 19,326 | (3,495 | ) | ||||||||
Impairment of housing and land inventory and write-off of option deposits | — | 23,963 | 115,124 | |||||||||
Impairment of investments in unconsolidated entities | — | 12,995 | 37,863 | |||||||||
Stock option compensation costs | 1,105 | 675 | — | |||||||||
Other changes in operating assets and liabilities: | ||||||||||||
Decrease / (increase) in receivables and other assets | 36,918 | 27,439 | (48,677 | ) | ||||||||
Decrease in housing and land inventory | 31,915 | 90,648 | 132,269 | |||||||||
Increase / (decrease) in accounts payable and other liabilities | 7,473 | (4,303 | ) | (31,539 | ) | |||||||
Net cash provided by operating activities | 88,547 | 137,190 | 66,406 | |||||||||
Cash Flows From / (Used in) Investing Activities | ||||||||||||
Investments in unconsolidated entities | (43,087 | ) | (11,222 | ) | (28,344 | ) | ||||||
Distribution from unconsolidated entities | 7,666 | 9,359 | 3,046 | |||||||||
Restricted cash | 119 | (7,485 | ) | — | ||||||||
Acquisition of additional interest in unconsolidated entities | — | — | (6,844 | ) | ||||||||
Net cash used in investing activities | (35,302 | ) | (9,348 | ) | (32,142 | ) | ||||||
Cash Flows From / (Used in) Financing Activities | ||||||||||||
Net repayments under revolving project specific and other financing | (49,773 | ) | (376,233 | ) | (46,742 | ) | ||||||
Distributions to noncontrolling interest and other interests in consolidated subsidiaries | (5,356 | ) | (1,122 | ) | (580 | ) | ||||||
Contributions from noncontrolling interest and other interests in consolidated subsidiaries | 1,864 | 3,259 | 9,130 | |||||||||
Exercise of stock options | 93 | 66 | 129 | |||||||||
Preferred stock issuance | — | 250,000 | — | |||||||||
Preferred stock issuance costs | — | (312 | ) | — | ||||||||
Preferred stock dividends | (73 | ) | (3,500 | ) | — | |||||||
Common stock dividends paid in cash | — | — | (5,333 | ) | ||||||||
Net cash used in financing activities | (53,245 | ) | (127,842 | ) | (43,396 | ) | ||||||
Decrease in cash and cash equivalents | — | — | (9,132 | ) | ||||||||
Cash and cash equivalents at beginning of year | — | — | 9,132 | |||||||||
Cash and cash equivalents at end of year | $ | — | $ | — | $ | — | ||||||
Supplemental Cash Flow Information | ||||||||||||
Interest paid | $ | 31,042 | $ | 36,484 | $ | 57,754 | ||||||
Income taxes recovered | 42,766 | 63,286 | 22,299 | |||||||||
Acquisitions of Unconsolidated Entities’ Assets and Liabilities | ||||||||||||
Increase in housing and land inventory | — | $ | 14,521 | $ | 97,828 | |||||||
Reduction in investment in unconsolidated entities | — | 9,604 | 33,960 | |||||||||
Liabilities assumed | — | 51 | 63,868 |
F-30
Note 1. | Significant Accounting Policies |
(a) | Basis of Presentation |
(b) | Housing and Land Inventory |
F-31
(c) | Unconsolidated Entities |
(d) | Use of Estimates |
(e) | Cash and Cash Equivalents |
(f) | Restricted Cash |
(g) | Income Taxes |
F-32
(h) | Stock-Based Compensation |
(i) | Other Comprehensive Income |
(j) | Loss Per Share |
(k) | Advertising Costs |
(l) | Warranty Costs |
(m) | Variable Interest Entities |
F-33
(n) | Derivative Financial Instruments and Hedging Activities |
(o) | Recent Accounting Pronouncements |
(p) | Reclassification |
F-34
Note 2. | Housing and Land Inventory |
December 31 | ||||||||
2010 | 2009 | |||||||
Housing inventory | $ | 261,611 | $ | 359,132 | ||||
Model homes | 18,631 | 32,542 | ||||||
Land and land under development | 521,167 | 443,589 | ||||||
$ | 801,409 | $ | 835,263 | |||||
Number | Total Exercise | |||||||
Year of Expiry | of Lots | Price | ||||||
2011 | 680 | $ | 26,910 | |||||
2012 | 320 | 20,187 | ||||||
Thereafter | 5,435 | 104,491 | ||||||
6,435 | $ | 151,588 | ||||||
F-35
Note 3. | Investments in Unconsolidated Entities |
December 31 | ||||||||
2010 | 2009 | |||||||
Assets | ||||||||
Housing and land inventory | $ | 294,526 | $ | 235,864 | ||||
Other assets | 7,976 | 6,722 | ||||||
$ | 302,502 | $ | 242,586 | |||||
Liabilities and Equity | ||||||||
Project specific financings | $ | 33,173 | $ | 52,175 | ||||
Accounts payable and other liabilities | 22,362 | 14,082 | ||||||
Equity | ||||||||
Brookfield Homes interest | 124,369 | 92,477 | ||||||
Others’ interest | 122,598 | 83,852 | ||||||
$ | 302,502 | $ | 242,586 | |||||
December 31 | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Revenue and Expenses | ||||||||||||
Revenue | $ | 12,709 | $ | 12,663 | $ | 21,547 | ||||||
Cost of sales | (15,088 | ) | (13,414 | ) | (15,581 | ) | ||||||
Other income / (expense) | 2,776 | (4,081 | ) | (2,548 | ) | |||||||
Net income / (loss) | $ | 397 | $ | (4,832 | ) | $ | 3,418 | |||||
Brookfield Homes’ share of net (loss) / income | $ | (192 | ) | $ | 1,331 | $ | 3,302 | |||||
Impairment of investments in unconsolidated entities | $ | — | $ | (12,995 | ) | $ | (37,863 | ) | ||||
F-36
Note 4. | Receivables and Other Assets |
December 31 | ||||||||
2010 | 2009 | |||||||
Proceeds and escrow receivable | $ | 4,943 | $ | 1,414 | ||||
Refundable deposits | 989 | 4,815 | ||||||
Notes receivable | 2,425 | 2,425 | ||||||
Prepaid expense | 725 | 2,970 | ||||||
Miscellaneous receivables | 9,353 | 5,261 | ||||||
Swap contract (Note 13 (f)) | 2,238 | 674 | ||||||
Other assets | 865 | 4,183 | ||||||
Taxes receivable | 3,288 | 40,002 | ||||||
$ | 24,826 | $ | 61,744 | |||||
Note 5. | Restricted Cash |
Note 6. | Project Specific and Other Financings |
F-37
Note 7. | Accounts Payable and Other Liabilities |
December 31 | ||||||||
2010 | 2009 | |||||||
Trade payables and cost to complete accruals | $ | 38,881 | $ | 37,518 | ||||
Warranty costs (Note 13 (c)) | 10,529 | 13,126 | ||||||
Customer deposits | 1,987 | 3,357 | ||||||
Stock-based compensation (Note 9) | 8,076 | 5,878 | ||||||
Loans from other interests in consolidated subsidiaries | 14,168 | 17,118 | ||||||
Accrued and deferred compensation | 3,464 | 3,268 | ||||||
Swap contracts (Note 13 (e)) | 15,206 | 14,192 | ||||||
Consolidated land option contracts (Note 2) | 25,206 | 25,434 | ||||||
Dividends payable | 9,922 | — | ||||||
Other | 7,825 | 2,299 | ||||||
$ | 135,264 | $ | 122,190 | |||||
F-38
Note 8. | Income Taxes |
December 31 | ||||||||
2010 | 2009 | |||||||
Differences relating to housing and land inventory | $ | 5,468 | $ | 23,388 | ||||
Compensation deductible for tax purposes when paid | 3,271 | 2,641 | ||||||
Differences related to derivative instruments | 4,927 | 5,235 | ||||||
Loss carry-forwards | 18,965 | 8,848 | ||||||
$ | 32,631 | $ | 40,112 | |||||
December 31 | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Current | $ | (3,775 | ) | $ | (39,460 | ) | $ | (67,366 | ) | |||
Deferred | 7,481 | 19,326 | (3,495 | ) | ||||||||
Income tax expense / (recovery) | $ | 3,706 | $ | (20,134 | ) | $ | (70,861 | ) | ||||
December 31 | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Statutory federal rate | 35.0 | % | 35.0 | % | 35.0 | % | ||||||
State income tax | 3.0 | % | 3.0 | % | 3.0 | % | ||||||
Uncertain tax liability reversals | — | 2.9 | % | — | ||||||||
Interest and other penalties | 7.7 | % | — | — | ||||||||
Other | — | 1.2 | % | — | ||||||||
Effective rate | 45.7 | % | 42.1 | % | 38.0 | % | ||||||
F-39
Note 9. | Stock-Based Compensation |
2010 | 2009 | |||||||
Dividend yield | 0.0 | % | 0.0 | % | ||||
Volatility rate | 72 | % | 74 | % | ||||
Risk-free interest rate | 3.7 | % | 2.9 | % | ||||
Expected option life (years) | 7.5 | 7.5 | ||||||
December 31, 2010 | December 31, 2009 | December 31, 2008 | ||||||||||||||||||||||
Weighted | Weighted | Weighted | ||||||||||||||||||||||
Average | Average | Average | ||||||||||||||||||||||
per Common | per Common | per Common | ||||||||||||||||||||||
Share Exercise | Share Exercise | Share Exercise | ||||||||||||||||||||||
Shares | Price | Shares | Price | Shares | Price | |||||||||||||||||||
Outstanding, beginning of year | 2,155,000 | $ | 10.21 | 875,000 | $ | 30.57 | 782,319 | $ | 30.11 | |||||||||||||||
Granted | 579,000 | 7.79 | 1,670,000 | 2.65 | 210,000 | $ | 15.90 | |||||||||||||||||
Exercised | (38,000 | ) | 2.46 | (25,000 | ) | 2.65 | (117,319 | ) | $ | 1.28 | ||||||||||||||
Cancelled | (59,000 | ) | 6.16 | (365,000 | ) | 24.92 | — | — | ||||||||||||||||
Outstanding, end of year | 2,637,000 | 9.88 | 2,155,000 | 10.21 | 875,000 | $ | 30.57 | |||||||||||||||||
Options exercisable, end of year | 507,000 | $ | 26.39 | 339,200 | $ | 29.35 | 304,400 | $ | 30.39 | |||||||||||||||
F-40
December 31, 2010 | ||||||||
Weighted | ||||||||
Average Fair | ||||||||
Shares | Value per Share | |||||||
Unvested options outstanding, December 31, 2009 | 1,815,800 | 1.51 | ||||||
Granted | 579,000 | 5.38 | ||||||
Vested | (206,800 | ) | 1.11 | |||||
Cancelled | (58,000 | ) | 3.44 | |||||
Unvested options outstanding, December 31, 2010 | 2,130,000 | 2.49 | ||||||
Weighted | ||||||||||||
Options | Average | Options | ||||||||||
Outstanding at | Remaining | Exercisable at | ||||||||||
Exercise Prices per Share | December 31, 2010 | Contract Life | December 31, 2010 | |||||||||
$1.74 | 38,000 | 2.2 | 38,000 | |||||||||
$21.94 | 70,000 | 3.2 | 70,000 | |||||||||
$36.25 | 94,000 | 4.2 | 94,000 | |||||||||
$52.00 | 90,000 | 5.2 | 72,000 | |||||||||
$36.41 | 160,000 | 6.2 | 96,000 | |||||||||
$15.90 | 145,000 | 7.2 | 58,000 | |||||||||
$2.65 | 1,491,000 | 8.2 | 79,000 | |||||||||
$7.34 | 255,000 | 9.2 | — | |||||||||
$8.23 | 294,000 | 9.8 | — | |||||||||
2,637,000 | 7.7 | 507,000 | ||||||||||
F-41
December 31, 2010 | ||||
Outstanding, January 1, 2010 | 936,109 | |||
Granted | 23,846 | |||
Redeemed | (13,757 | ) | ||
Cancelled | — | |||
Outstanding, December 31, 2010 | 946,198 | |||
Deferred Share Units Vested, December 31, 2010 | 610,804 | |||
Note 10. | Other Interests in Consolidated Subsidiaries and Noncontrolling Interest |
December 31 | ||||||||
2010 | 2009 | |||||||
Other interests in consolidated subsidiaries, beginning of year | $ | 47,011 | $ | 49,839 | ||||
Net loss attributable to other interests in consolidated subsidiaries | (976 | ) | (4,316 | ) | ||||
(Distributions to) / contributions from other interests in consolidated subsidiaries | (3,574 | ) | 1,488 | |||||
Other interests in consolidated subsidiaries, end of year | $ | 42,461 | $ | 47,011 | ||||
F-42
Note 11. | Stockholders’ Equity |
F-43
Note 12. | Loss Per Share |
Years Ended December 31 | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Numerator: | ||||||||||||
Net income / (loss) attributable to Brookfield Homes Corporation | $ | 4,427 | $ | (27,709 | ) | $ | (115,615 | ) | ||||
Less: Preferred stock dividends | (19,995 | ) | (13,500 | ) | — | |||||||
Net loss attributable to common stockholders | $ | (15,568 | ) | $ | (41,209 | ) | $ | (115,615 | ) | |||
Denominator: | ||||||||||||
Basic average common shares outstanding | 29,087 | 26,838 | 26,688 | |||||||||
Dilutive effect of stock options assumed to be exercised | — | — | — | |||||||||
Dilutive effect of preferred stock assumed to be converted | — | — | — | |||||||||
Diluted average shares outstanding | 29,087 | 26,838 | 26,688 | |||||||||
Basic loss per share | $ | (0.54 | ) | $ | (1.54 | ) | $ | (4.33 | ) | |||
Diluted loss per share | $ | (0.54 | ) | $ | (1.54 | ) | $ | (4.33 | ) | |||
Note 13. | Commitments, Contingent Liabilities and Other |
F-44
2010 | 2009 | |||||||
Balance, at beginning of year | $ | 13,126 | $ | 13,123 | ||||
Payments made during the year | (1,765 | ) | (2,459 | ) | ||||
Warranties issued during the year | 1,705 | 2,491 | ||||||
Adjustments relating to pre-existing warranties | (2,537 | ) | (29 | ) | ||||
Balance, at end of year | $ | 10,529 | $ | 13,126 | ||||
Lease | ||||
Payments | ||||
2011 | $ | 1,851 | ||
2012 | $ | 1,762 | ||
2013 | $ | 1,070 | ||
2014 | $ | 558 | ||
Thereafter | $ | 222 |
F-45
Note 14. | Fair Value Measurements |
Fair Value Measurements | ||||
Using Significant | ||||
Observable Inputs | ||||
(Level 2) | ||||
Interest rate swap contracts at December 31, 2010 | $ | (15,206 | ) |
Fair Value Measurements | ||||
Using Significant | ||||
Unobservable Inputs | ||||
(Level 3) | ||||
Equity swap contract at December 31, 2010 | $ | 2,238 |
F-46
Note 15. | Segment Information |
Years Ended December 31 | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Revenues: | ||||||||||||
Northern California | $ | 71,570 | $ | 102,264 | $ | 128,878 | ||||||
Southland / Los Angeles | 86,554 | 79,125 | 93,828 | |||||||||
San Diego / Riverside | 81,014 | 89,502 | 86,745 | |||||||||
Washington D.C. Area | 96,208 | 93,558 | 135,416 | |||||||||
Corporate and Other | 3,520 | 11,531 | 4,136 | |||||||||
Total Revenues | $ | 338,866 | $ | 375,980 | $ | 449,003 | ||||||
Years Ended December 31 | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Segment Income/ (Loss) before income taxes: | ||||||||||||
Northern California | $ | 6,299 | $ | (6,475 | ) | $ | (29,213 | ) | ||||
Southland / Los Angeles | 8,406 | (4,926 | ) | (18,923 | ) | |||||||
San Diego / Riverside | 3,189 | (22,339 | ) | (87,571 | ) | |||||||
Washington D.C. Area | 7,920 | (11,722 | ) | (33,147 | ) | |||||||
Corporate and Other | (18,657 | ) | (7,134 | ) | (35,244 | ) | ||||||
Income / (loss) before Income Taxes | $ | 7,157 | $ | (52,596 | ) | $ | (204,098 | ) | ||||
December 31 | ||||||||
2010 | 2009 | |||||||
Housing and Land Assets:(1) | ||||||||
Northern California | $ | 206,994 | $ | 201,164 | ||||
Southland / Los Angeles | 127,682 | 122,504 | ||||||
San Diego / Riverside | 313,706 | 336,458 | ||||||
Washington D.C. Area | 234,255 | 226,768 | ||||||
Corporate and Other | 43,141 | 40,846 | ||||||
Total | $ | 925,778 | $ | 927,740 | ||||
F-47
(2) | Consists of housing and land inventory including investments in unconsolidated entities. |
Years Ended December 31 | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Equity / (Loss) in Earnings from Unconsolidated Entities: | ||||||||||||
Northern California | $ | 1,371 | $ | 2,382 | $ | — | ||||||
San Diego / Riverside | (1 | ) | — | 1,974 | ||||||||
Washington D.C. Area | (604 | ) | (317 | ) | 14 | |||||||
Corporate and Other | (958 | ) | (734 | ) | 1,314 | |||||||
Total | $ | (192 | ) | $ | 1,331 | $ | 3,302 | |||||
Impairment of Housing and Land Inventory: | ||||||||||||
Northern California | $ | — | $ | — | $ | 21,172 | ||||||
Southland / Los Angeles | — | 2,600 | 15,695 | |||||||||
San Diego / Riverside | — | 1,195 | 42,498 | |||||||||
Washington D.C. Area | — | 12,900 | 35,759 | |||||||||
Corporate and Other | — | 7,268 | — | |||||||||
Total | $ | — | $ | 23,963 | $ | 115,124 | ||||||
Impairment of Investments in Unconsolidated Entities: | ||||||||||||
San Diego / Riverside | $ | — | $ | (9,243 | ) | $ | (37,863 | ) | ||||
Washington D.C. Area | — | (3,435 | ) | — | ||||||||
Corporate and Other | — | (317 | ) | — | ||||||||
Total | $ | — | $ | (12,995 | ) | $ | (37,863 | ) | ||||
December 31 | ||||||||
2010 | 2009 | |||||||
Investments in Unconsolidated Entities: | ||||||||
Northern California | $ | — | $ | — | ||||
Southland / Los Angeles | 64,833 | 48,050 | ||||||
San Diego / Riverside | 2,050 | 2,694 | ||||||
Washington D.C. Area | 46,579 | 34,971 | ||||||
Corporate and Other | 10,907 | 6,762 | ||||||
Total | $ | 124,369 | $ | 92,477 | ||||
Note 16. | Potential Transaction |
F-48
![(DELOITTE LOGO)](https://capedge.com/proxy/POS AM/0000950123-11-033055/o69758o6975800.gif)
Brookfield Place
181 Bay Street
Suite 1400
Toronto ON M5J 2V1
Canada
Fax:416-601-6151
www.deloitte.ca
F-50
December 31, | ||||||||||||
Note | 2010 | 2009 | ||||||||||
(All dollar amounts are denominated in thousands of U.S. dollars) | ||||||||||||
ASSETS | ||||||||||||
Land and Housing Inventory | 2 | $ | 1,392,538 | $ | 1,379,406 | |||||||
Investments in Unconsolidated Entities | 3 | 12,834 | 556 | |||||||||
Receivables | 4 | 139,425 | 132,396 | |||||||||
Other Assets | 5 | 34,721 | 25,287 | |||||||||
Deferred Income Taxes | 6 | 42,594 | 52,870 | |||||||||
Due from Affiliates | 9 | 19,000 | 19,061 | |||||||||
Cash | 4,345 | 8,015 | ||||||||||
Restricted Cash | 1 | — | 1,014 | |||||||||
$ | 1,645,457 | $ | 1,618,605 | |||||||||
LIABILITIES | ||||||||||||
Secured Debt | 7 | $ | 67,819 | $ | 87,211 | |||||||
Bank Indebtedness | 8 | 421,686 | 89,930 | |||||||||
Due to Affiliates | 9 | 204,040 | 425,096 | |||||||||
Accounts Payable and Other Liabilities | 10 | 153,192 | 205,641 | |||||||||
846,737 | 807,878 | |||||||||||
Commitments, Contingent Liabilities and Other | 12 | |||||||||||
EQUITY IN NET ASSETS | 798,720 | 810,727 | ||||||||||
$ | 1,645,457 | $ | 1,618,605 | |||||||||
F-51
Years Ended December 31, | ||||||||||||||||
Note | 2010 | 2009 | 2008 | |||||||||||||
(All dollar amounts are denominated in thousands of U.S. dollars) | ||||||||||||||||
REVENUE | ||||||||||||||||
Land | $ | 308,051 | $ | 227,187 | $ | 354,729 | ||||||||||
Housing | 307,257 | 150,937 | 222,997 | |||||||||||||
Interest and Other | 17,056 | 5,862 | 10,696 | |||||||||||||
632,364 | 383,986 | 588,422 | ||||||||||||||
DIRECT COST OF SALES | ||||||||||||||||
Cost of Sales — Land | 160,481 | 118,274 | 142,686 | |||||||||||||
Cost of Sales — Housing | 251,617 | 131,387 | 180,012 | |||||||||||||
Impairment of Land Inventory | 2 | — | 17,075 | 3,300 | ||||||||||||
412,098 | 266,736 | 325,998 | ||||||||||||||
EXPENSES | ||||||||||||||||
Selling, General and Administrative | 34,817 | 27,031 | 36,632 | |||||||||||||
Depreciation | 3,107 | 2,604 | 2,261 | |||||||||||||
37,924 | 29,635 | 38,893 | ||||||||||||||
Equity in (Loss) Earnings of Unconsolidated Entity | 3 | (69 | ) | 1,309 | 1,229 | |||||||||||
INCOME BEFORE INCOME TAXES | 182,273 | 88,924 | 224,760 | |||||||||||||
Income Tax Expense | 6 | 54,709 | 22,593 | 62,752 | ||||||||||||
NET INCOME | 127,564 | 66,331 | 162,008 | |||||||||||||
NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST | 11 | 488 | 818 | 303 | ||||||||||||
NET INCOME ATTRIBUTABLE TO PARENT COMPANY | $ | 128,052 | $ | 67,149 | $ | 162,311 | ||||||||||
F-52
Years Ended December 31, | ||||||||||||||||
Note | 2010 | 2009 | 2008 | |||||||||||||
(All dollar amounts are denominated in thousands of U.S. dollars) | ||||||||||||||||
EQUITY | ||||||||||||||||
Opening Balance | $ | 769,337 | $ | 928,357 | $ | 683,578 | ||||||||||
Net Income Attributable to Parent Company | 128,052 | 67,149 | 162,311 | |||||||||||||
(Distributions) Contributions of Capital | 6 | (166,480 | ) | (226,169 | ) | 82,468 | ||||||||||
Ending Balance | 730,909 | 769,337 | 928,357 | |||||||||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME | ||||||||||||||||
Opening Balance | 32,602 | (80,567 | ) | 83,441 | ||||||||||||
Other Comprehensive Income (Loss) | 35,209 | 113,169 | (164,008 | ) | ||||||||||||
Ending Balance | 67,811 | 32,602 | (80,567 | ) | ||||||||||||
NON-CONTROLLING INTEREST | 11 | — | 8,788 | 9,606 | ||||||||||||
TOTAL EQUITY IN NET ASSETS | $ | 798,720 | $ | 810,727 | $ | 857,397 | ||||||||||
F-53
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Net Income Attributable to Parent Company | $ | 128,052 | $ | 67,149 | $ | 162,311 | ||||||
Other Comprehensive Income (Loss) | ||||||||||||
Foreign Currency Translation | 35,209 | 113,169 | (164,008 | ) | ||||||||
Total Other Comprehensive Income (Loss) | 35,209 | 113,169 | (164,008 | ) | ||||||||
Comprehensive Income (Loss) | $ | 163,261 | $ | 180,318 | $ | (1,697 | ) | |||||
F-54
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(All dollar amounts are denominated in thousands of U.S. dollars) | ||||||||||||
Net Income | $ | 127,564 | $ | 66,331 | $ | 162,008 | ||||||
Depreciation | 3,107 | 2,604 | 2,261 | |||||||||
Cost of Sales greater (less) than Development | ||||||||||||
Costs Incurred | 22,303 | 35,496 | (104,888 | ) | ||||||||
Land Acquisitions | (4,159 | ) | (10,800 | ) | (37,882 | ) | ||||||
Land Deposits and Investigation Costs | (14,167 | ) | (10,464 | ) | (13,306 | ) | ||||||
Decrease (Increase) in Deferred Income Taxes | 8,152 | (21,977 | ) | 10,923 | ||||||||
Impairment of Land Inventory | — | 17,075 | 3,300 | |||||||||
(Increase) Decrease in Receivables | (5,595 | ) | 945 | (36,334 | ) | |||||||
(Decrease) Increase in Accounts Payable | (8,011 | ) | 38,106 | 15,219 | ||||||||
Other | (195 | ) | 474 | 425 | ||||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 128,999 | 117,790 | 1,726 | |||||||||
Increase (Decrease) in Bank Indebtedness | 316,992 | (264,197 | ) | 34,980 | ||||||||
Secured Debt Arranged | 39,784 | 42,310 | 73,701 | |||||||||
Secured Debt Repaid | (58,065 | ) | (68,251 | ) | (93,780 | ) | ||||||
(Decrease) Increase in Due to/from Affiliates | (111,207 | ) | 187,458 | (27,014 | ) | |||||||
(Distributions) Contributions of Equity | (319,720 | ) | (4,080 | ) | 6,536 | |||||||
NET CASH USED IN FINANCING ACTIVITIES | (132,216 | ) | (106,760 | ) | (5,577 | ) | ||||||
Decrease in Restricted Cash | 1,036 | 32 | 2,135 | |||||||||
Contributions from Unconsolidated Entity | 485 | 1,491 | 2,485 | |||||||||
Capital Expenditures | (2,299 | ) | (6,855 | ) | (5,351 | ) | ||||||
NET CASH USED IN INVESTING ACTIVITIES | (778 | ) | (5,332 | ) | (731 | ) | ||||||
NET (DECREASE) INCREASE IN CASH | (3,995 | ) | 5,698 | (4,582 | ) | |||||||
Cash, Beginning of Year | 8,015 | 2,330 | 7,549 | |||||||||
Foreign Exchange on Cash | 325 | (13 | ) | (637 | ) | |||||||
CASH, END OF YEAR | $ | 4,345 | $ | 8,015 | $ | 2,330 | ||||||
Cash Interest Paid | $ | 31,453 | $ | 27,075 | $ | 41,059 | ||||||
Cash Taxes Paid | 76 | 276 | 253 |
F-55
Note 1 — | Significant Accounting Policies |
a) | Basis of Presentation |
b) | Use of Estimates |
c) | Land and Housing Inventory |
d) | Revenue Recognition |
F-56
e) | Restricted Cash |
f) | Reporting Currency and Foreign Currency Translation |
g) | Income Taxes |
h) | Investments in Unconsolidated Entities |
i) | Variable Interest Entities |
F-57
j) | Capital Assets |
k)�� | Recent Accounting Pronouncements |
Note 2 — | Land and Housing Inventory |
December 31, | ||||||||
2010 | 2009 | |||||||
Housing Units | $ | 86,208 | $ | 102,004 | ||||
Land Held and Land Under Development | 1,306,330 | 1,277,402 | ||||||
$ | 1,392,538 | $ | 1,379,406 | |||||
Note 3 — | Investments in Unconsolidated Entities |
December 31, | ||||||||
2010 | 2009 | |||||||
Assets | $ | 33 | $ | 1,537 | ||||
Liabilities | 9 | 426 |
F-58
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Revenue | $ | 2 | $ | 3,941 | $ | 4,180 | ||||||
Expenses | 140 | 1,322 | 1,723 | |||||||||
Net (Loss) Income from Operations | $ | (138 | ) | $ | 2,619 | $ | 2,457 | |||||
Operations’ Share of Net (Loss) Income | $ | (69 | ) | $ | 1,309 | $ | 1,229 | |||||
December 31, | ||||
2010 | ||||
Assets | $ | 25,644 | ||
Liabilities | — | |||
Net Income | — |
Note 4 — | Receivables |
December 31, | ||||||||
2010 | 2009 | |||||||
Development Recovery Receivables | $ | 83,404 | $ | 82,236 | ||||
Real Estate Receivables | 35,369 | 39,755 | ||||||
Sundry and Miscellaneous Receivables | 20,652 | 10,405 | ||||||
$ | 139,425 | $ | 132,396 | |||||
F-59
Note 5 — | Other Assets |
December 31, | ||||||||
2010 | 2009 | |||||||
Capital Assets | $ | 13,762 | $ | 14,771 | ||||
Prepaid Expenses | 1,238 | 2,018 | ||||||
Non-refundable Earnest Funds and Investigation Fees | 19,721 | 8,498 | ||||||
$ | 34,721 | $ | 25,287 | |||||
Note 6 — | Deferred Income Taxes |
December 31, | ||||||||
2010 | 2009 | |||||||
Non-capital Loss Carry-forwards | $ | 26,352 | $ | 17,663 | ||||
Differences Relating to Inventory | 10,863 | 20,733 | ||||||
Compensation Deductible for Tax Purposes when Paid | 5,416 | 16,597 | ||||||
Other Temporary Differences | (37 | ) | (2,123 | ) | ||||
$ | 42,594 | $ | 52,870 | |||||
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Current | $ | 46,557 | $ | 44,570 | $ | 51,829 | ||||||
Deferred | 8,152 | (21,977 | ) | 10,923 | ||||||||
$ | 54,709 | $ | 22,593 | $ | 62,752 | |||||||
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Statutory Rate | 28 | % | 29 | % | 30 | % | ||||||
US Loss Rate Difference | (1 | )% | (5 | )% | (1 | )% | ||||||
Other Adjustments | 3 | % | 1 | % | 1 | % | ||||||
Effective Rate | 30 | % | 25 | % | 30 | % | ||||||
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Note 7 — | Secured Debt |
December 31, | ||||||||
2010 | 2009 | |||||||
Canadian Operations | $ | 19,505 | $ | 19,921 | ||||
U.S. Operations | 48,314 | 67,290 | ||||||
$ | 67,819 | $ | 87,211 | |||||
Year | ||||
2011 | $ | 45,799 | ||
2012 | 18,317 | |||
2013 | 2,361 | |||
2014 | — | |||
2015 and thereafter | �� | 1,342 | ||
$ | 67,819 | |||
Note 8 — | Bank Indebtedness |
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Note 9 — | Related Party Transactions |
Note 10 — | Accounts Payable and Other Liabilities |
December 31, | ||||||||
2010 | 2009 | |||||||
Trade Payables and Accrued Liabilities | $ | 66,142 | $ | 94,924 | ||||
Lot and Damage Deposits | 45,572 | 61,257 | ||||||
Development Costs Payable | 39,325 | 48,028 | ||||||
Home Warranty Costs Payable | 1,637 | 766 | ||||||
Miscellaneous | 516 | 666 | ||||||
$ | 153,192 | $ | 205,641 | |||||
December 31, | ||||||||
2010 | 2009 | |||||||
Balance, Beginning of Year | $ | 766 | $ | 962 | ||||
Payments Made During the Year | (1,699 | ) | (1,417 | ) | ||||
Warranties Issued During the Year | 2,078 | 1,001 | ||||||
Adjustments for Pre-Existing Warranties | 492 | 220 | ||||||
Balance, End of Year | $ | 1,637 | $ | 766 | ||||
Note 11 — | Variable Interest Entity — UCAR Joint Venture |
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December 31, | ||||
2009 | ||||
Assets: | ||||
Investment in Land Held for Sale | $ | 57,644 | ||
Other Assets | 1,189 | |||
58,833 | ||||
Liabilities: | ||||
Accounts Payable and Other Liabilities | 1,280 | |||
Secured Loan | 4,891 | |||
Loan Payable to Carma, Inc. | 36,686 | |||
42,857 | ||||
Equity | 15,976 | |||
$ | 58,833 | |||
Years Ended December 31, | ||||||||
2010 | 2009 | |||||||
Balance, Beginning of Year | $ | 8,788 | $ | 9,606 | ||||
Investment in Non-Controlling Interest | — | — | ||||||
Net Loss Attributable to Non-Controlling Interest | (488 | ) | (818 | ) | ||||
Non-Controlling Interest Acquired | (8,300 | ) | — | |||||
Balance, End of Year | $ | — | $ | 8,788 | ||||
Note 12 — | Commitments, Contingent Liabilities and Other |
Year | ||||
2011 | $ | 4,165 | ||
2012 | 3,987 | |||
2013 | 3,889 | |||
2014 | 3,619 | |||
2015 and thereafter | 12,062 | |||
$ | 27,722 | |||
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Note 13 — | Guarantees |
December 31, | ||||||||
2010 | 2009 | |||||||
Financial Guarantees for Bonds | $ | 19,229 | $ | 26,260 | ||||
Construction Guarantees | 69,058 | 57,663 | ||||||
$ | 88,287 | $ | 83,923 | |||||
Note 14 — | Fair Value Measurements |
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Fair Value | ||||||||||||
Measurement Using | ||||||||||||
Significant | ||||||||||||
Pre-Impairment | Unobservable Inputs | |||||||||||
Amount | Total Impairment | (Level 3) | ||||||||||
United States | $ | 341,240 | $ | 17,075 | $ | 324,165 | ||||||
$ | 341,240 | $ | 17,075 | $ | 324,165 | |||||||
Note 15 — | Segment Information |
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Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Land and Housing: | ||||||||||||
Alberta | $ | 519,430 | $ | 298,697 | $ | 444,014 | ||||||
Ontario | 79,886 | 73,857 | 121,800 | |||||||||
United States | 15,992 | 5,570 | 11,912 | |||||||||
Interest and Other: | ||||||||||||
Alberta | 11,353 | 4,280 | 6,491 | |||||||||
Ontario | 5,137 | — | — | |||||||||
United States | 566 | 1,582 | 4,205 | |||||||||
$ | 632,364 | $ | 383,986 | $ | 588,422 | |||||||
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Alberta | $ | 315,423 | $ | 194,835 | $ | 213,424 | ||||||
Ontario | 69,650 | 41,889 | 87,566 | |||||||||
United States | 27,025 | 30,012 | 25,008 | |||||||||
$ | 412,098 | $ | 266,736 | $ | 325,998 | |||||||
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Alberta | $ | 204,007 | $ | 103,862 | $ | 230,590 | ||||||
Ontario | 10,236 | 31,968 | 34,234 | |||||||||
United States | (11,033 | ) | (24,442 | ) | (13,096 | ) | ||||||
$ | 203,210 | $ | 111,388 | $ | 251,728 | |||||||
December 31, | ||||||||
2010 | 2009 | |||||||
Alberta | $ | 942,224 | $ | 944,005 | ||||
Ontario | 112,687 | 105,854 | ||||||
United States | 337,627 | 329,547 | ||||||
$ | 1,392,538 | $ | 1,379,406 | |||||
F-66
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Alberta | $ | — | $ | — | $ | — | ||||||
Ontario | — | — | — | |||||||||
United States | — | 17,075 | 3,300 | |||||||||
$ | — | $ | 17,075 | $ | 3,300 | |||||||
December 31, | ||||||||
2010 | 2009 | |||||||
Alberta | $ | 12,834 | $ | 556 | ||||
Ontario | — | — | ||||||
United States | — | — | ||||||
$ | 12,834 | $ | 556 | |||||
Note 16 — | Subsequent Events |
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Item 6. | Indemnification of Directors and Officers. |
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Item 7. | Recent Sales of Unregistered Securities. |
Item 8. | Exhibits and Financial Statement Schedules. |
Exhibits | ||
Number | Document Description | |
2.1 | Merger and Contribution Agreement(1) | |
3.1 | Articles of Incorporation of Brookfield Residential Properties Inc.(1) | |
3.2 | Articles of Amendment of Brookfield Residential Properties Inc., effective August 4, 2010(1) | |
3.3 | Articles of Amendment of Brookfield Residential Properties Inc., effective September 29, 2010(1) | |
3.4 | Articles of Amendment of Brookfield Residential Properties Inc., effective October 8, 2010(1) | |
3.5 | Amended and Restated Bylaws of Brookfield Residential Properties Inc.(1) | |
4.1 | Form of Common Share Certificate(2) | |
4.2 | Form of Senior Note(1) | |
4.3 | Form of Junior Subordinated Note(1) | |
4.4 | Form of Rights Certificate(2) | |
4.5 | Form of Subscription and Rights Agency Agreement between Brookfield Properties Corporation and CIBC Mellon Trust Company(2) | |
5.1 | Form of Opinion of Goodmans LLP regarding legality of the securities being registered(2) | |
8.1 | Form of Opinion of Hodgson Russ LLP regarding United States federal income tax considerations(2) | |
8.2 | Form of Opinion of Goodmans LLP regarding Canadian federal tax considerations(2) |
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Exhibits | ||
Number | Document Description | |
8.3 | Form of Opinion of Torys LLP regarding United States tax considerations(2) | |
8.4 | Form of Opinion of Torys LLP regarding Canadian tax considerations(2) | |
23.1 | Consent of Goodmans LLP (included in Exhibit 5.1) (2) | |
23.2 | Consent of Hodgson Russ LLP (included in Exhibit 8.1) (2) | |
23.3 | Consent of Goodmans LLP (included in Exhibit 8.2) (2) | |
23.4 | Consent of Torys LLP (included in Exhibit 8.3) (2) | |
23.5 | Consent of Torys LLP (included in Exhibit 8.4) (2) | |
23.6 | Consent of Deloitte & Touche LLP(2) | |
23.7 | Consent of Deloitte & Touche LLP(2) | |
23.8 | Consent of Deloitte & Touche LLP(2) | |
24.1 | Powers of Attorney(1) | |
99.10 | Master Agreement, dated October 4, 2010, between Brookfield Asset Management Inc. and Brookfield Properties Corporation(1) | |
99.11 | Standby Agreement, dated March 31, 2011, between Brookfield Asset Management Inc. and Brookfield Office Properties. (2) |
(1) | Previously filed. | |
(2) | Filed herewith. |
Item 9. | Undertakings. |
(i) | to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended (the “Securities Act”); | ||
(ii) | to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. | ||
(iii) | to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; |
II-3
(i) | Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; | ||
(ii) | Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; | ||
(iii) | The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and | ||
(iv) | Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
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BROOKFIELD RESIDENTIAL PROPERTIES INC. | ||||||
By: | /s/ Alan Norris | |||||
President and Chief Executive Officer (Principal Executive Officer) | ||||||
By: | /s/ Craig J. Laurie | |||||
Chief Financial Officer (Principal Accounting and Financial Officer) |
Signature | Title | |
/s/ Alan Norris | President and Chief Executive Officer, Director | |
Alan Norris | ||
/s/ Craig J. Laurie | Executive Vice President, Chief Financial Officer | |
Craig J. Laurie | ||
/s/ Ian G. Cockwell | Executive Vice Chairman, Director | |
Ian G. Cockwell | ||
/s/ Bruce T. Lehman | Director | |
Bruce T. Lehman | ||
/s/ Patricia M. Newson | Director | |
Patricia M. Newson | ||
/s/ Timothy R. Price | Director | |
Timothy R. Price | ||
/s/ David M. Sherman | Director | |
David M. Sherman | ||
/s/ Robert L. Stelzl | Director | |
Robert L. Stelzl | ||
/s/ Michael D. Young | Director | |
Michael D. Young |
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