Consolidated Financial Statements and Notes - Brookfield Asset ...

Financial assets represent fi nancial resources which are currently not an active component of the company’s asset managementoperations (see Note 6). The fair value of fi nancial assets as at December 31, 2005 was $2,162 million (2004 – $1,255 million).The portfolio includes $1,517 million (2004 – $344 million) fi xed rate securities with an average yield of 5.7% (2004 – 4.0%) and$41 million (2004 – $335 million) of securities of affi liates, principally equity accounted investees. Revenue earned during the yearfrom securities of affi liates amounted to $18 million (2004 – $17 million).3. INVESTMENTSEquity accounted investments include the following:Number of Shares % of Investment Book ValuesMILLIONS 2005 2004 2005 2004 2005 2004Norbord Inc. 53.8 53.8 37% 36% $ 199 $ 177Fraser Papers Inc. 13.4 12.8 46% 42% 197 204Falconbridge Inc. — 122.6 — 42% — 1,344Other 199 219Total $ 595 $ 1,944During the second quarter of 2005 there was a substantial reorganization of Falconbridge which involved the repurchase byFalconbridge (formerly Noranda) of approximately 64 million common shares in exchange for $1.25 billion of preferred sharesand the subsequent issuance of 132.8 million shares to minority shareholders of Falconbridge to effect the privatization. Asa result, Brookfi eld received $950 million retractable preferred shares in exchange for 48 million common shares and the company’scommon share interest in Falconbridge decreased to 20% from 42%. The company subsequently sold 73 million common shares,or substantially all of its remaining 20% ownership for proceeds of $1.7 billion, consisting of $1.3 billion cash and a $375 millionconvertible debenture. These transactions resulted in an aggregate pre-tax gain of $1,350 million. Falconbridge redeemed$380 million of the $950 million retractable preferred shares previously received by the company as part of the exchange. Thecompany’s remaining investment in these preferred shares is included in Financial Assets as at December 31, 2005.4. ACCOUNTS RECEIVABLE AND OTHERMILLIONS Note 2005 2004Accounts receivable (a) $ 1,709 $ 1,187Prepaid expenses and other assets (b) 1,541 263Restricted cash (c) 651 29Inventory 247 16Future income tax assets 10(c) — 56Total $ 4,148 $ 1,551(a)Accounts ReceivableMILLIONS 2005 2004Property $ 865 $ 733Power generation 345 156Timberlands and infrastructure 28 13Other 471 285Total $ 1,709 $ 1,187Included in accounts receivable are executive share ownership plan loans receivable from executives of the company andconsolidated subsidiaries of $19 million (C$22 million) (2004 – $31 million (C$38 million)). No loans have been made since July2002.Brookfield Asset Management | 2005 Annual Report 71