Brookfield Homes CEO Ian Cockwell welcomed callers to the company's 2008 yearend earnings call with a message similar to last quarter's: Numbers are down, land is hard to move, but the company will remain solvent by enhancing its land assets and getting its balance sheet in order.

"We will continue to position ourselves to participate in the increased demand for lots as the longer-term demand for new homes returns, based on the fundamentals of population growth and the need for replacement housing," Cockwell said during the call. "Over the past two years, we have attempted to differentiate ourselves in the industry and have responded to the challenging market conditions, having achieved the following: Operations have maintained a focus on controlling unentitled land assets with limited capital interest and created value by entitling the land. And despite the severity of the housing downturn and having to address a number of operational challenges, we have continued our longer-term strategic focus of enhancing the value of our land projects."

However, land impairments cost the company. "In terms of balance sheet, housing and land inventory and investments in housing and land inventory ventures compromise the majority of our assets, and they decreased by $156 million due to impairments and other charges," CFO Craig Laurie said.

The company recorded impairments of $97 million during its fiscal year ended Dec. 31, 2008, on 2,326 owned lots, $18 million on the write-off of option deposits on 819 lots, and $38 million on investments in equity accounted joint ventures.

Cockwell said the company is hopeful that it will be able to increase cash flow to $120 million in 2009, using it to repay debt. Yearend numbers show the company as having $66 million in cash flow. Laurie said the $120 million in future cash flow will be comprised of $60 million in tax returns and roughly the same amount in operating cash flow during 4Q2008.

The builder is also working to enhance its financials through a rights offering to common stockholders of up to 10 million shares of 8% convertible preferred stock that was announced Dec. 23. Through the offering, each whole right will entitle the holder to purchase one share of convertible preferred stock for $25. The company hopes to net $250 million from the offering, with the proceeds going toward general corporate purposes, including repayment on the credit facility of an affiliate of its largest stockholder, Brookfield Asset Management Inc.

Laurie also pointed out that Brookfield Asset Management indicated its intention to exercise in full its subscription rights, as well as any over-subscription rights to which it may be entitled, but it has not entered into a binding agreement to do so.

Revenue for the year totaled $449 million, compared to $583 million for 2007. The company's 2008 average sales price was $562,000 compared to $662,000 in 2007.

Net new orders for the years 2008 and 2007 were 729 units and 735 units, respectively. Active communities at the close of 4Q2008 totalled 30, similar to the previous quarter.

Brookfield Homes closed on 750 homes and 616 lots for a total of 1,366 home and lot closings in 2008, compared to 839 home and 1,328 lot closings in 2007. Yearend numbers had Brookfield owning or controlling 24,109 lots.

Looking to the future, Cockwell said the company will focus on strengthening its balance sheet, monetizing its inventory of 3,000 fully developed lots, entitling or advancing the entitlement of optioned lots with the goal to entitle 1,500 lots during 2009 and 2010, and increasing the lots controlled in certain strategic market areas where the company has developed a strong reputation and relationships within the community.

Cockwell added that the company does not expect to invest significantly in land development until there is a meaningful reduction in current inventories.