##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2005
Commission File Number: 001-31524
 BROOKFIELD HOMES CORPORATION
  Delaware
    
    37-1446709(State or Other Jurisdiction of
    
    (I.R.S. EmployerIncorporation or Organization)
    
    Identification No.)8500 Executive Park AvenueSuite 300, Fairfax, Virginia
    
    22031(Address of Principal Executive Offices)
    
    (Zip Code)
 (703) 270-1700
 Title of Each Class
    
    Name of Each Exchange on Which RegisteredCommon Stock
    
    New York Stock Exchange
 None
  Yes     o
    
    No     þ
  Yes     o
    
    No     þ
  Yes     þ
    

No     o
 þ
  Large accelerated filer     o
    
    Accelerated filer     þ
    
    Non-accelerated filer     o
  Yes     o
    
    No     þ




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##### 



PART I
 Item 1. Business
 Introduction
  General Development of Our Business
   Market
    
    Year of Entry
    
    Principal SubsidiarySan Francisco Bay Area
    
    
    1996
    
    
    Brookfield Bay Area Holdings LLCSouthland / Los Angeles
    
    
    1996
    
    
    Brookfield Southland Holdings LLCSan Diego / Riverside
    
    
    1996
    
    
    Brookfield San Diego Holdings LLCSacramento
    
    
    2003
    
    
    Brookfield Sacramento LLCWashington D.C. Area
    
    
    1984
    
    
    Brookfield Washington LLC
  Overview of the Residential Homebuilding and Land Development Industry
  Raw Land
  Land Development
  2




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##### 



Home Construction and Marketing
  Narrative Description of Our Business
  3




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##### 



(Units)
    
    2005
    
    
    2004
    
    
    2003San Francisco Bay
Area
    
    
    192
    
    
    
    407
    
    
    
    275Southland / Los Angeles
    
    
    223
    
    
    
    437
    
    
    
    296San Diego / Riverside
    
    
    611
    
    
    
    507
    
    
    
    452Washington D.C. Area
    
    
    556
    
    
    
    447
    
    
    
    505Total
    
    
    1,582
    
    
    
    1,798
    
    
    
    1,528
    2005
    
    
    2004
    
    
    2003Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageSales
    
    
    Price
    
    
    Sales
    
    
    Price
    
    
    Sales
    
    
    Price(Millions)
    
    
    
    
    
    
    (Millions)
    
    
    
    
    
    
    (Millions)San Francisco Bay
Area
    
    $
    199
    
    
    $
    1,036,000
    
    
    $
    328
    
    
    $
    804,000
    
    
    $
    193
    
    
    $
    700,000Southland / Los Angeles
    
    
    194
    
    
    
    872,000
    
    
    
    391
    
    
    
    894,000
    
    
    
    258
    
    
    
    872,000San Diego / Riverside
    
    
    378
    
    
    
    618,000
    
    
    
    231
    
    
    
    456,000
    
    
    
    137
    
    
    
    303,000Washington D.C. Area
    
    
    303
    
    
    
    545,000
    
    
    
    219
    
    
    
    491,000
    
    
    
    230
    
    
    
    456,000Total
    
    $
    1,074
    
    
    $
    679,000
    
    
    $
    1,169
    
    
    $
    650,000
    
    
    $
    818
    
    
    $
    535,000
  Business Strategy
  Selective Acquisition Policies
  4




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##### 



Decentralized Operating Structure
   Proactive Asset Management
  Creating Communities
  Risk Management
   
    
    selecting carefully the building materials that we use;
    
    emphasizing to our employees and subcontractors that our homes are to be built to meet
a high standard of quality and workmanship;
    
    using only insured subcontractors to perform construction activities;
    
    providing on-site quality control; and
    
    providing after-sales service.
 5




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##### 



Asset Profile
   Owned(Lots)
    
    Directly
    
    
    Joint Ventures
    
    
    Options
    
    
    Total LotsSan Francisco Bay Area
    
    
    700
    
    
    
    382
    
    
    
    3,551
    
    
    
    4,633Southland / Los Angeles
    
    
    1,246
    
    
    
    33
    
    
    
    1,616
    
    
    
    2,895San Diego / Riverside
    
    
    3,796
    
    
    
    2,153
    
    
    
    2,300
    
    
    
    8,249Sacramento
    
    
    
    
    
    
    310
    
    
    
    4,810
    
    
    
    5,120Washington D.C. Area
    
    
    2,701
    
    
    
    1,012
    
    
    
    4,902
    
    
    
    8,615Total December 31, 2005
    
    
    8,443
    
    
    
    3,890
    
    
    
    17,179
    
    
    
    29,512Total December 31, 2004
    
    
    9,081
    
    
    
    3,966
    
    
    
    14,919
    
    
    
    27,966
  December 31,
    
    
    December 31,(Book Value, $ millions)
    
    2005
    
    
    2004San Francisco Bay Area
    
    $
    153
    
    
    $
    115Southland / Los Angeles
    
    
    227
    
    
    
    91San Diego / Riverside
    
    
    264
    
    
    
    274Sacramento
    
    
    16
    
    
    
    11Washington D.C. Area
    
    
    253
    
    
    
    189Total
    
    $
    913
    
    
    $
    680
  December 31,(Book Value, $ millions)
    
    2005Assets
    
    $
    423Liabilities
    
    $
    380Brookfield Homes net investment
    
    $
    53
  Windemere, San Francisco Bay Area.
 6




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##### 



University District, San Francisco Bay Area.
 Irvine Ranch, Orange County
 Morningstar Ranch, Riverside County.
 Audie Murphy, Riverside County.
 Calavera Hills, San Diego County
 Sycamore Canyon, San Diego County
 Winding Walk, San Diego County
 Braemar, Washington D.C. Area
 Property Acquisition and Sale
   Construction and Development
   7




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##### 



Sales and Marketing
     Customer Service and Quality Control
   8




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##### 



Mortgage Brokerage Operations
  Relationship with Affiliates
   Competition
  Material Contracts
  Regulation and Environment
   9




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##### 



Seasonality
  Employees
  Available Information
  NYSE Annual Disclosure
  Item 1A. Risk Factors
  Our business and results of operations will be materially and adversely affected by weakness in
general economic, real estate and other conditions.
  10




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##### 



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 us to
additional costs and delays which adversely affect our business and results of operations.
  If we are not able to develop and market our master-planned communities successfully, our business
and results of operations will be adversely affected.
  Difficulty in retaining qualified trades workers, or obtaining required materials and supplies,
will adversely affect our business and results of operations.
  We sometimes face liabilities when we act as a general contractor, and we are sometimes responsible
for losses when we hire general contractors.
  If we are not able to raise capital on favorable terms, our business and results of operations will
be adversely affected.
  11




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##### 



Our debt and leverage could adversely affect our financial condition.
     Our business and results of operations will be adversely affected if poor relations with the
residents of our communities negatively impact our sales.
  Our business is susceptible to adverse weather conditions and natural disasters.
  Increased insurance risk adversely affects our business.
  12




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##### 



Tax law changes could make home ownership more expensive or less attractive.
  Residential homebuilding is a competitive industry, and competitive conditions adversely affect our
results of operations.
  Provisions in our charter documents and Delaware law may make it difficult for a third party to
acquire us, which could depress the price of our common stock.
   The trading price of shares of our common stock could be adversely affected because Brookfield
Asset Management Inc. owns approximately 52% of our common stock.
  The trading price of shares of our common stock could fluctuate significantly.
  13




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##### 



Item 2. Properties
   Item 3. Legal Proceedings
  Item 4. Submission of Matters to a Vote of Security Holders
  PART II
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
  Year Ended December 31, 2005
    
    
    Year Ended December 31, 2004Cash
    
    
    
    
    
    
    
    
    
    
    CashDividends
    
    
    
    
    
    
    
    
    
    
    DividendsHigh
    
    
    Low
    
    
    Per Share
    
    
    High
    
    
    Low
    
    
    Per Share1st Quarter
    
    $
    45.00
    
    
    $
    31.70
    
    
    
    
    
    
    $
    26.71
    
    
    $
    14.90
    
    
    
    2nd Quarter
    
    $
    49.25
    
    
    $
    39.60
    
    
    $
    0.16
    
    
    $
    30.91
    
    
    $
    21.75
    
    
    $
    9.08
    (1)3rd Quarter
    
    $
    55.68
    
    
    $
    43.56
    
    
    
    
    
    
    $
    29.01
    
    
    $
    24.87
    
    
    
    4th Quarter
    
    $
    56.40
    
    
    $
    46.30
    
    
    $
    0.16
    
    
    $
    34.66
    
    
    $
    24.81
    
    
    $
    0.08
 (1)
    
    $4.50 was paid in the form of a subordinate note which was redeemed for cash during
the fourth quarter of 2004.
    14




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##### 



MaximumTotal Number of
    
    
    Approximate DollarTotal
    
    
    Average
    
    
    Shares Purchased
    
    
    Value of Shares ThatNumber
    
    
    Price
    
    
    as Part of Publicly
    
    
    May Yet be Purchasedof Shares
    
    
    Paid Per
    
    
    Announced Plans
    
    
    Under the Plans orPeriod
    
    Purchased(1)
    
    
    Share
    
    
    or Programs
    
    
    ProgramsJanuary 1, 2005  September 30,
2005
    
    
    215,500
    
    
    $
    44.15
    
    
    
    215,500
    
    
    $
    26,440,502October 1, 2005  October 31, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    191,440,502November 1, 2005  November 30, 2005
    
    
    3,225,100
    
    
    $
    54.65
    
    
    
    3,225,100
    
    
    $
    15,204,432December 1, 2005  December 31, 2005
    
    
    266,900
    
    
    $
    48.99
    
    
    
    266,900
    
    
    $
    52,128,294Total (Year)
    
    
    3,707,500
    
    
    $
    53.63
    
    
    
    3,707,500
    
    
    $
    52,128,294Total (Fourth Quarter)
    
    
    3,492,000
    
    
    $
    54.21
    
    
    
    3,492,000
    
    
    $
    52,128,294
 (1)
    
    All shares were purchased pursuant to the publicly announced plan in open-market
transactions or pursuant to the tender offer.
 Securities Authorized for Issuance Under Equity Compensation Plans
  (a)
    
    
    (b)
    
    
    (c)Number of SecuritiesRemaining Available forNumber of Securities to be
    
    
    Weighted-average
    
    
    Future Issuance UnderIssued Upon Exercise of
    
    
    Exercise Price of
    
    
    Equity CompensationOutstanding Options,
    
    
    Outstanding Options,
    
    
    Plans (Excluding SecuritiesWarrants and Rights
    
    
    Warrants and Rights
    
    
    Reflected in Column (a))Equity compensation plans
approved by stockholders
    
    
    678,576
    
    
    $
    10.52
    
    
    
    1,040,375Equity compensation plans not
approved by stockholders
    
    
    none
    
    
    
    n/a
    
    
    
    noneTotal
    
    
    678,576
    
    
    $
    10.52
    
    
    
    1,040,375
 Item 6. Selected Financial Data
    15




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##### 



United States GAAP
  Years Ended December 31Income Statement Data($ millions, except per share amounts)
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Housing revenue
    
    $
    1,074
    
    
    $
    1,169
    
    
    $
    818
    
    
    $
    785
    
    
    $
    729Total revenue(1)
    
    
    1,231
    
    
    
    1,232
    
    
    
    1,001
    
    
    
    831
    
    
    
    790Gross margin (1) (2)
    
    
    416
    
    
    
    287
    
    
    
    211
    
    
    
    131
    
    
    
    119Operating income (3)
    
    
    391
    
    
    
    268
    
    
    
    166
    
    
    
    81
    
    
    
    72Contribution from bulk land sales to
net income (4)
    
    
    39
    
    
    
    9
    
    
    
    39
    
    
    
    
    
    
    
    2Net income
    
    
    219
    
    
    
    146
    
    
    
    88
    
    
    
    43
    
    
    
    40Diluted earnings per share (5)
    
    
    7.04
    
    
    
    4.64
    
    
    
    2.75
    
    
    
    1.35
    
    
    
    1.23Cash dividends per share (6)
    
    
    0.32
    
    
    
    9.16
    
    
    
    0.16
    
    
    
    0.52
    
    
    
    
 At December 31Balance Sheet Data ($ millions)
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Housing and land inventory
    
    $
    913
    
    
    $
    680
    
    
    $
    567
    
    
    $
    616
    
    
    $
    633Cash and cash equivalents
    
    
    198
    
    
    
    187
    
    
    
    219
    
    
    
    36
    
    
    
    1Total assets
    
    
    1,330
    
    
    
    1,082
    
    
    
    1,013
    
    
    
    844
    
    
    
    851Total debt
    
    
    691
    
    
    
    512
    
    
    
    426
    
    
    
    424
    
    
    
    499Total liabilities
    
    
    1,065
    
    
    
    836
    
    
    
    631
    
    
    
    523
    
    
    
    564Total stockholders equity
    
    
    265
    
    
    
    246
    
    
    
    382
    
    
    
    321
    
    
    
    287
 Years Ended December 31Supplemental Financial Data ($ millions)
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Cash provided by/(used in):Operating activities
    
    $
    60
    
    
    $
    164
    
    
    $
    209
    
    
    $
    102
    
    
    $
    (32
    )Investment activities
    
    
    (5
    )
    
    
    25
    
    
    
    6
    
    
    
    24
    
    
    
    Financing activities
    
    
    (44
    )
    
    
    (221
    )
    
    
    (32
    )
    
    
    (91
    )
    
    
    25Net debt to total capitalization percent
(7)
    
    
    61%
    
    
    
    51%
    
    
    
    32%
    
    
    
    53%
    
    
    
    62%
 Years Ended December 31Operating Data (Unaudited)
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Home closings (units)
    
    
    1,582
    
    
    
    1,798
    
    
    
    1,528
    
    
    
    1,554
    
    
    
    1,645Lots sold (units)
    
    
    1,242
    
    
    
    400
    
    
    
    4,940
    
    
    
    284
    
    
    
    1,336Net new orders (units) (8)
    
    
    1,421
    
    
    
    1,765
    
    
    
    1,710
    
    
    
    1,580
    
    
    
    1,531Backlog (units at end of period)
(9)
    
    
    455
    
    
    
    616
    
    
    
    649
    
    
    
    467
    
    
    
    441Average selling price
    
    $
    679,000
    
    
    $
    650,000
    
    
    $
    535,000
    
    
    $
    505,000
    
    
    $
    443,000Lots controlled
    
    
    29,512
    
    
    
    27,966
    
    
    
    21,606
    
    
    
    22,128
    
    
    
    16,947
 (1)
    
    To conform to the current year presentation, for years prior to 2004, revenue excludes
equity in earnings from housing and land joint ventures and gross margin excludes equity in
earnings from housing and land joint ventures and includes interest expense.(2)
    
    Gross margin represents the contribution from our housing and land projects, after all costs
for development and construction, including related overhead, and before all selling, general
and administrative expense, interest expense and minority interest.(3)
    
    Operating income represents net income before minority interest and income taxes.(4)
    
    Contribution from bulk land sales to net income represents income from sales of owned parcels
of undeveloped land.(5)
    
    Earnings per share prior to September 30, 2002 have been calculated based on the weighted
average number of Brookfield Properties common shares outstanding during each respective
period, adjusted on the basis of one of our common shares for every five common shares of
Brookfield Properties. For the periods after October 1, 2002, earnings per share have been
calculated based on the weighted average number of shares of Brookfield Homes outstanding.(6)
    
    The 2004 cash dividend includes a special dividend of $9 per share.(7)
    
    Net debt to total capitalization percent is defined as total project specific financings plus
subordinated debt less cash (net debt) multiplied by 100 and divided by net debt plus
stockholders equity plus minority interest (total capitalization).(8)
    
    Net new orders for any period represents the aggregate of all homes ordered by customers, net
of cancellations, excluding joint ventures.(9)
    
    Backlog represents the number of new homes subject to pending sales contracts, excluding
joint ventures.
 16




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##### 



Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Overview
       17




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##### 



Results of Operations
 Years Ended December 31Selected Financial Information ($ millions)
    
    2005
    
    
    2004
    
    
    2003Revenue:Housing
    
    $
    1,074
    
    
    $
    1,169
    
    
    $
    818Land and other revenues
    
    
    157
    
    
    
    63
    
    
    
    183Total revenues (1)
    
    
    1,231
    
    
    
    1,232
    
    
    
    1,001Direct cost of sales(1)
    
    
    (815
    )
    
    
    (945
    )
    
    
    (790
    )Gross margin(1)
    
    
    416
    
    
    
    287
    
    
    
    211Equity in earnings from housing and land joint ventures
    
    
    65
    
    
    
    61
    
    
    
    22Selling, general and administrative expense
    
    
    (90
    )
    
    
    (80
    )
    
    
    (67
    )Operating income
    
    
    391
    
    
    
    268
    
    
    
    166Minority interest
    
    
    (36
    )
    
    
    (28
    )
    
    
    (19
    )Net income before taxes
    
    
    355
    
    
    
    240
    
    
    
    147Income tax expense
    
    
    (136
    )
    
    
    (94
    )
    
    
    (59
    )Net income
    
    $
    219
    
    
    $
    146
    
    
    $
    88
 Years Ended December 31Selected Operating Data
    
    2005
    
    
    2004
    
    
    2003Home closings (units):San Francisco Bay Area
    
    
    192
    
    
    
    407
    
    
    
    275Southland / Los Angeles
    
    
    223
    
    
    
    437
    
    
    
    296San Diego / Riverside
    
    
    611
    
    
    
    507
    
    
    
    452Washington D.C. Area
    
    
    556
    
    
    
    447
    
    
    
    505Total
    
    
    1,582
    
    
    
    1,798
    
    
    
    1,528Average selling price:San Francisco Bay Area
    
    $
    1,036,000
    
    
    $
    804,000
    
    
    $
    700,000Southland / Los Angeles
    
    
    872,000
    
    
    
    894,000
    
    
    
    872,000San Diego / Riverside
    
    
    618,000
    
    
    
    456,000
    
    
    
    303,000Washington D.C. Area
    
    
    545,000
    
    
    
    491,000
    
    
    
    456,000Average
    
    $
    679,000
    
    
    $
    650,000
    
    
    $
    535,000Net new orders (units): (2)San Francisco Bay Area
    
    
    150
    
    
    
    348
    
    
    
    342Southland / Los Angeles
    
    
    302
    
    
    
    338
    
    
    
    358San Diego / Riverside
    
    
    412
    
    
    
    674
    
    
    
    447Washington D.C. Area
    
    
    557
    
    
    
    405
    
    
    
    563Total
    
    
    1,421
    
    
    
    1,765
    
    
    
    1,710Backlog (units at end of year): (3)San Francisco Bay Area
    
    
    12
    
    
    
    54
    
    
    
    113Southland / Los Angeles
    
    
    165
    
    
    
    86
    
    
    
    185San Diego / Riverside
    
    
    82
    
    
    
    281
    
    
    
    114Washington D.C. Area
    
    
    196
    
    
    
    195
    
    
    
    237Total
    
    
    455
    
    
    
    616
    
    
    
    649Lots controlled:Lots owned:San Francisco Bay Area
    
    
    1,082
    
    
    
    1,413
    
    
    
    1,928Southland / Los Angeles
    
    
    1,279
    
    
    
    510
    
    
    
    404San Diego / Riverside
    
    
    5,949
    
    
    
    6,680
    
    
    
    6,282Sacramento
    
    
    310
    
    
    
    310
    
    
    
    310Washington D.C. Area
    
    
    3,713
    
    
    
    4,134
    
    
    
    2,08112,333
    
    
    
    13,047
    
    
    
    11,005Lots under option
    
    
    17,179
    
    
    
    14,919
    
    
    
    10,601Total
    
    
    29,512
    
    
    
    27,966
    
    
    
    21,606
 (1)
    
    To conform to the current years presentation, for 2003, revenue excludes equity in
earnings from housing and land joint ventures and gross margin excludes equity in earnings
from housing and land joint ventures and includes interest expense.(2)
    
    Net new orders for any period represent the aggregate of all homes ordered by customers, net
of cancellations, excluding joint ventures.(3)
    
    Backlog represents the number of new homes subject to pending sales contracts excluding joint
ventures.
 18




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##### 



Year Ended December 31, 2005 Compared With Year Ended December 31, 2004
 Net Income
  Results of Operations
      Other Expenses
  Sales Activity
  Year Ended December 31, 2004 Compared With Year Ended December 31, 2003
 Net Income
  Results of Operations
   19




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##### 



Other Expenses
  Sales Activity
  Liquidity and Capital Resources
 Financial Position
   MaturitiesPost($ millions)
    
    2006
    
    
    2007
    
    
    2008
    
    
    2008
    
    
    TotalSan Francisco Bay
Area
    
    $
    66
    
    
    $
    38
    
    
    $
    
    
    
    $
    
    
    
    $
    104Southland / Los Angeles
    
    
    72
    
    
    
    36
    
    
    
    
    
    
    
    
    
    
    
    108San Diego / Riverside
    
    
    136
    
    
    
    96
    
    
    
    
    
    
    
    
    
    
    
    232Washington D.C. Area
    
    
    70
    
    
    
    65
    
    
    
    22
    
    
    
    
    
    
    
    157Other
    
    
    35
    
    
    
    30
    
    
    
    18
    
    
    
    7
    
    
    
    90Total
    
    $
    379
    
    
    $
    265
    
    
    $
    40
    
    
    $
    7
    
    
    $
    691
 20




---



##### 



Cash Flow
  2005
    
    
    2004Housing units and model homes
    
    
    968
    
    
    
    498Lots ready for house construction
    
    
    1,114
    
    
    
    1,183Graded lots and lots commenced
grading
    
    
    1,590
    
    
    
    1,391Undeveloped land
    
    
    8,661
    
    
    
    9,97512,333
    
    
    
    13,047
    Deferred Tax
  Contractual Obligations and Other Commitments
   21




---



##### 



Payment Due by PeriodLess than
    
    
    1-3
    
    
    3-5
    
    
    More thanTotal
    
    
    1 Year
    
    
    Years
    
    
    Years
    
    
    5 YearsProject specific and other
financings(a)
    
    
    691
    
    
    
    379
    
    
    
    312
    
    
    
    
    
    
    
    Operating lease obligations(b)
    
    
    11
    
    
    
    4
    
    
    
    7
    
    
    
    
    
    
    
    Purchase obligations(c)
    
    
    743
    
    
    
    242
    
    
    
    174
    
    
    
    327
    
    
    
    Total (d)
    
    
    1,445
    
    
    
    625
    
    
    
    493
    
    
    
    327
    
    
    
    
 (a)
    
    Amounts are included on the Consolidated Balance Sheet. See Note 4 of the Notes to
the Consolidated Financial Statements included in this Form 10-K for additional information
regarding project specific and other financings and related matters.(b)
    
    Amounts relate to multiple non-cancelable operating leases involving office space, design
centers and model homes.(c)
    
    Amounts are included in the Notes to the Consolidated Financial Statements. See Note 2 for
additional information regarding purchase obligations and related matters.(d)
    
    Amounts do not include interest due to the floating nature of our debt.
 Off-Balance Sheet Arrangements
    Stock Repurchase Program
  22




---



##### 



Critical Accounting Policies and Estimates
   Capitalized Costs
   Carrying Values
  Revenue Recognition
  Recent Accounting Pronouncements
  23




---



##### 



Accounting for Income Taxes
 Seasonality and Quarterly Information
   December 31
    
    
    September 30
    
    
    June 30
    
    
    March 31($ millions, except home closingsand per share amounts)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Total revenue
    
    $
    559
    
    
    $
    547
    
    
    $
    267
    
    
    $
    313
    
    
    $
    253
    
    
    $
    229
    
    
    $
    152
    
    
    $
    143Gross margin
    
    
    211
    
    
    
    138
    
    
    
    81
    
    
    
    68
    
    
    
    76
    
    
    
    48
    
    
    
    48
    
    
    
    33Contribution from bulk land
sales to net income
    
    
    34
    
    
    
    9
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    Net income
    
    
    130
    
    
    
    89
    
    
    
    38
    
    
    
    29
    
    
    
    32
    
    
    
    18
    
    
    
    19
    
    
    
    10Diluted earnings per share
(1)
    
    
    4.36
    
    
    
    2.83
    
    
    
    1.20
    
    
    
    0.94
    
    
    
    1.03
    
    
    
    0.56
    
    
    
    0.60
    
    
    
    0.31Home closings (units)
    
    
    640
    
    
    
    726
    
    
    
    365
    
    
    
    496
    
    
    
    355
    
    
    
    332
    
    
    
    222
    
    
    
    244Total assets
    
    
    1,330
    
    
    
    1,082
    
    
    
    1,262
    
    
    
    1,021
    
    
    
    1,140
    
    
    
    969
    
    
    
    1,069
    
    
    
    1,067Total debt
    
    
    691
    
    
    
    512
    
    
    
    591
    
    
    
    616
    
    
    
    536
    
    
    
    621
    
    
    
    530
    
    
    
    457
 (1)
    
    Quarterly and year-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.
 Non-Arms Length Transactions
  Forward-Looking Statements
  24




---



##### 




    
    planned home closings, deliveries and land and lot sales (and the timing thereof);
    
    sources of and strategies for future growth;
    
    lot supply;
    
    visibility of cash flow and earnings;
    
    financing sources;
    
    expectations of future cash flow;
    
    valuation allowance;
    
    the effect of interest rate changes;
    
    strategic goals;
    
    the effect on our business of existing lawsuits;
    
    the adequacy of our land supply;
    
    whether or not our letters of credit or performance bonds will be drawn upon;
    
    acquisition strategies;
    
    capital expenditures; and
    
    the time of which construction and sales begin on a project.
  
    
    changes in general economic, real estate and other conditions;
    
    mortgage rate changes;
    
    availability of suitable undeveloped land at acceptable prices;
    
    adverse legislation or regulation;
    
    ability to obtain necessary permits and approvals for the development of our land;
    
    availability of labor or materials or increases in their costs;
    
    ability to develop and market our master-planned communities successfully;
    
    confidence levels of consumers;
    
    ability to raise capital on favorable terms;
    
    adverse weather conditions and natural disasters;
    
    relations with the residents of our communities;
    
    risks associated with increased insurance costs or unavailability of adequate coverage;
    
    ability to obtain surety bonds;
    
    competitive conditions in the homebuilding industry, including product and pricing pressures; and
    
    additional risks and uncertainties, many of which are beyond our control, referred to in this Form 10-K and our other SEC
filings.
  Item 7A. Quantitative and Qualitative Disclosures About Market Risk
 Exchange Rates
  Interest Rates
   25




---



##### 



Item 8.
Financial Statements and Supplementary Data
 INDEX TO FINANCIAL STATEMENTS
 PageReport of Independent Registered Chartered Accountants
    
    
    27Consolidated Balance Sheets as at December 31, 2005 and 2004
    
    
    28Consolidated
Statements of Income
for each of the Three Years Ended December 31, 2005, 2004 and 2003
    
    
    29Consolidated
Statements of Stockholders Equity
for each of the Three Years Ended December 31, 2005, 2004 and 2003
    
    
    30Consolidated
Statements of Cash Flows
for each of the Three Years Ended December 31, 2005, 2004 and 2003
    
    
    31Notes to Consolidated Financial Statements
    
    
    32
 26




---



##### 



REPORT OF INDEPENDENT REGISTERED CHARTERED ACCOUNTANTS
 To the Board of Directors and Stockholders of Brookfield Homes Corporation
    Internal Control  Integrated
Framework
 
 
 27




---



##### 



BROOKFIELD HOMES CORPORATION
 CONSOLIDATED BALANCE SHEETS
 (all dollar amounts are in thousands of U.S. dollars)
 As at December 31Note
    
    
    2005
    
    
    2004AssetsHousing and land inventory
    
    
    2
    
    
    $
    912,617
    
    
    $
    679,930Investments in housing and land joint ventures
    
    
    3
    
    
    
    53,260
    
    
    
    59,810Consolidated land inventory not owned
    
    
    2
    
    
    
    22,100
    
    
    
    47,240Receivables and other assets
    
    
    
    
    
    
    94,081
    
    
    
    73,986Cash and cash equivalents
    
    
    11
    
    
    
    198,411
    
    
    
    186,731Deferred income taxes
    
    
    6
    
    
    
    49,417
    
    
    
    33,924$
    1,329,886
    
    
    $
    1,081,621Liabilities and EquityProject specific and other financings
    
    
    4
    
    
    $
    691,410
    
    
    $
    512,098Accounts payable and other liabilities
    
    
    5
    
    
    
    320,787
    
    
    
    256,985Minority interest
    
    
    8
    
    
    
    53,040
    
    
    
    66,422Preferred stock  10,000,000 shares authorized, no shares issued
    
    
    9
    
    
    
    
    
    
    
    Common stock   65,000,000 authorized, 32,073,781 shares issued and
27,378,181 outstanding (December 31, 2004   32,073,781 shares issued
and 30,889,632 outstanding)
    
    
    9
    
    
    
    321
    
    
    
    321Additional paid-in capital
    
    
    9
    
    
    
    146,249
    
    
    
    142,016Treasury stock, at cost  4,695,600 shares
(December 31, 2004  1,184,149 shares)
    
    
    9
    
    
    
    (217,182
    )
    
    
    (22,091
    )Retained earnings
    
    
    9
    
    
    
    335,261
    
    
    
    125,870$
    1,329,886
    
    
    $
    1,081,621
 See accompanying notes to consolidated financial statements
 28




---



##### 



BROOKFIELD HOMES CORPORATION
 CONSOLIDATED STATEMENTS OF INCOME
 (all dollar amounts are in thousands of U.S. dollars, except per share amounts)
 Years Ended December 31Note
    
    
    2005
    
    
    2004
    
    
    2003RevenueHousing
    
    
    
    
    
    $
    1,074,155
    
    
    $
    1,169,073
    
    
    $
    817,774Land and other revenues
    
    
    
    
    
    
    156,897
    
    
    
    62,677
    
    
    
    183,4211,231,052
    
    
    
    1,231,750
    
    
    
    1,001,195Direct Cost of Sales
    
    
    2
    
    
    
    (815,423
    )
    
    
    (945,387
    )
    
    
    (790,877
    )415,629
    
    
    
    286,363
    
    
    
    210,318Equity in earnings from housing and land joint ventures
    
    
    3
    
    
    
    65,084
    
    
    
    61,394
    
    
    
    22,055Selling, general and administrative expense
    
    
    
    
    
    
    (89,693
    )
    
    
    (79,904
    )
    
    
    (66,612
    )Minority interest
    
    
    
    
    
    
    (36,498
    )
    
    
    (28,140
    )
    
    
    (18,684
    )Net Income Before Taxes
    
    
    
    
    
    
    354,522
    
    
    
    239,713
    
    
    
    147,077Income tax expense
    
    
    6
    
    
    
    (135,782
    )
    
    
    (93,297
    )
    
    
    (58,830
    )Net Income
    
    
    
    
    
    $
    218,740
    
    
    $
    146,416
    
    
    $
    88,247Earnings Per ShareBasic
    
    
    10
    
    
    $
    7.17
    
    
    $
    4.74
    
    
    $
    2.78Diluted
    
    
    10
    
    
    $
    7.04
    
    
    $
    4.64
    
    
    $
    2.75Weighted Average Common Shares Outstanding(in thousands)Basic
    
    
    10
    
    
    
    30,497
    
    
    
    30,903
    
    
    
    31,751Diluted
    
    
    10
    
    
    
    31,071
    
    
    
    31,547
    
    
    
    32,048
 See accompanying notes to consolidated financial statements
 29




---



##### 



BROOKFIELD HOMES CORPORATION
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 (all dollar amounts are in thousands of U.S. dollars)
 Years Ended December 31Note
    
    
    2005
    
    
    2004
    
    
    2003Common Stock
    
    
    
    
    
    $
    321
    
    
    $
    321
    
    
    $
    321Additional Paid-in CapitalOpening balance
    
    
    1
    
    
    
    142,016
    
    
    
    320,417
    
    
    
    320,417Stock option exercises
    
    
    9
    
    
    
    4,233
    
    
    
    709
    
    
    
    Special dividend
    
    
    9
    
    
    
    
    
    
    
    (179,110
    )
    
    
    Ending balance
    
    
    
    
    
    
    146,249
    
    
    
    142,016
    
    
    
    320,417Treasury StockOpening balance
    
    
    1
    
    
    
    (22,091
    )
    
    
    (21,695
    )
    
    
    Share repurchases
    
    
    9
    
    
    
    (198,847
    )
    
    
    (1,942
    )
    
    
    (21,695
    )Stock option exercises
    
    
    9
    
    
    
    3,756
    
    
    
    1,546
    
    
    
    Ending balance
    
    
    
    
    
    
    (217,182
    )
    
    
    (22,091
    )
    
    
    (21,695
    )Retained EarningsOpening balance
    
    
    
    
    
    
    125,870
    
    
    
    83,215
    
    
    
    Net income
    
    
    
    
    
    
    218,740
    
    
    
    146,416
    
    
    
    88,247Dividends
    
    
    9
    
    
    
    (9,349
    )
    
    
    (4,942
    )
    
    
    (5,032
    )Special dividends
    
    
    9
    
    
    
    
    
    
    
    (98,819
    )
    
    
    Ending balance
    
    
    
    
    
    
    335,261
    
    
    
    125,870
    
    
    
    83,215Total stockholders equity
    
    
    
    
    
    $
    264,649
    
    
    $
    246,116
    
    
    $
    382,258
 See accompanying notes to consolidated financial statements
 30




---



##### 



BROOKFIELD HOMES CORPORATION
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (all dollar amounts are in thousands of U.S. dollars)
 Years Ended December 312005
    
    
    2004
    
    
    2003Cash Flows From Operating ActivitiesNet income
    
    $
    218,740
    
    
    $
    146,416
    
    
    $
    88,247Adjustments to reconcile net income to net cash provided by
operating activities:Distributed/(undistributed) income from housing and
land joint ventures
    
    
    11,319
    
    
    
    (6,755
    )
    
    
    (3,179
    )Minority interest
    
    
    36,498
    
    
    
    28,140
    
    
    
    18,684Deferred income taxes
    
    
    (10,955
    )
    
    
    17,867
    
    
    
    29,967Other changes in operating assets and liabilities:(Increase)/decrease in receivables and other assets
    
    
    (20,095
    )
    
    
    6,360
    
    
    
    (5,812
    )(Increase)/decrease in housing and land inventory
    
    
    (232,057
    )
    
    
    (115,374
    )
    
    
    47,389Increase in accounts payable and other
    
    
    56,771
    
    
    
    87,516
    
    
    
    33,158Net cash provided by operating activities
    
    
    60,221
    
    
    
    164,170
    
    
    
    208,454Cash Flows From Investing ActivitiesInvestment in housing and land joint ventures
    
    
    (35,980
    )
    
    
    (46,064
    )
    
    
    (28,417
    )Recovery from housing and land joint ventures
    
    
    31,211
    
    
    
    71,207
    
    
    
    34,357Net cash (used in)/provided by investing activities
    
    
    (4,769
    )
    
    
    25,143
    
    
    
    5,940Cash Flows From Financing ActivitiesNet borrowings under revolving project specific and other financings
    
    
    179,312
    
    
    
    85,787
    
    
    
    100,819Repayment of subordinated debt
    
    
    
    
    
    
    (137,294
    )
    
    
    (98,300
    )Distributions to minority interest
    
    
    (24,858
    )
    
    
    (24,510
    )
    
    
    (8,421
    )Contributions from minority interest
    
    
    9,726
    
    
    
    2,263
    
    
    
    938Exercise of stock options
    
    
    244
    
    
    
    85
    
    
    
    Repurchase of common shares
    
    
    (198,847
    )
    
    
    (1,942
    )
    
    
    (21,695
    )Dividends paid in cash
    
    
    (9,349
    )
    
    
    (145,577
    )
    
    
    (5,032
    )Net cash used in financing activities
    
    
    (43,772
    )
    
    
    (221,188
    )
    
    
    (31,691
    )Increase/(decrease) in cash and cash equivalents
    
    
    11,680
    
    
    
    (31,875
    )
    
    
    182,703Cash and cash equivalents at beginning of year
    
    
    186,731
    
    
    
    218,606
    
    
    
    35,903Cash and cash equivalents at end of year
    
    $
    198,411
    
    
    $
    186,731
    
    
    $
    218,606Supplemental Cash Flow InformationInterest paid
    
    $
    37,567
    
    
    $
    31,788
    
    
    $
    19,117Income taxes paid
    
    
    146,000
    
    
    
    71,128
    
    
    
    20,000Non-cash (decrease)/increase in consolidated land inventory not owned
    
    
    (24,510
    )
    
    
    18,952
    
    
    
    23,808Dividends paid through issuance of subordinated debt
    
    
    
    
    
    
    137,294
    
    
    
    
 See accompanying notes to consolidated financial statements
 31




---



##### 



BROOKFIELD HOMES CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Tabular amounts in thousands of U.S. dollars except share and per share amounts)
 Note 1. Significant Accounting Policies
 Basis of Presentation
   Housing and Land Inventory
 (i)  Revenue recognition:Revenues from the sale of homes are recognized when title passes to the
purchaser upon closing, wherein all proceeds are received or collectability is evident. Land
sales are recognized when title passes to the purchaser upon closing, all material conditions of
the sales contract have been met and a significant cash down payment or appropriate security is
received and collectability is evident.(ii)  Carrying values:Housing and land assets are reviewed for recoverability whenever events or
changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Recoverability is measured by comparing the carrying amount of an asset to future undiscounted
cash flows expected to be generated by the asset. To arrive at this amount, the Company
estimates the cash flow for the life of each project. These projections take into account the
specific business plans for each project and managements best estimate of the most probable set
of economic conditions anticipated to prevail in the market area. If these assets are considered
to be impaired, they are then written down to the fair value less estimated selling costs. The
ultimate fair values for the Companys housing and land inventory are dependent upon future
market and economic conditions.(iii)  Capitalized costs:Capitalized costs include the costs of acquiring land, development and
construction costs, interest, property taxes and overhead related to the development of land and
housing. Direct costs are capitalized to individual homes and lots and other costs are allocated
to each lot in proportion to our anticipated revenue.
 Joint Ventures
  Use of Estimates
  Cash and Cash Equivalents
  32




---



##### 



BROOKFIELD HOMES CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Tabular amounts in thousands of U.S. dollars except share and per share amounts)
 Income Taxes
 .
 Stock-Based Compensation
   Other Comprehensive Income
  Earnings Per Share
  Advertising Costs
  Segment Information
   Warranty Costs
  33




---



##### 



BROOKFIELD HOMES CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Tabular amounts in thousands of U.S. dollars except share and per share amounts)
 Variable Interest Entities
  Derivatives
  Recent Accounting Pronouncements
   Accounting for Income Taxes
 Reclassification
  34




---



##### 



BROOKFIELD HOMES CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Tabular amounts in thousands of U.S. dollars except share and per share amounts)
 Note 2. Housing and Land Inventory
  December 312005
    
    
    2004Housing inventory
    
    $
    441,912
    
    
    $
    345,266Model homes
    
    
    20,837
    
    
    
    19,179Land and land under
development
    
    
    449,868
    
    
    
    315,485$
    912,617
    
    
    $
    679,930
     Number
    
    
    Total ExerciseYear of Expiry
    
    of Lots
    
    
    Price2006
    
    
    4,790
    
    
    $
    233,3632007
    
    
    3,723
    
    
    
    139,5212008
    
    
    341
    
    
    
    33,983Thereafter
    
    
    7,748
    
    
    
    313,69616,602
    
    
    $
    720,563
 35




---



##### 



BROOKFIELD HOMES CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Tabular amounts in thousands of U.S. dollars except share and per share amounts)
 Note 3. Investments in Housing and Land Joint Ventures
  December 312005
    
    
    2004AssetsHousing and land inventory
    
    $
    357,833
    
    
    $
    345,939Other assets
    
    
    64,866
    
    
    
    54,510$
    422,699
    
    
    $
    400,449Liabilities and EquityAccounts payable and other liabilities
    
    $
    90,459
    
    
    $
    46,313Project specific financings
    
    
    289,851
    
    
    
    277,568Investment and advancesBrookfield Homes
    
    
    53,260
    
    
    
    59,810Others
    
    
    (10,871
    )
    
    
    16,758$
    422,699
    
    
    $
    400,449Revenue and ExpensesRevenue
    
    $
    594,380
    
    
    $
    466,260Expenses
    
    
    (299,898
    )
    
    
    (265,277
    )Net income
    
    $
    294,482
    
    
    $
    200,983Companys share of net income
    
    $
    65,084
    
    
    $
    61,394
    Note 4. Project Specific and Other Financings
    36




---



##### 



BROOKFIELD HOMES CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Tabular amounts in thousands of U.S. dollars except share and per share amounts)
   Note 5. Accounts Payable and Other Liabilities
  December 312005
    
    
    2004Trade payables and cost to complete accruals
    
    $
    86,137
    
    
    $
    74,388Warranty costs
    
    
    17,743
    
    
    
    18,202Customer deposits
    
    
    12,307
    
    
    
    9,147Stock-based compensation
    
    
    44,935
    
    
    
    30,264Due to minority interest
    
    
    39,478
    
    
    
    29,240Accrued and deferred compensation
    
    
    47,974
    
    
    
    25,007Income tax liabilities
    
    
    65,039
    
    
    
    58,808Other accrued expenses
    
    
    7,174
    
    
    
    11,929$
    320,787
    
    
    $
    256,985
 Note 6. Income Taxes
  December 312005
    
    
    2004Compensation deductible for tax purposes when
paid
    
    $
    37,338
    
    
    $
    28,614Differences relating to properties
    
    
    12,424
    
    
    
    11,149Valuation allowance
    
    
    (345
    )
    
    
    (5,839
    )$
    49,417
    
    
    $
    33,924
  37




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##### 



BROOKFIELD HOMES CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Tabular amounts in thousands of U.S. dollars except share and per share amounts)
  December 312005
    
    
    2004Current taxes payable
    
    $
    13,904
    
    
    $
    13,167Other tax liabilities
    
    
    51,135
    
    
    
    45,641$
    65,039
    
    
    $
    58,808
   December 312005
    
    
    2004
    
    
    2003Current
    
    $
    146,737
    
    
    $
    75,430
    
    
    $
    28,863Deferred
    
    
    (10,955
    )
    
    
    17,867
    
    
    
    29,967$
    135,782
    
    
    $
    93,297
    
    
    $
    58,830
  December 312005
    
    
    2004
    
    
    2003Statutory Federal rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State income tax
    
    
    4.0
    %
    
    
    3.9
    %
    
    
    5.0
    %Other
    
    
    (0.7
    )%
    
    
    
    
    
    
    Effective rate
    
    
    38.3
    %
    
    
    38.9
    %
    
    
    40.0
    %
 38




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##### 



BROOKFIELD HOMES CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Tabular amounts in thousands of U.S. dollars except share and per share amounts)
 Note 7. Stock-Based Compensation
 Option Plan
 
  December 31, 2005
    
    
    December 31, 2004
    
    
    December 31, 2003Weighted Average
    
    
    
    
    
    
    Weighted Average
    
    
    
    
    
    
    Weighted AveragePer Share
    
    
    
    
    
    
    Per Share
    
    
    
    
    
    
    Per ShareShares
    
    

Exercise Price
    
    
    Shares
    
    

Exercise Price
    
    
    Shares
    
    

Exercise PriceOutstanding, beginning
of year
    
    
    756,625
    
    
    $
    3.83
    
    
    
    747,625
    
    
    $
    1.20
    
    
    
    542,625
    
    
    $
    1.00Granted
    
    
    124,000
    
    
    $
    36.25
    
    
    
    95,000
    
    
    $
    21.94
    
    
    
    205,000
    
    
    $
    1.74Exercised
    
    
    (202,049
    )
    
    $
    1.26
    
    
    
    (86,000
    )
    
    $
    1.01
    
    
    
    
    
    
    
    Cancelled
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding, end of year
    
    
    678,576
    
    
    $
    10.52
    
    
    
    756,625
    
    
    $
    3.83
    
    
    
    747,625
    
    
    $
    1.20Options exercisable at
year end
    
    
    138,526
    
    
    $
    3.93
    
    
    
    172,050
    
    
    $
    1.17
    
    
    
    108,525
    
    
    $
    1.00
   Options
    
    
    Weighted
    
    
    OptionsOutstanding at
    
    
    Average
    
    
    Exercisable atDecember 31,
    
    
    Remaining
    
    
    December 31,Exercise Prices Per Share
    
    2005
    
    
    Contract Life
    
    
    2005$1.00
    
    
    325,576
    
    
    6.9 years
    
    
    108,526$1.74
    
    
    134,000
    
    
    7.2 years
    
    
    11,000$21.94
    
    
    95,000
    
    
    8.2 years
    
    
    19,000$36.25
    
    
    124,000
    
    
    9.2 years
    
    
    
  39




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##### 



BROOKFIELD HOMES CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Tabular amounts in thousands of U.S. dollars except share and per share amounts)
 Deferred Share Unit Plan
   Note
8.   Minority Interest
     Note
9.   Stockholders Equity
 Preferred Stock 
 Common Stock Repurchases
 40




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##### 



BROOKFIELD HOMES CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Tabular amounts in thousands of U.S. dollars except share and per share amounts)
  Dividends
 Special Dividend
 Exercise of Stock Options 
 Note 10. Earnings Per Share
  Years Ended December 312005
    
    
    2004
    
    
    2003Numerator:Net income
    
    $
    218,740
    
    
    $
    146,416
    
    
    $
    88,247Denominator:Basic average shares outstanding
    
    
    30,497
    
    
    
    30,903
    
    
    
    31,751Net effect of stock options assumed to be exercised
    
    
    574
    
    
    
    644
    
    
    
    297Diluted average shares outstanding
    
    
    31,071
    
    
    
    31,547
    
    
    
    32,048Basic earnings per share
    
    $
    7.17
    
    
    $
    4.74
    
    
    $
    2.78Diluted earnings per share
    
    $
    7.04
    
    
    $
    4.64
    
    
    $
    2.75
 Note 11. Commitments, Contingent Liabilities and Other
    41




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##### 



BROOKFIELD HOMES CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Tabular amounts in thousands of U.S. dollars except share and per share amounts)
   2005
    
    
    2004
    
    
    2003Balance, at beginning of year
    
    $
    18,202
    
    
    $
    14,917
    
    
    $
    13,709Payments made during the year
    
    
    (5,246
    )
    
    
    (3,624
    )
    
    
    (1,691
    )Warranties issued during the year
    
    
    4,787
    
    
    
    6,909
    
    
    
    2,899Balance, at end of year
    
    $
    17,743
    
    
    $
    18,202
    
    
    $
    14,917
   42




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##### 



Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  Item 9A.
Controls and Procedures
 Conclusions Regarding the Effectiveness of Disclosure Controls and Procedures
    Managements Report on Internal Control Over Financial Reporting
 Internal Control  Integrated Framework Internal Control  Integrated Framework
   43




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##### 



REPORT OF INDEPENDENT REGISTERED CHARTERED ACCOUNTANTS
 To the Board of Directors and Stockholders of Brookfield Homes Corporation
 Internal Control  Integrated Framework
    Internal Control  Integrated Framework Internal Control  Integrated Framework
  
 
 44




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##### 



Item 9B.
Other Information
  PART III
 Item 10.
Directors and Executive Officers of the Registrant
  Name
    
    Age
    
    Position HeldOfficers:Ian G. Cockwell
    
    58
    
    President and Chief Executive OfficerPaul G. Kerrigan
    
    38
    
    Executive Vice President, Chief Financial Officer and TreasurerShane D. Pearson
    
    33
    
    Vice President and SecretaryWilliam B. Seith
    
    56
    
    Executive Vice President, Risk ManagementSignificant Employees:Stephen P. Doyle
    
    48
    
    President, Brookfield Homes San Diego Holdings LLCAdrian Foley
    
    43
    
    President, Brookfield Homes Southland Holdings LLCRobert Hubbell
    
    48
    
    President, Brookfield Washington LLCJohn J. Ryan
    
    46
    
    President, Brookfield Homes Bay Area Holdings LLCRichard T. Whitney
    
    42
    
    President, Brookfield California Land Holdings LLC
 Ian Cockwell
 Paul Kerrigan
 Shane Pearson
 William Seith
 Stephen Doyle
 Adrian Foley
 Robert Hubbell
 45




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##### 



John Ryan
 Richard Whitney
 Item 11. Executive Compensation
  Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
  Item 13. Certain Relationships and Related Transactions
  Item 14. Principal Accounting Fees and Services
  PART IV
 Item 15. Exhibits, Financial Statement Schedules
 (a)
    
    The following documents are filed as part of this report:
 (i)
    
    Financial Statements:
See Item 8 of this report, beginning on page 26.(ii)
    
    Financial Statement Schedules:
Schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission have either
been incorporated in the consolidated financial statements and
accompanying notes or are not applicable to us.(iii)
    
    Exhibits:
Refer to the Exhibit Index to this report.
 46




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##### 



SIGNATURES
 th
 Brookfield Homes CorporationBy:

/s/ IAN G. COCKWELLIan G. CockwellPresident and Chief Executive Officer  Signature
    
    Title
    
    Date/s/ J. BRUCE FLATT

J. Bruce Flatt
    
    Chairman of the Board
    
    February 24, 2006/s/ IAN G. COCKWELL

Ian G. Cockwell
    
    President and Chief
Executive Officer and
Director (Principal
Executive Officer)
    
    February 24, 2006/s/ PAUL G. KERRIGAN

Paul G. Kerrigan
    
    Executive Vice President,
Chief Financial Officer and
Treasurer (Principal
Financial Officer and
Principal Accounting
Officer)
    
    February 24, 2006/s/ JOAN H. FALLON

Joan H. Fallon
    
    Director
    
    February 24, 2006/s/ ROBERT A. FERCHAT

Robert A. Ferchat
    
    Director
    
    February 24, 2006/s/ BRUCE T. LEHMAN

Bruce T. Lehman
    
    Director
    
    February 24, 2006/s/ ALAN NORRIS
Alan Norris
    
    Director
    
    February 24, 2006/s/ TIMOTHY R. PRICE

Timothy R. Price
    
    Director
    
    February 24, 2006/s/ DAVID M. SHERMAN

David M. Sherman
    
    Director
    
    February 24, 2006/s/ ROBERT L. STELZL

Robert L. Stelzl
    
    Director
    
    February 24, 2006
 47




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##### 



EXHIBIT INDEX

Exhibit
    
    Description2.1
    
    Purchase Agreement between Brookfield California Holdings Inc. and Brookfield Homes Corporation,
effective as of September 30, 2002  Incorporated by reference to Exhibit 2.1 of the
Registrants Registration Statement on Form 10 (Commission File No. 001-31524) filed with the
Commission.2.2
    
    Purchase Agreement between Brookfield Homes (US) Inc. and Brookfield Homes Holdings Inc.,
effective as of September 30, 2002  Incorporated by reference to Exhibit 2.2 of the
Registrants Registration Statement on Form 10 (Commission File No. 001-31524) filed with the
Commission.2.3
    
    Purchase Agreement between Brookfield Washington Inc. and Brookfield Homes Holdings Inc.,
effective as of September 30, 2002  Incorporated by reference to Exhibit 2.3 of the
Registrants Registration Statement on Form 10 (Commission File No. 001-31524) filed with the
Commission.2.4
    
    Purchase Agreement between Brookfield Homes of California Inc. and Brookfield Homes Holdings
Inc., effective as of September 30, 2002  Incorporated by reference to Exhibit 2.4 of the
Registrants Registration Statement on Form 10 (Commission File No. 001-31524) filed with the
Commission.2.5
    
    Purchase Agreement between Brookfield Washington Inc., Brookfield Homes of California Inc. and
Brookfield Homes Corporation, effective as of September 30, 2002  Incorporated by reference to
Exhibit 2.5 of the Registrants Registration Statement on Form 10 (Commission File No.
001-31524) filed with the Commission.2.6
    
    Purchase Agreement between Brookfield Homes of California Inc. and Intercontinental Investment &
Development Bank Corporation, effective as of September 30, 2002  Incorporated by reference to
Exhibit 2.6 of the Registrants Registration Statement on Form 10 (Commission File No.
001-31524) filed with the Commission.3.1
    
    Amended and Restated Certificate of Incorporation  Incorporated by reference to Exhibit 3.1 of
the Registrants Registration Statement on Form 10 (Commission File No. 001-31524) filed with
the Commission.3.2
    
    By-laws  Incorporated by reference to Exhibit 3.2 of the Registrants Registration Statement on
Form 10 (Commission File No. 001-31524) filed with the Commission.4.1
    
    Description of Common Stock (see Article FOURTH of Exhibit A to Exhibit 3.1)  Incorporated by
reference to Exhibit 4.1 of the Registrants Registration Statement on Form 10 (Commission File
No. 001-31524) filed with the Commission.4.2
    
    Form of Deposit Facility  Incorporated by reference to Exhibit 4.2 of the Registrants Annual
Report on Form 10-K filed with the Commission on March 15, 2004.4.3*
    
    Letter furnished to Securities and Exchange Commission agreeing to furnish certain debt
instruments.10.1
    
    License Agreement  Incorporated by reference to Exhibit 10.1 of the Registrants Registration
Statement on Form 10 (Commission File No. 001-31524) filed with the Commission.10.2
    
    Form of Stock Option Plan  Incorporated by reference to Exhibit 10.5 of the Registrants
Registration Statement on Form 10 (Commission File No. 001-31524) filed with the Commission.10.3
    
    Form of Deferred Share Unit Plan  Incorporated by reference to Exhibit 10.6 of the
Registrants Registration Statement on Form 10 (Commission File No. 001-31524) filed with the
Commission.21.1
    
    List of Subsidiaries  Incorporated by reference to Exhibit 21.1 of the Registrants
Registration Statement on Form 10 (Commission File No. 001-31524) filed with the Commission.31.1*
    
    Rule 13a-14(a) certification by Ian G. Cockwell, President and Chief Executive Officer.31.2*
    
    Rule 13a-14(a) certification by Paul G. Kerrigan, Executive Vice President, Chief Financial
Officer and Treasurer.32.1*
    
    Section 1350 certification of the Chief Executive Officer and Chief Financial Officer.





*
    
    Filed herewith
    
    Executive Officers management contract or compensatory plan or arrangementCopies of the exhibits filed with or incorporated by reference into this annual report on Form 10-K
do not accompany copies of this annual report on Form 10-K distributed to our stockholders. We will
furnish a copy of any of such exhibits to any stockholder requesting the same.