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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) July 21, 2004
-------------------------------
The St. Joe Company
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Florida
- --------------------------------------------------------------------------------
(State or Other Jurisdiction of Incorporation)
1-10466 59-0432511
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(Commission File Number) (IRS Employer Identification No.)
245 Riverside Avenue, Suite 500, Jacksonville, FL 32202
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(904) 301-4200
- --------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
N/A
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
-----------------------
The Company issued a Press Release dated July 21, 2004, announcing the
Company's financial results for the quarter ended June 30, 2004. A
copy is furnished with this Form 8-K as Exhibit 99.1 and is
incorporated by reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE ST. JOE COMPANY
Dated: July 21, 2004 By: /s/ Michael N. Regan
-------------------------------
Name: Michael N. Regan
Title: Senior Vice President
Exhibit 99.1
The St. Joe Company Reports Second Quarter 2004 Net Income of $22.7
Million, or $0.30 Per Share
JACKSONVILLE, Fla.--(BUSINESS WIRE)--July 21, 2004--The St. Joe
Company (NYSE:JOE):
- JOE Raises 2004 Full-Year Guidance
- RiverTown and WindMark Beach Complete Key Approvals
- Sales Velocity and Pricing in Town and Resort Communities
Continue to Strengthen
- JOE and Government Agencies Agree on Environmental Permitting
for 39,000 Acres in Northwest Florida
The St. Joe Company (NYSE:JOE) today announced that its second
quarter 2004 Net Income was $22.7 million, or $0.30 per share,
compared with $9.9 million, or $0.13 per share, for the second quarter
of 2003.
Net Income in the second quarter of 2004 included after-tax
conservation land gains of $1.5 million, or $0.02 per share, compared
to $3.2 million, or $0.04 per share, in the second quarter of 2003.
Results for the second quarter of 2003 also included a non-cash charge
of $8.8 million net of tax, or $0.11 per share, to reduce the carrying
value of Advantis Real Estate Services, the company's commercial real
estate services unit. All per share references in this release are
presented on a fully diluted basis.
Net Income for the first half of 2004 was $35.7 million, or $0.46
per share, compared with $24.3 million, or $0.31 per share, for the
first half of 2003. Net income year-to-date for 2004 included
after-tax conservation land gains of $1.5 million, or $0.02 per share,
compared to $11.4 million, or $0.15 per share, along with the Advantis
charge in the 2003 period.
"JOE continued to build momentum during the second quarter," said
Peter S. Rummell, chairman and CEO of JOE. "We're well on our way to a
very good 2004. Demand for our real estate products - resort and
primary residential, commercial and rural land - remains strong. The
recent increase in interest rates from historic lows has had no
apparent impact on sales to date. We are pleased with our performance,
our position and our financial flexibility. We're looking forward to
the rest of the year with growing confidence and are pleased to raise
our full-year guidance for 2004.
"We continue to be disciplined about the release of new product in
Northwest Florida," said Rummell. "The market has begun to recognize
the values being created in this region, and one of our greatest
challenges going forward will be to time product releases to maximize
these values."
"JOE has numerous advantages," said Rummell. "Most important, our
low-basis, high-quality land enables us to remain patient as we create
value in Northwest Florida. Our goal is to ensure that as much of our
land as possible benefits from the appreciation that we are building
with the region's increased visibility, infrastructure development and
place-making."
"Early in the third quarter, JOE reached an agreement with the
U.S. Army Corps of Engineers and the Florida Department of
Environmental Protection which will expedite future development within
approximately 39,000 acres in Walton and Bay Counties," said Rummell.
"This agreement represents a significant advance in large-scale land
planning and a unique asset for JOE."
"During the second quarter, we again made significant entitlement
advances," said Rummell. "We have built a solid pipeline of entitled
land that will allow us to continue to create new inventory in
high-quality communities for many years to come. In the second
quarter, JOE received key land use approvals for WindMark Beach in
Northwest Florida and RiverTown near Jacksonville. Although permitting
steps remain, we expect to break ground on these communities in 2005."
"In Walton County, we received land use approvals for WaterSound
West Beach (formerly referred to as DeerLake)," said Rummell. "In
addition, the 1,060-unit WaterSound community located north of US 98
continues to make progress. Phase one of WaterSound has been approved
and we expect to start infrastructure development in late 2004. We
expect WaterSound to be an outstanding community in its own right, and
it will build on the enthusiasm generated by WaterSound Beach and
WaterColor. Although permitting steps remain, these communities will
bring new inventory to one of Florida's hottest real estate markets."
"We benefit from very strong demographic trends," said Rummell.
"More and more people are entering the key second and retirement home
purchasing demographic, and we are working to have entitlements in
place to meet that demand. Florida remains a favorite location for
transitioning Baby Boomers, and we believe our proven place-making
ability will make St. Joe communities special locations within
Florida."
"This summer, we gained valuable exposure for our resort
residential communities in Walton and Bay Counties through our
partnership with Southern Progress, the publisher of Southern Living
and Southern Accents magazines," said Rummell. "JOE homes are featured
this month on the covers of these magazines that are read by our
current target customers in the Southeastern United States. Southern
Living features an Idea House at RiverCamps on Crooked Creek in its
August issue, and Southern Accents features its 2004 Showhouse at
WaterSound Beach in its July/August issue."
"We are well positioned to turn in another excellent year for our
shareholders," said Rummell. "We continue to make outstanding progress
laying the foundation for future value through the entitlements
process. Finally, we are particularly pleased that Northwest Florida
is beginning to get the recognition it deserves as a great place to
live, work and play. Our goal is to ensure that all JOE developments
preserve the best of Florida's character and quality of life."
OUTLOOK
Raising Guidance: Full Year 2004 to Exceed 2003 Baseline by
25 Percent or More
"Building on a very solid second quarter and with a strong
pipeline of business, we look ahead to the remainder of this year with
increased confidence," said Kevin M. Twomey, president, COO and CFO of
JOE.
"In February, we made comparisons to 2003, excluding conservation
land gains ($36.4 million pretax; $22.7 million net income), and the
non-cash Advantis charge ($8.8 million deduction from net income),"
said Twomey. "Excluding those items, 2003 'baseline' earnings per
share was $0.80, as detailed in our earnings release in February. At
that time, we expected the full year 2004 earnings per share, before
conservation land gains, to increase by 10 to 15 percent over that
adjusted 2003 total."
"In April, we raised these earnings expectations," said Twomey.
"We said then that we expected our 2004 results to be at the high end
of the range, or higher if certain potential transactions are
consummated."
Full Year 2004 Expectations
"Based on the strong demand for our resort, residential, rural
land and commercial real estate products, we are raising our
expectations for the full year 2004," said Twomey. "We now expect the
results for the full year 2004, before conservation land gains, to
exceed 2003's baseline earnings per share of $0.80 by 25 percent or
more."
Towns & Resorts
"Results from the St. Joe Towns & Resorts segment (formerly called
the Community Development segment) are expected to continue to grow in
the final six months of 2004," said Twomey. "Artisan Park and
SummerCamp should be important contributors for the second half of the
year. We continue to see excellent results at WaterColor. WaterSound
Beach is also expected to perform well during the balance of 2004.
Pricing has been particularly strong at both resort communities, and
we will continue to make judgments about the rate that we release
product for sale to maximize values."
Commercial Real Estate
"During the remainder of 2004 and into 2005, our commercial real
estate division will focus on the development and sale of retail,
multi-family and commercial properties in Northwest Florida," said
Twomey. "We expect commercial pretax income from continuing operations
for the year 2004 to be higher than 2003. The sale of a commercial
building from our Development Properties inventory and another from
our Investment Property Portfolio are expected to be important
contributors to operating income for the commercial division in the
second half of 2004."
"We have turned a corner with commercial development in Northwest
Florida, particularly in Bay County," said Twomey. "There has been a
marked change in the attitude of national retailers and commercial
developers toward Northwest Florida and Panama City Beach in
particular. We expect the pending land sale at Pier Park to the Simon
Property Group to be a significant catalyst for additional success."
St. Joe Land
"St. Joe Land Company is expected to continue its strong
performance for the remainder of the year," said Twomey. "Overall, we
expect full-year 2004 results from St. Joe Land Company, excluding
conservation land gains, to be well above the levels achieved in
2003."
"With respect to sales of conservation land, we had previously
announced that we intended to sell a 44,000-acre parcel near St.
Vincent Sound," said Twomey. "We are now evaluating alternative higher
values and better uses for this land. We may determine that some of
this land should be held or sold for non-conservation use, while
offering selected portions for conservation sale.
SALE OF TRUST SHARES
On June 10, 2004, a shelf registration became effective that
allows the Alfred I. duPont Testamentary Trust (the Trust) and its
beneficiary, The Nemours Foundation (the Foundation) to sell up to a
total of 12.0 million shares of JOE common stock. JOE does not receive
any of the proceeds from these sales.
On July 1, 2004, the Trust and the Foundation sold 540,742 and
1,459,258 shares, respectively, under this registration statement, for
a total of 2.0 million shares of JOE common stock. The shares were
sold at $39.70 per share, the closing price on June 30, 2004. As a
result of this transaction, the Trust now owns approximately 15.7
million shares, or approximately 20.6 percent, of JOE's outstanding
common stock, and the Foundation no longer owns any shares of JOE
common stock.
DIVIDENDS AND STOCK REPURCHASE PROGRAM
On May 18, 2004, the board of directors declared a quarterly cash
dividend of $0.12 per share on its common stock, which was paid on
June 30, 2004 to shareholders of record at the close of business on
June 15, 2004.
During the second quarter of 2004, the company expended an
aggregate of $43.4 million for dividends and the acquisition of its
shares. JOE acquired 884,843 of its shares at a cost of $34.4 million,
or an average price of $38.83 per share. Of these amounts, 146,000
shares were acquired through open market purchases for $5.7 million
(an average of $39.00 per share); 52,820 shares were purchased from
the Trust and the Foundation for $2.1 million (an average of $39.32
per share); and 686,023 shares of stock, having a value of $26.6
million, were surrendered by company executives as payment for the
strike price and taxes due on exercised stock options.
Table 1 summarizes the company's stock repurchase activity
from 1998 through June 30, 2004.
Table 1
Stock Repurchase Activity
Through June 30, 2004
Shares
------------------------------------------
Purchased Purchased Total Cost Average
Period From From Surrendered Total (in Price
Public Trust millions)
- ------ ------------------------------------------ ----------- -------
1998 2,574,200 -- 11,890 2,586,090 $55.5 $21.41
1999 2,843,200 -- 11,890 2,855,090 69.5 24.31
2000 3,101,566 415,500 -- 3,517,066 80.2 22.78
2001 3,485,400 3,585,900 58,550 7,129,850 176.0 24.67
2002 2,583,700 2,586,206 256,729 5,426,635 157.6 29.03
2003 1,469,800 1,085,374 812,802 3,367,976 102.9 30.55
2004
(first
half) 549,000 235,775 777,228 1,562,003 61.3 39.25
------- ------- ------- --------- ---- -----
Total/
Weighted
Average 16,606,866 7,908,755 1,929,089 26,444,710 $703.1 $26.56
========== ========= ========= ========== ====== ======
At June 30, 2004, 76,165,531 JOE shares were outstanding. The
number of weighted-average diluted shares in the second quarter of
2004 was 76,695,142. At June 30, 2004, approximately $162.1 million
remained of the company's current stock repurchase authorizations.
"We continue to make good progress on our program to pay dividends
and acquire stock through the purchase and the surrender of shares,"
said Twomey. "We remain comfortable with the benchmark of $125 million
to $175 million we established for the program this year and continue
to view the program as an important contributor to shareholder value."
ENTITLEMENTS
"JOE is now positioned to build on the success of WaterColor and
WaterSound Beach," said Rummell. "Our pipeline is building nicely, but
we're not done. Through our land analysis process, we continue to
identify new planning areas with resort, residential, rural land and
commercial development potential. Though we are very early in the
process, we have visioning and planning efforts in progress, and we
have identified a number of additional planning areas for future
development."
Large-Scale Land Planning
West Bay
"We continue to move forward with our large-scale land planning
efforts," said Rummell. Planning continues on the West Bay Detailed
Specific Area Plan in Bay County that includes 16,556 acres of JOE
land near the proposed 4,000-acre site for the relocation of the
Panama City - Bay County International Airport.
The Federal Aviation Administration continues working through its
process to determine whether to recommend relocation of the airport to
West Bay. There are many steps remaining before a final decision is
reached on the relocation of this airport.
St. James Island
In Franklin County, south of Tallahassee, JOE and local citizens
continues to make progress on a public visioning process for the
future development on 23,150 acres of JOE land on St. James Island.
In the second quarter, the Franklin County Commission voted
unanimously to send a proposed updated county comprehensive plan that
included a conceptual St. James Island plan to the Florida Department
of Community Affairs for review and comment. The report from the state
is expected later in the third quarter.
After further revisions, the visioning plan and an amended
Franklin County Comprehensive Plan are expected to be ready for
presentation to the Franklin County Board of County Commissioners for
their final adoption late in 2004. While many steps remain before any
implementation, these plans will outline the use of this land for
decades to come.
Western Bay County/Eastern Walton County Regional General Permit
Area
Earlier this month, the U.S. Army Corps of Engineers issued a
broad-based environmental permit covering 39,129 acres of JOE
timberland in Bay and Walton counties. The Regional General Permit
provides authorization and sets wetland impact and mitigation
guidelines for development within the permit area stretching from West
Bay in Bay County to Choctawhatchee Bay in Walton County. The permit
streamlines the development planning process by providing
environmental review upfront and establishing the environmental
framework within which to design projects. Individual projects then
only need to demonstrate compliance with the General Permit before
starting development.
Earlier this year, the Florida Department of Environmental
Protection announced it intended to sign an Ecosystem Management
Agreement (EMA) with JOE to accomplish similar objectives for state
regulation in the same area. An administrative challenge to the EMA
was filed by a citizens group.
"This agreement is a model for future land planning," said
Rummell. "Protection of environmentally special lands is given the
first priority and the process makes development significantly more
efficient. We believe this agreement will be a valuable tool for JOE
as the planning process continues."
Land Use Entitlements
JOE has a broad range of land-use entitlements in hand or in
various stages of the approval process for primary residential, resort
and RiverCamps in Northwest Florida and other high-growth regions of
the state. Additional permits are required for these projects to be
built as planned.
Table 2 summarizes JOE's Florida residential, resort and
RiverCamps projects with land-use entitlements as of June 30, 2004.
Table 2
Summary of Land-Use Entitlements
JOE Residential, Resort and RiverCamps Projects in Florida (1)
June 30, 2004
Units
Total Total Sold/Under
Project County Project Project Contract
Acres Units As of
6/30/04
Artisan Park (2) Osceola 160 616 208
CampCreek Golf Cottages Walton 10 50 0
East Lake Powell Bay 181 360 0
Hampton Park Duval 150 158 145
Hawks Landing Bay 252 167 0
James Island Duval 194 365 364
Palmetto Trace Bay 138 523 261
Paseos (2) Palm Beach 175 325 280
Pier Park (Residential) Bay 10 125 0
Port St. Joe Mill Site (2) Gulf 126 625 0
RiverCamps on
Crooked Creek Bay 1,500 450 23
Rivercrest (2) Hillsborough 413 1300 697
RiverSide Calhoun 362 13 0
RiverTown St. Johns 4,170 4,500 23
SouthWood Leon 3,770 4,770 715
St. Johns Golf &
County Club St. Johns 820 799 585
SummerCamp Franklin 782 499 0
The Hammocks Bay 143 459 332
Victoria Park Volusia 1,859 4,000 501
Walton Corners Leon 60 33 0
WaterColor Walton 499 1,140 770
WaterSound Beach Walton 256 499 335
WaterSound first phase Walton 506 487 0
WaterSound West Beach Walton 62 197 0
WaterMill Gulf 94 120 0
WindMark Beach Gulf 2080 1,662 103
---- ----- ---
Total 18,772 24,242 5,342
====== ====== =====
(1) A project is deemed entitled when all major discretionary local
governmental land use approvals have been received. These projects
require additional permits for full build-out of entitlements. Total
project units represent the number of units entitled. The actual
number of units to be constructed at full build-out may be lower than
the number entitled.
(2) The Port St. Joe Mill Site, Paseos and Rivercrest are each 50
percent owned by JOE. Artisan Park is 74 percent owned by JOE.
Additional projects are moving through the entitlement process.
Table 3 summarizes JOE's Florida residential, resort and RiverCamps
projects in the entitlement process as of June 30, 2004.
Table 3
JOE Residential, Resort and RiverCamps Projects
in the Entitlement Process in Florida (1)
June 30, 2004
Total Estimated
Project County Project Project
Acres Units (2)
------- -------- ------- ---------
Cutter Ridge Franklin 30 90
Perico Island Manatee 352 686
RiverCamps on Sandy Creek Bay 3,000 300
WaterSound future phases Walton 900+ 573
WaveCrest Bay 6 88
St. James Island (3) Franklin 9,436 3,593
West Bay DSAP Bay 6,789 5,842
----- -----
Total 20,513 11,172
====== ======
(1) All developments listed have entitlement steps remaining that
could affect timing, scale and viability. There can be no assurance
that these entitlements will ultimately be received.
(2) The actual number of units to be constructed at full build-out
may be lower than the number ultimately entitled.
(3) St. James Island Future Land Use Map Amendments.
As of June 30, 2004, JOE owned approximately 820,000 acres,
primarily in Northwest Florida, of which approximately 350,000 acres
are within ten miles of the Gulf of Mexico. JOE's pipeline of
residential projects extends well into the future with more than
30,000 units with land-use entitlements or in various stages in the
entitlement process.
"JOE owns enough high-quality developable land to create value for
decades," said Rummell. "We spend significant time studying our land
holdings and their development potential. Based on our analysis, we
feel confident in saying 'The Best Is Yet To Come'."
SEGMENT RESULTS
ST. JOE TOWNS & RESORTS
Pretax income from continuing operations for St. Joe Towns &
Resorts, JOE's community development segment, was $34.4 million for
the second quarter of 2004, compared with $23.0 million in the second
quarter of 2003.
In the second quarter of 2004, St. Joe Towns & Resorts generated
revenues of $158.5 million and sold 540 units, compared to $116.4
million and 399 units in the second quarter last year. Both periods
included revenue recognized under the percentage-of-completion method.
JOE accepted contracts for 688 units in the second quarter of 2004,
compared to 543 units in the second quarter a year ago.
"We see continuing strength in our Florida residential and resort
markets," said Rummell. "The state's healthy economy, consistent job
growth and steady tourism industry continue to draw new visitors and
residents at a very solid pace. We are monitoring conditions closely,
but pricing and sales velocity remain strong. Florida is the place to
be, and fortunately, JOE is well positioned with the assets and the
financial flexibility to respond appropriately."
"The second quarter is traditionally a strong season for real
estate activity in Northwest Florida," said Rummell. "As demand and
values continue to increase, we are carefully managing our inventory
by concentrating on value rather than the number of units sold. Both
resort and primary communities performed well in the second quarter
with indicators pointing to additional progress ahead."
Gross profits on home sites were substantially higher in the
second quarter of 2004, compared to the same quarter a year ago. The
improved margins were primarily due to an increase in the number of
home-site closings and better pricing at WaterColor, WaterSound Beach
and Windmark Beach. There were 68 home sites sold in these three
communities during this year's second quarter for an average price of
$605,000, compared to 48 in the same period a year ago at an average
price of $372,000.
Gross profits on homes were slightly lower in 2004's second
quarter compared to the second quarter a year ago. During the second
quarter this year, there were fewer high margin condominiums at
WaterSound Beach being built and under contract. Using the
percentage-of-completion accounting method, profit from WaterSound
Beach condominiums in 2004's second quarter was $4.2 million, compared
to $12.8 million in the same period last year. Also impacting margins
was a $1.7 million expense taken in the second quarter of this year
for warranty costs in excess of the warranty reserves at a small
primary home community completed in 2002.
Table 4 summarizes sales activity for St. Joe Towns & Resorts for
the second quarter of 2004 compared to the same period in 2003.
Table 4
St. Joe Towns & Resorts
Sales Activity
($ in millions)
For the Three Months
Ended June 30,
2004 2003
------------------------ ---------------------
Number Number
of Revenue Gross of Revenue Gross
Units Profit Units Profit
Closed Closed
------ ------- ------ ------ ------- ------
Home Sites 130 $44.8 $31.5 108 $21.6 $13.5
Homes (1) 410 113.7 16.7 291 94.8 20.1
------ ------- ------ ------ ------- ------
Total 540 $158.5 $48.2 399 $116.4 $33.6
====== ======= ====== ====== ======= ======
(1) Homes include single family, multi-family and Private Resident
Club (PRC) units. Multi-family and PRC revenue is recognized, if
preconditions are met, on a percentage of completion basis. As a
consequence, revenue and closings may occur in different periods.
Table 5 summarizes the units placed under contract for the quarter
ending June 30, 2004 compared to the same period in 2003.
Table 5
Units Placed Under Contract
For the Three Months
Ended June 30,
Percentage
2004 2003 Change
---- ---- ----------
Home Sites 143 176 (19)%
Homes (1) 545 367 49%
---- ---- ----
Total 688 543 27%
==== ==== ====
(1) Homes include single family homes, multi-family and PRC units.
Table 6 summarizes backlog for St. Joe Towns & Resorts at June 30,
2004 compared to the same period in 2003.
Table 6
Backlog (1)
June 30,
($ in millions)
Units Revenue
----- -------
2004 2003 2004 2003
---- ---- ---- ----
Home Sites 28 94 $6.4 $22.8
Homes 1,017 699 296.2 244.5
----- ---- ----- -----
Total 1,045 793 $302.6 $267.3
===== ==== ===== =====
(1) Backlog represents units under contract but not yet closed.
The two joint ventures, Paseos and Rivercrest, are not included.
Northwest Florida
WaterColor
WaterColor sales were strong in the second quarter with phase
three pricing showing significant improvement. Meanwhile,
predevelopment activity continues on phase four of WaterColor, a
60-acre parcel on the east side of County Road 395 adjacent to
WaterColor Crossing. Development in phase four, with approximately 185
units, is scheduled to begin later this year.
"WaterColor continues to exceed our expectations, both as a
community and as a catalyst for the region," said Rummell. "The
community, featuring the award-winning WaterColor Inn, has helped
raise the profile of the region and demonstrated JOE's place-making
ability and commitment to quality."
WaterColor Private Residence Club
Construction of the WaterColor Private Residence Club (PRC),
adjacent to WaterColor Inn, is expected to be completed in late 2004.
As of June 30, 2004, JOE had accepted contracts for 49 of the 88
ownership interests in 11 two-bedroom, two-bath, fully furnished
luxury, vacation multi-family units. Each owner receives a deed to 1/8
interest in a specific residence. Shares are now priced at $220,000.
Each PRC owner is entitled to a minimum of 5 weeks a year in the PRC,
plus additional time throughout the year based on availability.
WaterSound Beach
Sales activity in the second quarter at WaterSound Beach focused
heavily on Compass Point, a 92-unit neighborhood of multi-family
residences. Construction of the initial 49 units has started.
Contracts on 7 units were accepted in the first quarter at an average
price of approximately $1.5 million. In the second quarter, contracts
were accepted for 17 units at an average price of approximately $1.6
million.
In the third quarter of 2004, a total of 24 residences, generally
smaller in size, are slated to be released with prices expected to
average over $1.3 million per unit. Demand has been high with the
initial third-quarter release of 8 units attracting 203 potential
buyers. The average price for these units was approximately $1.2
million. On July 15, 2004, a release of 8 additional units, with price
increases of $100,000 to $245,000, attracted 177 potential buyers.
The remaining 43 units in Compass Point are scheduled for sales
release in 2005 and 2006.
There were 18 single family home sites released, contracted and
closed during the second quarter of 2004 at WaterSound Beach. These
home sites ranged in price from $535,000 to $685,000 and generated
$10.9 million in sales revenue. As of June 30, 2004, the remaining 95
single family home sites had not been released for sale, including 8
on the beachfront and 33 slated for JOE-constructed homes.
"WaterSound Beach is emerging as the next great beach community on
the Gulf Coast," said Rummell. "With the debut of the 2004 Southern
Accents Showhouse featured in the current issue of the magazine,
WaterSound Beach has arrived. We believe the market is now beginning
to understand the significance of the community's beachfront preserve
fronted by one of the most beautiful beaches anywhere."
WaterSound Beach, a gated beachfront community south of County
Road 30A in south Walton County, is planned to include single family
homes, home sites and multi-family units. It is expected to have 499
residential units at full build-out.
WaterSound
JOE started infrastructure construction in the second quarter on
WaterSound, located on 1,443 acres of timberland between U.S. 98 and
the Intracoastal Waterway.
"The WaterSound master plan calls for a full package of amenities,
including a family-friendly six-hole golf course and a nine-hole golf
course, both designed by Davis Love III; tennis; access to Lake
Powell; plus the opportunity to purchase memberships in a beach club
at WaterSound Beach and Camp Creek Golf Club," said Rummell.
WaterSound has final land-use approval of 487 of 1,060 units
planned for the community, with the balance in a Development of
Regional Impact (DRI) process. This initial phase of WaterSound also
provides for 35,000 square feet of commercial space.
Progress is expected on the DRI by the end of 2004. Although
additional permits are required, sales are expected to begin in late
2005 or 2006.
WaterSound West Beach
The 62-acre WaterSound West Beach is approximately one mile west
of WaterSound Beach on the beach side of County Road 30A, with beach
access through the adjacent Deerlake State Park. "West Beach is a
'hidden gem' among the beaches of South Walton County," said Rummell.
JOE has final land use approvals for 197 units. A number of
additional environmental regulatory steps remain before construction
can begin. Sales are expected to begin in 2005.
West Beach is being designed to be a gated, high-end community
with pricing comparable to WaterColor.
Palmetto Trace, The Hammocks, Hawks Landing
Palmetto Trace, The Hammocks and Hawks Landing are primary home
communities in Bay County. These communities are designed to provide a
wide choice in housing options for the residents of Bay County with
home sites starting in the high $30,000's and residences starting at
the low $100,000's.
"Sales at Palmetto Trace and The Hammocks were very strong in the
second quarter," said Rummell. "Demand at Palmetto Trace has increased
significantly. Sales have also been strong at The Hammocks in Lynn
Haven."
"We have additional product moving through the planning process in
order to meet the strong primary residential demand in Bay County.
Planning has started on a new community in east Bay County, Hawks
Landing, that is intended to provide much needed housing stock in that
part of the county. Hawks Landing is currently being planned for 167
units on 252 acres. We expect increases in sales velocity to continue
in 2004 as retirees relocate to Bay County and new jobs are added to
the Northwest Florida economy."
WindMark Beach
During the second quarter, land-use approvals were finalized for
WindMark Beach, consisting of 1,662 residential units in a mixed-use
development on approximately 2,080 acres in Gulf County, Florida.
WindMark Beach includes a previously approved 80-acre first phase with
110 home sites, only 7 of which remain unsold or not under contract.
Although additional regulatory steps remain, sales in the new phases
of WindMark Beach are scheduled to begin in 2005.
Plans for WindMark Beach include a 3.5-mile public beachfront
trail system. No residential development is planned seaward of the
beachfront trails, and JOE intends to provide public beach parking
areas and multiple access points for the public.
"The supply of land for new large-scale beachfront communities is
nearly exhausted," said Rummell. "WindMark Beach represents one of the
last large-scale, fully-amenitized beachfront communities to be built
in the Southeastern United States."
SouthWood
SouthWood, four miles southeast of the state capitol building in
Tallahassee, is entitled for 4,770 residential units plus a variety of
retail shops, restaurants, community facilities, light industrial
sites and professional offices.
"SouthWood continues to be the dominant real estate project in
Tallahassee," said Rummell. "In SouthWood's phase one, some product
lines are nearly sold out. Evaluation and planning has started on the
development of phase two of the community, which is expected to
require additional regional transportation improvements."
SummerCamp
Reservations were accepted on July 9, 2004 for SummerCamp's second
release. This release of 12 home sites attracted 296 potential buyers.
Home site prices averaged $407,000 compared to $386,000 in the first
release.
Pending the receipt of regulatory and environmental permits,
infrastructure construction is expected to begin in the third quarter
of 2004, with closings to begin in the fourth quarter of 2004.
"SummerCamp maintains its strong pace," said Rummell. "Our team
has developed a SummerCamp architectural style based on historic and
well recognized communities like St. Teresa and Apalachicola, evoking
the traditional communities of Old Florida. This community is about
families and friends making and renewing connections."
SummerCamp is located in Franklin County, approximately 45 miles
south of Tallahassee on the Gulf Coast. With nearly 4 miles of
waterfront, the community is planned for 499 units on 762 acres of JOE
timberland. A sales preview center is open in Tallahassee, and an
onsite sales center, general store and outfitter are scheduled to open
in 2005. SummerCamp's current plans call for a community beach club
with cabanas, two smaller beach clubs, several observation piers,
gathering pavilions, a canoe and kayak boathouse, one small community
dock and miles of interconnected nature trails.
Northeast Florida
RiverTown
Land use entitlements for RiverTown were finalized in the second
quarter. Although certain permits are required before construction can
begin, sales are expected to start in 2006.
RiverTown is JOE's new Southern town in St. Johns County with more
than 3.5 miles of frontage on the beautiful St. Johns River. It is
being planned for approximately 4,500 units on 4,170 acres. "The site
offers many fundamental benefits - one of the last stretches of
riverfront in Northeast Florida suitable for large-scale residential
development with a central, convenient location," said Rummell. "It is
located within easy commuting distance to Jacksonville and the
evolving commercial center around I-95 and International Golf
Parkway."
"RiverTown is being designed as a fully functioning town that
offers residents a wide range of housing options, retail and
commercial areas and amenities designed to build a sense of
community," said Rummell. "Seven distinct neighborhoods blend to
create a complete Southern town atmosphere that embraces this scenic
river with a 58-acre riverfront public park. RiverTown is well
positioned in one of Florida's fastest growing counties with one of
the state's highest per-capita incomes."
"RiverTown reflects everything JOE has collectively learned about
the art and science of community development," said Rummell.
"Northeast Florida is attracting a significant number of transitioning
Baby Boomers and families seeking a more relaxed lifestyle. We believe
RiverTown will be very attractive to them."
St. Johns Golf & Country Club
In the second quarter, construction continued on infrastructure
for the final phases of St. Johns Golf & Country Club in St. Johns
County. "St. Johns Golf & Country Club had a solid second quarter,"
said Rummell. "We expect to complete sales in this community by early
2006."
Central Florida
Victoria Park
JOE accepted 73 contracts in Victoria Park in the second quarter
of 2004, up 14 percent over the same quarter a year ago.
"Victoria Park is becoming an attractive option in the greater
Orlando housing market," said Rummell. "Our traffic through the sales
center continues to increase with a good balance between prospects
from within the greater Orlando area and those coming from outside of
Florida."
Victoria Park, located between Orlando and Daytona Beach, sits on
1,859 acres in the historic college town of DeLand. This mixed-used
community is planned for more than 4,000 residences built among parks,
lakes and conservation areas.
Saussy Burbank
Saussy Burbank, JOE's homebuilder based in Charlotte, N.C., had a
$(0.9) million pretax loss from continuing operations in the second
quarter of 2004, compared to pretax operating income of $0.9 million
in the second quarter of 2003. The loss was due to a $2.0 million
impairment charge at a home site development project in North Carolina
that experienced higher than expected development costs and a
reduction in planned home sites due to site development constraints.
"We believe we have resolved the outstanding issues at this
community," said Rummell.
Sales at Saussy Burbank communities continue to be strong. In the
second quarter this year, 220 homes were closed and 213 contracts were
accepted, compared to 146 closings and 133 contracts in the same
quarter a year ago.
Joint Venture Communities
Celebration, Artisan Park
"Artisan Park is performing very well with sales running ahead of
our expectations," said Rummell. "One of the last residential
neighborhoods to be developed in Celebration, Artisan Park is seeing
strong demand for single family homes and condominiums."
Plans for the neighborhood feature approximately 314 single family
homes plus 302 condominium homes, along with parks, trails and an
outdoor performance area and community clubhouse with a fitness
center, pool and educational and recreational programs.
JOE owns 74 percent of the joint venture developing Artisan Park
and manages the project.
Paseos
"Paseos had an excellent second quarter with strong sales
velocity," said Rummell. "Contracts and reservations have exceeded the
original objective for the entire year. The Jupiter market has
attracted national attention as one of South Florida's most desirable
places to live. Paseos is benefiting from the growth in this part of
Florida."
The proximity of Paseos to major employment centers, excellent
public schools, the beaches and a host of recreational and
entertainment options makes it ideal for families of all sizes. A
clubhouse, pool and tennis court are scheduled to open later this
year. There are six furnished model homes on site.
JOE owns 50 percent of the joint venture developing Paseos and
manages the project.
Rivercrest
"We are seeing exceptional momentum at Rivercrest with robust
sales," said Rummell. "Rivercrest is a wonderful family-oriented
community that offers many recreational opportunities."
JOE owns 50 percent of the joint venture developing Rivercrest and
manages the project.
Table 7 summarizes the sales activity at various residential
communities for the second quarters of 2004 and 2003.
Table 7
St. Joe Towns & Resorts
Homes and Home Sites
For the Three Months Ended June 30
-----------------------------------
2004
------------------------------------------
Units Avg. Contracts Avg.
Closed Price Accepted(1) Price
------------------------------------------
WaterColor
Home Sites 47 $576,000 53 $586,000
Single Family
Homes 2 1,060,000 4 974,000
PRC Shares -- -- 16 208,000
WaterSound Beach
Home Sites 18 614,000 17 626,000
Single Family
Homes -- -- 1 1,294,000
Multi Family
Homes -- -- 17 1,627,000
Palmetto Trace/
The Hammocks
Home Sites 38 37,000 38 37,000
Single Family
Homes 35 150,000 63 157,000
WindMark Beach
Home Sites 3 1,017,000 3 1,017,000
SouthWood
Home Sites 4 108,000 18 99,000
Single Family
Homes 34 246,000 59 235,000
St. Johns G & CC
Home Sites 7 117,000 -- --
Single Family
Homes 28 365,000 40 368,000
Hampton Park/
James Island
Single Family
Homes 27 336,000 10 355,000
Victoria Park
Home Sites 10 80,000 11 80,000
Single Family
Homes 52 220,000 62 235,000
Artisan Park (2)
Home Sites 3 180,000 3 180,000
Single Family
Homes 12 455,000 19 435,000
Multi Family
Homes -- -- 41 277,000
Paseos (2)
Single Family
Homes 23 385,000 64 469,000
Rivercrest (2)
Single Family
Homes 76 145,000 183 164,000
Saussy Burbank
Home Sites -- -- -- --
Single Family
Homes 220 211,000 213 226,000
2003
------------------------------------------
Units Avg. Contracts Avg.
Closed Price Accepted(1) Price
------------------------------------------
WaterColor
Home Sites 27 $356,000 41 $331,000
Single Family
Homes 1 792,000 8 761,000
PRC Shares -- -- -- --
WaterSound Beach
Home Sites 21 393,000 55 393,000
Single Family
Homes -- -- -- --
Multi Family
Homes -- -- 20 1,224,000
Palmetto Trace/
The Hammocks
Home Sites 9 31,000 4 29,000
Single Family
Homes 30 144,000 51 156,000
WindMark Beach
Home Sites -- -- 5 516,000
SouthWood
Home Sites 22 94,000 18 83,000
Single Family
Homes 29 182,000 38 222,000
St. Johns G & CC
Home Sites 21 53,000 44 54,000
Single Family
Homes 30 305,000 32 357,000
Hampton Park/
James Island
Single Family
Homes 29 322,000 25 320,000
Victoria Park
Home Sites 3 109,000 4 95,000
Single Family
Homes 26 178,000 60 199,000
Artisan Park (2)
Home Sites -- -- -- --
Single Family
Homes -- -- -- --
Multi Family
Homes -- -- -- --
Paseos (2)
Single Family
Homes -- -- 20 394,000
Rivercrest (2)
Single Family
Homes 38 150,000 60 149,000
Saussy Burbank
Home Sites 5 24,000 5 24,000
Single Family
Homes 146 206,000 133 200,000
(1) Contracts accepted but not closed in second quarters of 2004
and 2003.
(2) JOE holds 74 percent of Artisan Park and 50 percent each of
Paseos and Rivercrest. Sales from Paseos and Rivercrest are not
consolidated with the financial results of St. Joe Towns & Resorts.
Table 8 summarizes the units sold since inception through
June 30, 2004 at various St. Joe Towns & Resorts residential projects.
Table 8
St. Joe Towns & Resorts
Units Sold Since Inception(1)
Through June 30, 2004
Total Planned Closed Contracts
Units Units Accepted (2)
------------- ------ ------------
WaterColor 1,140 746 24
WaterSound Beach 499 310 25
Palmetto Trace/ The Hammocks 982 423 170
WindMark Beach 1662 103 0
SouthWood 4,770 573 142
SummerCamp 499 0 0
St. Johns Golf & Country Club 799 500 85
Hampton Park/ James Island 523 482 27
Victoria Park 4,000 371 130
Artisan Park (3) 616 35 173
Paseos (3) 325 70 210
Rivercrest (3) 1,300 374 323
------------- ------ ------------
Total 17,115 3,987 1,309
============= ====== ============
(1) Units include home sites, single family and multi-family units
and Private Resident Club shares, with each share treated as
one-eighth of a unit.
(2) Contracts accepted, but not closed, to date, at the end of the
quarter.
(3) Artisan Park is 74 percent owned by JOE. Paseos and Rivercrest
are each 50 percent owned by JOE; their sales are not consolidated
with the financial results of St. Joe Towns & Resorts.
COMMERCIAL REAL ESTATE
The commercial segment consists of St. Joe Commercial, Inc., JOE's
commercial real estate development unit, and Advantis, the company's
commercial real estate services unit. Pretax income from continuing
operations from the commercial segment was $1.1 million for the second
quarter of 2004, compared with a loss of $(11.4) million in the same
quarter of 2003, which included a $14.1 million pretax non-cash
impairment charge on Advantis.
St. Joe Commercial
For the second quarter of 2004, St. Joe Commercial had pretax
income of $1.4 million, compared to $4.1 million in the second quarter
a year ago.
"Our commercial development division turned in a good second
quarter, both in terms of value creation and strategic
accomplishments," said Twomey. "Gross proceeds from Northwest Florida
commercial land sales totaled $3.4 million, compared to $7.7 million
in the same period in 2003. We are seeing a good mix of small and
large transactions, but earnings from these sales tend to be 'lumpy'
as the number and size of transactions vary from quarter to quarter."
The profile of the Northwest Florida retail development sector has
increased significantly in the last six months. Pier Park specifically
and Northwest Florida in general were prominently featured at the
annual meeting of the International Conference of Shopping Centers in
May. The increase in interest from national retailers, who are just
beginning to understand the Northwest Florida market, continues to
expand.
During the second quarter of 2004, JOE sold 9 Florida commercial
land parcels, totaling 57 acres, at an average price of approximately
$60,000 per acre. Pricing reflects variations in location, parcel
quality and the percentage of each parcel that may be developable.
Table 9 summarizes JOE's commercial land sales in Florida for the
second quarters of 2004 and 2003.
Table 9
St. Joe Commercial Florida Land Sales
Quarter Ended June 30, 2004
Gross Average
Land Number Acres Sales Price/
of Sold Price Acre
Sales (in thousands) (in thousands)
---- ------ ----- -------------- --------------
Unimproved 1 42.3 $1,542 $36
Improved 8 14.5 1,861 128
------ ----- -------------- --------------
Total/Average 9 56.8 $3,403 $60
====== ===== ============== ==============
Quarter Ended June 30, 2003
Gross Average
Land Number Acres Sales Price/
of Sold Price Acre
Sales (in thousands) (in thousands)
---- ----- -------------- --------------
Unimproved 3 13.0 $1,476 $114
Improved 8 47.1 6,181 131
------ ----- -------------- --------------
Total/Average 11 60.1 $7,657 $127
====== ===== ============== ==============
"Job growth in Northwest Florida is increasing demand for
multi-family units," said Twomey. "Multi-family products provide
access to a more affordable housing option to citizens in this market.
We see growing interest in Northwest Florida from national and
regional multi-family developers, and the value of land for apartment
development is moving closer to comparable prices in other parts of
the nation."
JOE has 5 parcels for multi-family development under contract
totaling 70.6 acres at an average price of approximately $100,000 per
acre.
Northwest Florida
Beckrich
The Home Depot is scheduled to open its new store in August on a
13-acre retail development site in Beckrich, purchased from JOE in the
fourth quarter of last year. "With the creation of more than 300 new
jobs, we believe The Home Depot will stimulate demand among retail and
multi-family residential users for the remaining 86 acres in Beckrich
and other areas of Panama City Beach," said Twomey. "Current plans
include an additional 13 parcels designed for retail users and 4
parcels designed for multi-family use."
Beckrich Office Park
JOE developed and delivered a new 30,000-square-foot building to
provide space for 400 additional employees for Nextel Partners. The
new building is located adjacent to Nextel's existing
67,500-square-foot customer care center with approximately 600
employees.
Pier Park
Simon Property Group, Inc. and JOE have agreed to the sale of 90
acres to Simon within and near Pier Park for a retail, restaurant and
entertainment project. Additional due diligence, planning and other
steps remain to be completed.
Under the terms of the agreement, Simon also has the right to
purchase an additional 114 acres in or near Pier Park. JOE will retain
approximately 15 acres in Pier Park near the beach for future
complementary hospitality development.
"We believe there is a significantly broader market potential in
Panama City Beach, which could mean that Pier Park is well positioned
to take the higher end of the spectrum," said Twomey. "Simon, arguably
the best in the retail development business, can help make Pier Park a
regional destination. Success at Pier Park creates additional
opportunities along the US 98 corridor in Panama City Beach."
SouthWood Commercial
Sales at the Business Park at SouthWood continue to be robust with
4 parcels sold in the second quarter of 2004 at an average price per
acre of $278,000. Of the remaining 8 saleable acres in the park, two
half acre parcels are under contract for an average price of $212,000
per acre.
Construction continued in the second quarter on two buildings in
SouthWood Town Center totaling approximately 40,000 square feet of
commercial space. The Tallahassee YMCA will be an early tenant
featuring an upscale full-service health and fitness center. The
buildings were designed to accommodate restaurants and other retail
users. Office space ranging from 900 to 2,000 square feet will also be
available.
Commerce Parks
During the second quarter, commercial land sales within JOE's
commerce parks totaled $580,000, compared to $800,000 in the second
quarter a year ago. JOE has 10 commerce parks operating or under
development in six Northwest Florida counties.
"We are seeing a wide range of users, many of which are local
businesses positioning themselves for growth in the region," said
Twomey. "The only exception has been in Tallahassee at the Airport
Commerce Park where growth around the Tallahassee airport has been
slow."
Table 10 summarizes the status of JOE's commerce parks throughout
Northwest Florida as of June 30, 2004.
Table 10
Commerce Parks
June 30, 2004
Net Acres Current
Commerce Parks County Saleable Sold/ Asking
-------------- ------ Acres Under Price
-------- Contract Per Acre
-------- ---------------
Existing and Under
Construction
Beach Commerce Bay 161 95 $65,000-435,000
Port St. Joe Commerce Gulf 58 51 50,000-60,000
Airport Commerce Leon 40 -- 75,000-260,000
Nautilus Court Bay 12 2 300,000-375,000
Hammock Creek Commerce Gadsden 114 23 40,000-150,000
South Walton Commerce Walton 39 -- 150,000-435,000
Predevelopment
Beach Commerce II Bay 115 -- 70,000-80,000
Port St. Joe Commerce II Gulf 50 -- 50,000-90,000
Cedar Grove Commerce Bay 100 -- 35,000-45,000
Apalachicola Commerce Franklin 50 -- 30,000-35,000
------ ------
Total 739 171
====== ======
Investment Property Portfolio
JOE has redeployed some of the proceeds of its land sales in a
tax-deferred manner through the acquisition of commercial office
buildings in select markets within the Southeast.
In the second quarter, JOE acquired Overlook I & II, two Class-A
office buildings totaling 128,667 square feet, in the Innsbrook Office
Park in Richmond, VA. The two buildings are each 100 percent leased to
high-quality tenants. Advantis will manage these properties on behalf
of JOE.
As of June 30, 2004, JOE's portfolio of commercial office
buildings acquired through the capital redeployment program totals
approximately 2.5 million square feet and represents an aggregate
investment of almost $347 million, compared to 1.7 million square feet
and an aggregate investment of $229 million at June 30, 2003.
Table 11 summarizes JOE's investment property portfolio as of June
30, 2004.
Table 11
Investment Property Portfolio
June 30, 2004
Number of Net Rentable Leased
Location Properties Square Feet Percentage
- -------- ---------- ------------- ----------
Florida
Tampa 5 479,000 81%
Orlando 2 313,000 67%
Jacksonville 1 136,000 56%
Northwest Florida 3 156,000 84%
Atlanta 5 864,000 90%
Washington, D.C. 2 271,000 94%
Charlotte 1 158,000 100%
Richmond 2 129,000 100%
----------- --------- -----------
Total/Weighted
Average 21 2,506,000 84%
=========== ========== ===========
Development Properties
During the second quarter, JOE sold a 2.7-acre commercial parcel
in Houston, Texas for $1.3 million. Our current inventory of
commercial land includes 108 acres in Houston, Atlanta, Northern
Virginia, Orlando and Boca Raton.
Table 12 summarizes the development property portfolio as of June
30, 2004.
Table 12
Development Property Portfolio
June 30, 2004
Market Ownership Net Rentable Leased
Property Location Percentage Square Feet Percentage
- -------- -------- ---------- ------------ ----------
TNT Logistics Jacksonville 100% 99,000 94%
Deerfield Commons I Atlanta 40% 122,000 77%
Westchase Corporate Houston 93% 184,000 94%
Nextel Partners II Panama City
Beach 100% 30,000 100%
---------- ------
Total/Weighted Average 435,000 90%
========== ======
Advantis
Building on a good first-quarter performance, Advantis showed
significant improvement compared to the second quarter of 2003. "In
the second quarter of 2004, Advantis had brokerage revenue of $12.8
million, a 66 percent increase from last year's second quarter," said
Twomey.
Pretax income in the second quarter of 2004 was $0.2 million
before elimination of inter-company profits of $0.5 million. Advantis
had a pretax loss of $(1.1) million for the second quarter of 2003,
before elimination of inter-company profits of $0.3 million and the
$14.1 million pretax non-cash impairment charge.
"For the second half of 2004, we are looking at a stronger
pipeline of brokerage and construction business," said Twomey. "We are
pleased with the foundation Advantis has built for the year," said
Twomey. "We feel gratified that the initiatives put in place earlier
are now beginning to pay off."
ST. JOE LAND COMPANY
St. Joe Land Company, JOE's land sales division, had pretax income
from continuing operations of $10.3 million in the second quarter of
2004, compared with $12.8 million in the second quarter of 2003.
Included was pretax income from conservation land sales of $2.4
million in the second quarter of 2004, compared with $5.1 million in
the second quarter of 2003.
"JOE's land division had a strong second quarter with good
progress expanding its geographic market and its product diversity,"
said Twomey. "Transactions in the quarter continue to be well balanced
by land type and location."
"We continue to see an increasing number of potential buyers
coming from outside our initial core market of a two-hour drive radius
from our land holdings," said Twomey. "In addition, the internet has
become an increasingly important marketing tool." An updated web site
(www.stjoeland.com) is expected to be introduced in the third quarter
with additional inventory, mapping, search and pricing tools.
As St. Joe Land has learned more about the suitability of our land
holdings, it has been able to identify a variety of higher and better
uses for JOE's timberlands, adding diversity to its product lines. The
evolution of RiverCamps has created additional real estate products
with various levels of amenities.
"The initial RiverCamps concept was to provide a real estate
product for people who wanted to get closer to nature," said Twomey.
"The RiverCamps we are developing today have evolved to a much higher
use than originally expected. As a result, we have been able to
broaden our range of products. The 40,000 acres once expected to
become RiverCamps has now evolved into 98,000 acres for five new
product offerings - RiverCamps, preserves, ranches, farmsteads and
home sites."
In the second quarter, JOE sold 4,216 acres of land, primarily for
rural recreation, for approximately $2,633 per acre, compared to 5,896
acres in the same quarter a year ago for approximately $1,867 per
acre. "In the second quarter this year there were several premium
parcels with higher per acre prices, while the average per acre price
in the second quarter last year was influenced by a number of parcels
that were of lower quality."
Table 13 summarizes St. Joe Land sales activity for the second
quarters of 2004 and 2003.
Table 13
St. Joe Land Sales (1)
Quarter Ended June 30,
Gross Sales Gross
Number Number Average Price Price Profit
Period of Sales of Acres Per Acre (in millions) (in millions)
- ------ -------- -------- ------------- ------------- -------------
2004 45 4,216 $2,633 $11.1 $9.6
2003 47 5,896 $1,867 $11.0 $9.3
(1) Does not include RiverCamps sales.
RiverCamps
RiverCamps are a series of planned settlements in rustic settings,
offering personal retreats in private woodland preserves. As of March
31, 2004, approximately 18,000 acres have been classified by the
company for RiverCamps use. RiverCamps home sites are sold fee-simple,
with a common area preserved for conservation. At JOE's first
RiverCamps location, many home sites are almost one acre. Home sites
could be larger at future locations.
RiverCamps on Crooked Creek
In the second quarter, there were no releases of home sites in
RiverCamps on Crooked Creek in Bay County.
On July 4, 2004, JOE released a second group of 27 home sites with
a price increase of approximately 34 percent, compared to home sites
in the first release in October of 2003. Home site pricing in this
second release ranged from $129,000 for a woodland property to
$750,000 for a bay-front home site. The sales of home sites in this
release are expected to close in the fourth quarter of 2004.
Approved for up to 450 home sites on approximately 1,500 acres of
former timberland, RiverCamps on Crooked Creek features views of West
Bay, the Intracoastal Waterway and Crooked Creek. A variety of
RiverCamp floor plans, typically from 1,500 to 2,400 square feet, will
soon be available.
RiverCamps on Sandy Creek
Planning and evaluation continues on RiverCamps on Sandy Creek in
Bay County. Preliminary plans initially call for approximately 300
units on 3,000 acres. Work also continues on other potential
RiverCamps locations in Northwest Florida.
Conservation Land
In the second quarter of 2004, 1,749 acres of conservation land
sold for a gross sales price of $2.7 million, or $1,544 per acre.
Conservation land sales and operations have been integrated into
St. Joe Land Company. Activity is currently underway to offer for sale
approximately 14,000 acres in 2004 to state and private conservation
interests. The timing, sequence and viability of these transactions
are uncertain and some transactions could be delayed or cancelled.
FORESTRY
Pretax income from continuing operations for the forestry segment
totaled $2.4 million for the second quarter of 2004, compared with
$2.2 million in the comparable 2003 period.
FINANCIAL DATA
Other Income (Expense)
Other income (expense), which includes dividend and interest
income, gains (losses) on sales of investments and non-operating
assets and miscellaneous income, and interest expense, was an expense
of $2.2 million in the second quarter of 2004, compared to expense of
$1.5 million in the comparable 2003 period.
Table 14 summarizes other income (expense) for the second quarters
of 2004 and 2003.
Table 14
Other Income (Expense)
(in millions)
Quarter Ended June 30,
------------------------------
2004 2003
---------------- -------------
Dividend and interest income $0.1 $0.4
Interest expense (2.8) (2.4)
Other 0.5 0.5
---------------- -------------
Total $(2.2) $(1.5)
================ =============
EBITDA
Earnings before interest, taxes, depreciation and amortization
(EBITDA) for the second quarter of 2004 were $51.8 million, or $0.68
per share, compared to $27.7 million, or $0.36 per share, in the
second quarter of 2003.
Table 15 provides a reconciliation of net income to EBITDA for the
second quarters of 2004 and 2003.
Table 15
Reconciliation of Net Income to EBITDA
($ in millions except per share amounts)
Quarter Ended June 30,
----------------------
2004 2003
--------- --------
Net Income $22.7 $9.9
Plus:
Income tax expense 14.3 5.8
Depreciation and amortization 9.3 7.1
Interest expense 5.5 4.9
--------- --------
EBITDA $51.8 $27.7
========= ========
EBITDA per diluted share $0.68 $0.36
========= ========
Weighted average diluted shares outstanding 76,695,142 77,735,916
We use EBITDA as a supplemental performance measure, along with
net income, to report our operating results. Management believes
EBITDA is an important metric commonly used by companies in the real
estate industry for comparative performance purposes. EBITDA is not a
measure of operating results or cash flows from operating activities
as defined by generally accepted accounting principles (GAAP).
Additionally, EBITDA is not necessarily indicative of cash available
to fund cash needs and should not be considered as an alternative to
cash flows as a measure of liquidity. However, we believe that EBITDA
provides relevant information about our operations and, along with net
income, is useful in understanding our operating results.
Prior-year EBITDA has been changed to conform to the SEC's current
guidance on non-GAAP financial measures. EBITDA includes conservation
land EBITDA of $2.5 million in 2004 and $5.1 million in 2003.
Table 16
Summary Balance Sheet
(in millions)
June 30, June 30,
2004 2003
------- -------
Assets
Investment in real estate $902.0 $837.0
Cash and cash equivalents 70.8 49.0
Prepaid pension asset 94.6 93.2
Property, plant and equipment 35.5 39.7
Other assets 178.4 198.8
Assets held for sale 59.7 --
------- -------
Total assets $1,341.0 $1,217.7
======= =======
Liabilities and Stockholders' Equity
Debt $399.6 $348.7
Accounts payable, accrued liabilities 181.3 169.7
Deferred income taxes 240.4 217.7
Liabilities related to assets held for sale 26.5 --
------- -------
Total liabilities 847.8 736.1
Minority interest 6.0 5.3
Total stockholders' equity 487.2 476.3
-------- -------
Total liabilities and stockholders' equity $1,341.0 $1,217.7
======== =======
Table 17
Debt Schedule
(in millions)
June 30, 2004 June 30, 2003
------------- -------------
Revolving debt facility $ -- $ 15.0
Medium term notes 275.0 175.0
Acquisition and other debt 15.3 4.0
Other collateralized/specific
asset related debt 109.3 154.7
----- -----
Total debt $399.6 $348.7
===== =====
Table 18
Consolidated Quarterly Comparisons
($ in millions except per share amounts)
Quarter Ended Six Months Ended
June 30, June 30,
------------------- ------------------
2004 2003 2004 2003
------- ------- -------- -------
Revenues:
Real estate sales $177.6 $142.4 $313.3 $256.5
Realty revenues 23.8 13.5 42.8 25.8
Timber sales 9.2 10.2 19.1 19.8
Rental revenue 9.7 7.3 19.2 14.3
Other revenues 12.2 8.7 19.6 13.4
------- ------- -------- -------
Total revenues 232.5 182.1 414.0 329.8
======= ======= ======== =======
Expenses:
Cost of
real estate sales 114.1 88.6 204.6 153.9
Cost of realty
revenues 15.5 7.4 26.2 14.1
Cost of timber sales 5.7 6.8 11.8 13.6
Cost of rental revenue 3.6 3.5 7.4 6.5
Cost of other revenues 10.0 7.5 16.5 12.7
Other operating
expenses 25.3 21.6 49.3 42.0
Corporate expense, net 9.5 8.7 18.6 14.7
Depreciation and
amortization 8.3 6.5 16.8 12.4
Impairment loss 2.0 14.1 2.0 14.1
------- ------- -------- ------
Total expenses 194.0 164.7 353.2 284.0
------- ------- -------- ------
Operating profit 38.5 17.4 60.8 45.8
Other income (expense) (2.2) (1.5) (4.2) (3.2)
------- ------- -------- ------
Pretax income from
continuing operations 36.3 15.9 56.6 42.6
Income tax expense (14.2) (5.7) (22.3) (14.3)
Minority interest
(expense) income (0.4) (0.4) (0.5) (0.7)
Equity in income (loss)
of unconsolidated
affiliates (1) 0.9 -- 1.6 (3.7)
Discontinued operations 0.1 0.1 0.3 0.4
------- ------- -------- ------
Net income $22.7 $9.9 $35.7 $24.3
======= ======= ======== ======
Net income per diluted
share $0.30 $0.13 $0.46 $0.31
======= ======= ======== ======
Weighted average diluted
shares outstanding 76,695,142 77,735,916 77,213,116 78,035,051
(1) Reformatted to reflect equity in income (loss) of
unconsolidated affiliates separately from revenues. Previously the
Company recorded equity in income (loss) of unconsolidated affiliates
as a component of revenues in the Towns & Resorts segment ($(0.2)
million loss in the second quarter 2003), and commercial real estate
segment ($0.2 million in the second quarter 2003). For the second
quarter of 2004, equity in income (loss) of unconsolidated affiliates
was $1.0 million in the Towns & Resorts segment and a loss of $(0.1)
million in the commercial real estate segment. Equity in income (loss)
of unconsolidated affiliates for the Towns & Resorts segment was a
$(0.4) million loss for the six months ended June 30, 2003, and $0.4
million for the commercial real estate segment for the same period.
For the six months ended June 30, 2004, equity in income (loss) of
unconsolidated affiliates was $2.0 million in the Towns & Resorts
segment and a loss of $(0.4) million in the commercial real estate
segment.
Table 19
Quarterly Revenues
By Segment (1)
(in millions)
Quarter Ended Six Months
June 30, Ended June 30,
-------------- --------------
2004 2003 2004 2003
------ ----- ------ ------
Towns & Resorts $171.0 $125.4 $276.7 $215.1
Commercial real estate 38.3 29.8 81.6 55.1
Land sales 14.0 16.7 36.7 39.7
Forestry 9.2 10.2 19.0 19.8
Corporate and other -- -- -- 0.1
------ ----- ------ ------
Total revenues $232.5 $182.1 $414.0 $329.8
====== ===== ====== ======
(1) Reformatted to reflect equity in income of unconsolidated
affiliates separately from revenues. See footnote to Table 18.
Table 20
Quarterly Segment Income Before
Taxes, Minority Interest and Equity in Income
Of Unconsolidated Affiliates (1)
(in millions)
June 30, Mar 31, Dec 31, Sept 30, June 30,
2004 2004 2003 2003 2003
--------- -------- --------- --------- --------
Towns & Resorts $34.4 $9.1 $13.2 $32.1 $23.0
Commercial real
estate 1.1 1.2 6.5 (1.4) (11.4)
Land sales 10.3 18.8 33.2 14.8 12.8
Forestry 2.4 2.7 2.3 1.7 2.2
Corporate and
other (11.9) (11.5) (12.2) (12.0) (10.7)
--------- -------- --------- --------- --------
Income before
income taxes,
minority interest
and equity in
income of
unconsolidated
affiliates $36.3 $20.3 $43.0 $35.2 $15.9
========= ======== ========= ========= ========
Mar 31, Dec 31, Sept 30, June 30,
2003 2002 2002 2002
----------- --------- -------- ---------
Towns & Resorts $12.4 $19.9 $18.4 $17.9
Commercial real
estate 2.9 4.5 (1.1) (0.7)
Land sales 17.6 30.7 8.6 10.5
Forestry 1.9 2.0 1.7 2.3
Corporate and
other (8.1) 28.4 (11.1) (13.7)
----------- --------- -------- ---------
Income before
income taxes,
minority interest
and equity in
income of
unconsolidated
affiliates $26.7 $85.5 $16.5 $16.3
=========== ========= ======= =========
(1) Excludes equity in income of unconsolidated affiliates,
previously reported in operating revenues. See footnote to Table 18.
Conference Call Information
JOE will host an interactive conference call to review the
company's results for the quarter ended June 30, 2004 and discuss
guidance for 2004 on Wednesday, July 21, 2004, at 10:00 AM, Eastern
Daylight Time.
To participate in the call, please phone 888.639.6205 (for
domestic calls from the United States) or 703.925.2608 (for
international calls) approximately ten minutes before the scheduled
start time. Approximately three hours following the call, you may
access a replay of the call by phoning 800.475.6701 (domestic) or
320.365.3844 (international) using access code 737963. The replay will
be available for one week.
JOE will also webcast the conference call live over the internet
in a listen-only format. Listeners can participate by visiting the
company's web site at http://www.joe.com. Access will be available 15
minutes prior to the scheduled start time. A replay of the conference
call will be posted to the JOE web site approximately three hours
following the call. The replay of the call will be available for one
week.
About JOE
The St. Joe Company, a publicly held company based in
Jacksonville, is one of Florida's largest real estate operating
companies. It is engaged in town, resort, commercial and industrial
development, land sales and commercial real estate services. JOE also
has significant interests in timber.
More information about JOE can be found at our web site at
http://www.joe.com.
Forward-Looking Statements
We have made forward-looking statements in this earnings release,
particularly in the Outlook Section. The Private Securities Litigation
Reform Act of 1995 provides a safe-harbor for forward-looking
information to encourage companies to provide prospective information
about themselves without fear of litigation so long as that
information is identified as forward-looking and is accompanied by
meaningful cautionary statements identifying important factors that
could cause actual results to differ, possibly materially, from those
in the information. Any statements in this release that are not
historical facts are forward-looking statements. You can find many of
these forward-looking statements by looking for words such as
"intend", "anticipate", "believe", "estimate", "expect", "plan",
"forecast" or similar expressions. In particular, forward-looking
statements include, among others, statements about the following:
-- the size and number of residential units and commercial
buildings;
-- expected development timetables, development approvals and the
ability to obtain such approvals, including possible legal
challenges;
-- the anticipated price ranges of developments;
-- the number of units that can be supported upon full build out
of a development;
-- the number, price and timing of anticipated land sales or
acquisitions;
-- estimated land holdings for a particular use within a specific
time frame;
-- absorption rates and expected gains on land and home site
sales;
-- the pace at which we release new product for sale;
-- future operating performance, cash flows, and short and
long-term revenue and earnings growth rates;
-- comparisons to historical projects; and
-- the number of shares of company stock which may be purchased
under the company's existing or future share-repurchase
program.
Forward-looking statements are not guarantees of future
performance. You are cautioned not to place undue reliance on any of
these forward-looking statements. These statements are made as of the
date hereof based on current expectations, and we undertake no
obligation to update the information contained in this release.
Forward-looking statements are subject to numerous assumptions,
risks and uncertainties. Factors that could cause actual results to
differ materially from those contemplated by a forward-looking
statement include the risk factors described in our annual report on
Form 10-K for the year ended December 31, 2003 as well as, among
others, the following:
-- economic conditions, particularly in Northwest Florida,
Florida as a whole and key areas of the southeast United
States that serve as feeder markets to the company's Northwest
Florida operations;
-- acts of war, terrorism or other geopolitical events;
-- local conditions such as an oversupply of homes and home sites
and residential or resort properties or a reduction in the
demand for real estate in an area;
-- timing and costs associated with property developments and
rentals;
-- the pace of commercial development in Northwest Florida;
-- competition from other real estate developers;
-- whether potential residents or tenants consider our properties
attractive;
-- increases in operating costs, including increases in real
estate taxes and the cost of construction materials;
-- changes in the amount or timing of federal and state income
tax liabilities resulting from either a change in our
application of tax laws, an adverse determination by a taxing
authority or court, or legislative changes to existing laws;
-- how well we manage our properties;
-- changes in interest rates and the performance of the financial
markets;
-- decreases in market rental rates for our commercial and resort
properties;
-- changes in the prices of wood products;
-- the pace of development of public infrastructure, particularly
in Northwest Florida;
-- potential liability under environmental laws or other laws or
regulations;
-- adverse changes in laws, regulations or the regulatory
environment affecting the development of real estate;
-- the availability of adequate funding from governmental
agencies and others to purchase conservation lands;
-- fluctuations in the size and number of transactions from
period to period; and
-- adverse weather conditions or natural disasters.
The foregoing list is not exhaustive and should be read in
conjunction with other cautionary statements contained in our periodic
and other filings with the Securities and Exchange Commission.
Copyright 2004, The St. Joe Company. "St. Joe," "JOE," "Advantis,"
"Artisan Park," "Beckrich," "Paseos,""Pier Park," "RiverCamps,"
"RiverTown," "SouthWood," "SummerCamp," "Victoria Park," "WaterColor,"
"WaterSound," "WindMark," and the "taking flight" design are service
marks of The St. Joe Company.
CONTACT: The St. Joe Company, Jacksonville
Media Contact:
Jerry M. Ray, 904-301-4430
or
Investor Contact:
Steve Swartz, 904-301-4347