e10vk
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Form 10-K
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(Mark One)
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þ
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31,
2010
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or
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the transition period
from to
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Commission File
No. 1-10466
The St. Joe Company
(Exact name of registrant as
specified in its charter)
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Florida
(State or other jurisdiction
of
incorporation or organization)
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59-0432511
(I.R.S. Employer
Identification No.)
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133 South WaterSound Parkway
WaterSound, Florida
(Address of principal
executive offices)
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32413
(Zip
Code)
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Registrants telephone number, including area code:
(850) 588-2300
Securities Registered Pursuant to Section 12(b) of the
Act:
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, no par value
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New York Stock Exchange
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Securities Registered Pursuant to Section 12(g) of the
Act:
None
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities
Act. YES þ NO o
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the
Act. YES o NO þ
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant
was required to file such reports) and (2) has been subject
to such filing requirements for the past
90 days. YES þ NO o
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of
Regulation S-T
(§232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant
was required to submit and post such
files). YES þ NO o
Indicate by check mark if disclosure of delinquent filers
pursuant to item 405 of
Regulation S-K
(§229.405 of this chapter) is not contained herein, and
will not be contained, to the best of the registrants
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this
Form 10-K
or any amendment to this
Form 10-K. þ
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in
Rule 12b-2
of the Exchange Act. (Check one):
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Large accelerated
filer þ
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Accelerated
filer o
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Non-accelerated
filer o
(Do not check if a smaller reporting company)
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Smaller reporting
company o
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Indicate by check mark whether the registrant is a shell company
(as defined in
Rule 12b-2
of the Exchange
Act). YES o NO þ
The aggregate market value of the registrants Common Stock
held by non-affiliates based on the closing price on
June 30, 2010, was approximately $2.1 billion.
As of February 18, 2011, there were 122,934,261 shares
of Common Stock, no par value, issued and 92,568,657 shares
outstanding, with 30,365,604 shares of treasury stock.
DOCUMENTS
INCORPORATED BY REFERENCE
Portions of the registrants definitive Proxy Statement for
the Annual Meeting of our Shareholders to be held on
May 17, 2011 (the proxy statement) are
incorporated by reference in Part III of this Report. Other
documents incorporated by reference in this Report are listed in
the Exhibit Index.
Table of
Contents
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* |
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Portions of the Proxy Statement for the Annual Meeting of our
Shareholders to be held on May 17, 2011 are incorporated by
reference in Part III of this
Form 10-K. |
1
PART I
As used throughout this Annual Report on
Form 10-K,
the terms St. Joe, the Company,
we, our, or us include The
St. Joe Company and its consolidated subsidiaries unless the
context indicates otherwise.
St. Joe was incorporated in 1936 and is one of the largest real
estate development companies in Florida. We own approximately
574,000 acres of land concentrated primarily in Northwest
Florida. Most of this land was acquired decades ago and, as a
result, has a very low cost basis. Approximately
403,000 acres, or approximately 70 percent of our
total land holdings, are within 15 miles of the coast of
the Gulf of Mexico.
We are engaged in town and resort development, commercial
development and rural land sales. We also have significant
interests in timber. Our four operating segments are:
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Residential Real Estate,
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Commercial Real Estate,
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Rural Land Sales, and
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Forestry.
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We believe we have one of the largest inventories of private
land suitable for development in Florida. We seek to create
value in our land by securing higher and better land-use
entitlements, facilitating infrastructure improvements,
developing community amenities, undertaking strategic and expert
land planning and development, parceling our land holdings in
creative ways and performing land restoration and enhancement.
We believe we are one of the few real estate development
companies to have assembled the range of real estate, financial,
marketing and regulatory expertise necessary to achieve a
large-scale approach to real estate development.
Market
Conditions and the Economy
Our business, financial condition and results of operations
continued to be adversely affected during 2010 by the ongoing
real estate downturn and stagnant economy in the United States
in general, and Florida in particular. These adverse conditions
include among others, minimal gains in employment and consumer
confidence from recessionary levels, a large number of homes for
sale or in various stages of foreclosure, increased regulation
and decreased availability of mortgage loans, historically low
housing starts, stagnant household income levels, and a slow
recovery in business investments. This challenging environment
has exerted negative pressure on the demand for all of our real
estate products.
Deepwater
Horizon Oil Spill
In late April 2010, an oil drilling platform exploded and sank
in the Gulf of Mexico off the coast of Louisiana releasing
millions of barrels of oil into the Gulf. Northwest Florida
beaches, including our beachfront properties in Walton County,
experienced physical impacts from the oil spill. The ruptured
oil well was permanently contained in September 2010.
The oil spill has had a negative impact on our properties,
results of operations and stock price. Uncertainty remains
regarding the extent of the environmental damage from the oil
and other pollutants that have been discharged into the Gulf and
the duration of the negative effects from the spill. We have
engaged legal counsel to assist us with our effort to recover
damages from the parties responsible for the oil spill. We
cannot be certain, however, of the amount of any recovery or the
ultimate success of our claims.
Northwest
Florida Beaches International Airport
The new Northwest Florida Beaches International Airport
commenced commercial flight operations on May 23, 2010. The
new airport is located on approximately 4,000 acres of land
we donated within the West Bay Area Sector Plan (the West
Bay Sector), one of the largest planned mixed-use
developments in the United States. We own substantially all of
the 71,000 acres in the West Bay Sector surrounding the
airport,
2
including approximately 41,000 acres dedicated to
preservation. Our West Bay Sector land has initial entitlements
for over 4 million square feet of commercial space and
approximately 6,000 residential units.
On April 12, 2010, we launched VentureCrossings Enterprise
Centre, a 1,000 acre commercial development adjacent to the
new airport. CB Richard Ellis Group, Inc. has been engaged to
market the land in this project for lease, sale or joint venture.
On November 29, 2010, we executed a Master Airport Access
Agreement with the Panama City-Bay County Airport and Industrial
District regarding
through-the-fence
access at the new Northwest Florida Beaches International
Airport. The Master Airport Access Agreement outlines the
process for implementing the
through-the-fence
rights originally established when we donated the land for the
airport.
Through-the-fence
access will allow companies in our VentureCrossings Enterprise
Centre direct access to airport taxiways and runways. The Master
Airport Access Agreement identifies three initial
through-the-fence
access points in VentureCrossings Enterprise Centre and provides
for flexibility as to the number and location of additional
access points. In addition, we entered into a ground lease for a
strategic parcel with immediate runway access at the new airport.
Other
2010 Highlights
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We relocated our corporate headquarters to Northwest Florida.
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We generated $8.7 million from the sale of 41 resort
homesites at an average price of $159,000 and 42 primary
homesites at an average price of $52,000.
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We sold 18 acres of commercial land for $4.4 million,
or over $237,000 per acre.
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We sold 606 acres of rural land for $3.0 million, or
$4,900 per acre.
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We recognized $20.6 million in previously deferred revenue
and conveyed 2,148 acres to the Florida Department of
Transportation (FDOT) as part of FDOTs
purchase of land from us in 2006.
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We increased our cash position by $20.0 million to
$183.8 million.
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We renegotiated and extended our pulpwood supply agreement with
Smurfit-Stone Container Corporation.
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Land-Use
Entitlements
We have a broad range of land-use entitlements in hand or in
various stages of the approval process for residential
communities in Northwest Florida and other selected regions of
the state, as well as commercial entitlements. As of
December 31, 2010, we had approximately 31,602 residential
units and 11.6 million commercial square feet in the
entitlements pipeline, in addition to 642 acres zoned for
commercial uses. The following tables describe our residential
and mixed-use projects with land-use entitlements that are in
development or pre-development and additional commercial
entitlements. These entitlements are on approximately
38,218 acres.
Summary
of Land-Use Entitlements (1)
Active St. Joe Residential and Mixed-Use Projects
December 31, 2010
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Residential
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Residential
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Units
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Units
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Under
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Total
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Remaining
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Closed
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Contract
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Residential
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Commercial
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Project
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Project
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Since
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as of
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Units
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Entitlements
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Project
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Class(2)
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County
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Acres
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Units(3)
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Inception
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12/31/10
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Remaining
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(Sq. Ft.)(4)
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In Development:(5)
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Hawks Landing
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PR
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Bay
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88
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168
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166
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2
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Landings at Wetappo
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RR
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Gulf
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113
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24
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7
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17
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RiverCamps on Crooked Creek
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RS
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Bay
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1,491
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408
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191
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217
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RiverSide at Chipola
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RR
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Calhoun
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120
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10
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2
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8
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RiverTown
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PR
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St. Johns
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4,170
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4,500
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32
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4,468
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500,000
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3
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Residential
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Residential
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Units
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Units
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Under
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Total
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Remaining
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Closed
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Contract
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Residential
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Commercial
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Project
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Project
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Since
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as of
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Units
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Entitlements
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Project
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Class(2)
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County
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Acres
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Units(3)
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Inception
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12/31/10
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Remaining
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(Sq. Ft.)(4)
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SouthWood
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PR
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Leon
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3,370
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4,770
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2,552
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2,218
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4,535,588
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SummerCamp Beach
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RS
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Franklin
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762
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499
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88
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411
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25,000
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Topsail
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PR
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Walton
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115
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610
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610
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220,000
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WaterColor
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RS
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Walton
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499
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1,140
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932
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1
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207
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47,600
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WaterSound
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RS
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Walton
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2,425
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1,432
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31
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1,401
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457,380
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WaterSound Beach
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RS
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Walton
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256
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511
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447
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64
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29,000
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WaterSound West Beach
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RS
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Walton
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62
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199
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52
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2
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145
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West Bay DSAP I
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PR/RS
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Bay
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15,089
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5,628
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5,628
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4,430,000
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Wild Heron(6)
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RS
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Bay
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17
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28
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2
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26
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WindMark Beach
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RS
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Gulf
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2,020
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1,516
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150
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1,366
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76,157
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Subtotal
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30,597
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21,443
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4,652
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3
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16,788
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10,320,725
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In Pre-Development:(5)
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Avenue A
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PR
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Gulf
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6
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96
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96
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Bayview Estates
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PR
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Gulf
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31
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45
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45
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Bayview Multifamily
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PR
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Gulf
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20
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300
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300
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Beacon Hill
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RR
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Gulf
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3
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12
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12
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Beckrich NE
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PR
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Bay
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15
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74
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74
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Boggy Creek
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PR
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Bay
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630
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526
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526
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Bonfire Beach
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RS
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Bay
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550
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|
750
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750
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70,000
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Breakfast Point, Phase 1
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PR/RS
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Bay
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|
132
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|
348
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|
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|
348
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College Station
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PR
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|
Bay
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|
|
567
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|
|
800
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|
800
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Cutter Ridge
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PR
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Franklin
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10
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|
25
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25
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DeerPoint Cedar Grove
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PR
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Bay
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|
|
686
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|
950
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950
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|
East Lake Creek
|
|
|
PR
|
|
|
|
Bay
|
|
|
|
81
|
|
|
|
313
|
|
|
|
|
|
|
|
|
|
|
|
313
|
|
|
|
|
|
East Lake Powell
|
|
|
RS
|
|
|
|
Bay
|
|
|
|
181
|
|
|
|
360
|
|
|
|
|
|
|
|
|
|
|
|
360
|
|
|
|
30,000
|
|
Howards Creek
|
|
|
RR
|
|
|
|
Gulf
|
|
|
|
8
|
|
|
|
33
|
|
|
|
|
|
|
|
|
|
|
|
33
|
|
|
|
|
|
Laguna Beach West
|
|
|
PR
|
|
|
|
Bay
|
|
|
|
36
|
|
|
|
260
|
|
|
|
|
|
|
|
|
|
|
|
260
|
|
|
|
|
|
Long Avenue
|
|
|
PR
|
|
|
|
Gulf
|
|
|
|
10
|
|
|
|
30
|
|
|
|
|
|
|
|
|
|
|
|
30
|
|
|
|
|
|
Palmetto Bayou
|
|
|
PR
|
|
|
|
Bay
|
|
|
|
58
|
|
|
|
217
|
|
|
|
|
|
|
|
|
|
|
|
217
|
|
|
|
90,000
|
|
ParkSide
|
|
|
PR
|
|
|
|
Bay
|
|
|
|
48
|
|
|
|
480
|
|
|
|
|
|
|
|
|
|
|
|
480
|
|
|
|
|
|
Pier Park Timeshare
|
|
|
RS
|
|
|
|
Bay
|
|
|
|
13
|
|
|
|
125
|
|
|
|
|
|
|
|
|
|
|
|
125
|
|
|
|
|
|
PineWood
|
|
|
PR
|
|
|
|
Bay
|
|
|
|
104
|
|
|
|
264
|
|
|
|
|
|
|
|
|
|
|
|
264
|
|
|
|
|
|
Port St. Joe Draper, Phase 1
|
|
|
PR
|
|
|
|
Gulf
|
|
|
|
610
|
|
|
|
1,200
|
|
|
|
|
|
|
|
|
|
|
|
1,200
|
|
|
|
|
|
Port St. Joe Draper, Phase 2
|
|
|
PR
|
|
|
|
Gulf
|
|
|
|
981
|
|
|
|
2,125
|
|
|
|
|
|
|
|
|
|
|
|
2,125
|
|
|
|
150,000
|
|
Port St. Joe Town Center
|
|
|
RS
|
|
|
|
Gulf
|
|
|
|
180
|
|
|
|
624
|
|
|
|
|
|
|
|
|
|
|
|
624
|
|
|
|
500,000
|
|
Powell Adams
|
|
|
RS
|
|
|
|
Bay
|
|
|
|
56
|
|
|
|
2,520
|
|
|
|
|
|
|
|
|
|
|
|
2,520
|
|
|
|
|
|
Sabal Island
|
|
|
RS
|
|
|
|
Gulf
|
|
|
|
45
|
|
|
|
18
|
|
|
|
|
|
|
|
|
|
|
|
18
|
|
|
|
|
|
South Walton Multifamily
|
|
|
PR
|
|
|
|
Walton
|
|
|
|
40
|
|
|
|
212
|
|
|
|
|
|
|
|
|
|
|
|
212
|
|
|
|
|
|
Star Avenue North
|
|
|
PR
|
|
|
|
Bay
|
|
|
|
295
|
|
|
|
600
|
|
|
|
|
|
|
|
|
|
|
|
600
|
|
|
|
350,000
|
|
The Cove
|
|
|
RR
|
|
|
|
Gulf
|
|
|
|
64
|
|
|
|
107
|
|
|
|
|
|
|
|
|
|
|
|
107
|
|
|
|
|
|
Timber Island(7)
|
|
|
RS
|
|
|
|
Franklin
|
|
|
|
49
|
|
|
|
407
|
|
|
|
|
|
|
|
|
|
|
|
407
|
|
|
|
14,500
|
|
Wavecrest
|
|
|
RS
|
|
|
|
Bay
|
|
|
|
7
|
|
|
|
95
|
|
|
|
|
|
|
|
|
|
|
|
95
|
|
|
|
|
|
West Bay Corners SE
|
|
|
PR
|
|
|
|
Bay
|
|
|
|
100
|
|
|
|
524
|
|
|
|
|
|
|
|
|
|
|
|
524
|
|
|
|
50,000
|
|
West Bay Corners SW
|
|
|
PR
|
|
|
|
Bay
|
|
|
|
64
|
|
|
|
160
|
|
|
|
|
|
|
|
|
|
|
|
160
|
|
|
|
|
|
West Bay Landing(8)
|
|
|
RS
|
|
|
|
Bay
|
|
|
|
950
|
|
|
|
214
|
|
|
|
|
|
|
|
|
|
|
|
214
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
|
|
|
|
|
|
|
|
6,630
|
|
|
|
14,814
|
|
|
|
|
|
|
|
|
|
|
|
14,814
|
|
|
|
1,254,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
37,227
|
|
|
|
36,257
|
|
|
|
4,652
|
|
|
|
3
|
|
|
|
31,602
|
|
|
|
11,575,225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
A project is deemed land-use
entitled when all major discretionary governmental land-use
approvals have been received. Some of these projects may require
additional permits for development and/or build-out; they also
may be subject to legal challenge.
|
|
(2)
|
|
Current St. Joe land
classifications for its residential developments or the
residential portion of its mixed-use projects:
|
4
|
|
|
|
|
PR Primary residential
|
|
|
|
RS Resort and seasonal residential
|
|
|
|
RR Rural residential
|
|
|
|
(3)
|
|
Project units represent the maximum
number of units entitled or currently expected at full
build-out. The actual number of units or square feet to be
constructed at full build-out may be lower than the number
entitled or currently expected.
|
|
(4)
|
|
Represents the remaining square
feet with land-use entitlements as designated in a development
order or expected given the existing property land use or zoning
and present plans. The actual number of square feet to be
constructed at full build-out may be lower than the number
entitled. Commercial entitlements include retail, office and
industrial uses. Industrial uses total 6,128,381 square
feet including SouthWood, RiverTown and the West Bay DSAP I.
|
|
(5)
|
|
A project is in
development when St. Joe has commenced horizontal
construction on the project and commenced sales and/or marketing
or will commence sales and/or marketing in the foreseeable
future. A project in pre-development has land-use
entitlements but is still under internal evaluation or requires
one or more additional permits prior to the commencement of
construction. For certain projects in pre-development, some
horizontal construction may have occurred, but no sales or
marketing activities are expected in the foreseeable future.
|
|
(6)
|
|
Homesites acquired by St. Joe
within the Wild Heron community.
|
|
(7)
|
|
Timber Island entitlements include
seven residential units and 400 units for hotel or other
transient uses (including units held with fractional ownership
such as private residence clubs).
|
|
(8)
|
|
West Bay Landing is a
sub-project
within West Bay DSAP I.
|
Summary
of Additional Commercial Land-Use Entitlements (1)
(Commercial Projects Not Included in the Tables Above)
December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acres Sold
|
|
|
|
|
|
|
|
|
|
|
|
|
Project
|
|
|
Since
|
|
|
Acres Under Contract
|
|
|
Total Acres
|
|
Project
|
|
County
|
|
|
Acres
|
|
|
Inception
|
|
|
As of 12/31/10
|
|
|
Remaining
|
|
|
Airport Commerce
|
|
|
Leon
|
|
|
|
45
|
|
|
|
10
|
|
|
|
|
|
|
|
35
|
|
Alf Coleman Retail
|
|
|
Bay
|
|
|
|
25
|
|
|
|
23
|
|
|
|
|
|
|
|
2
|
|
Beach Commerce
|
|
|
Bay
|
|
|
|
157
|
|
|
|
151
|
|
|
|
|
|
|
|
6
|
|
Beach Commerce II
|
|
|
Bay
|
|
|
|
112
|
|
|
|
13
|
|
|
|
|
|
|
|
99
|
|
Beckrich Office Park
|
|
|
Bay
|
|
|
|
17
|
|
|
|
15
|
|
|
|
|
|
|
|
2
|
|
Beckrich Retail
|
|
|
Bay
|
|
|
|
44
|
|
|
|
41
|
|
|
|
|
|
|
|
3
|
|
Cedar Grove Commerce
|
|
|
Bay
|
|
|
|
51
|
|
|
|
5
|
|
|
|
|
|
|
|
46
|
|
Franklin Industrial
|
|
|
Franklin
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
7
|
|
Glades Retail
|
|
|
Bay
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
14
|
|
Gulf Boulevard
|
|
|
Bay
|
|
|
|
78
|
|
|
|
27
|
|
|
|
|
|
|
|
51
|
|
Hammock Creek Commerce
|
|
|
Gadsden
|
|
|
|
165
|
|
|
|
27
|
|
|
|
|
|
|
|
138
|
|
Mill Creek Commerce
|
|
|
Bay
|
|
|
|
37
|
|
|
|
|
|
|
|
|
|
|
|
37
|
|
Nautilus Court
|
|
|
Bay
|
|
|
|
11
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
Pier Park NE
|
|
|
Bay
|
|
|
|
57
|
|
|
|
|
|
|
|
|
|
|
|
57
|
|
Port St. Joe Commerce II
|
|
|
Gulf
|
|
|
|
39
|
|
|
|
9
|
|
|
|
|
|
|
|
30
|
|
Port St. Joe Commerce III
|
|
|
Gulf
|
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
50
|
|
Powell Hills Retail
|
|
|
Bay
|
|
|
|
44
|
|
|
|
|
|
|
|
|
|
|
|
44
|
|
South Walton Commerce
|
|
|
Walton
|
|
|
|
38
|
|
|
|
17
|
|
|
|
|
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
991
|
|
|
|
349
|
|
|
|
|
|
|
|
642
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
A project is deemed land-use
entitled when all major discretionary governmental land-use
approvals have been received. Some of these projects may require
additional permits for development and/or build-out; they also
may be subject to legal challenge. Includes significant St. Joe
projects that are either operating, under development or in the
pre-development stage.
|
5
Residential
Real Estate
Our residential real estate segment typically plans and develops
mixed-use resort, seasonal and primary residential communities
of various sizes, primarily on our existing land. We own large
tracts of land in Northwest Florida, including large tracts near
Tallahassee and Panama City, and significant Gulf of Mexico
beach frontage and other waterfront properties, which we believe
are suited for resort, seasonal and primary communities. We
believe this large land inventory, with a low cost basis,
provides us an advantage over our competitors who must purchase
and finance real estate at current market prices before
beginning projects.
We are continuing to devote resources to the conceptual design,
planning, permitting and construction of certain key projects
currently under development, and we will maintain this process
for certain select communities going forward. The success of
this strategy is dependent on our intent and ability to hold and
sell these key projects in most cases, over a long-term horizon.
We also plan to either partner with third parties for the
development of new communities or sell entitled land to
third-party developers or investors.
Currently, customers for our developed homesites include both
individual purchasers and national, regional and local
homebuilders. Going forward, we may also sell undeveloped land
with significant residential entitlements directly to
third-party developers or investors.
The following are descriptions of some of our current
residential development projects in Florida:
WaterColor is situated on approximately 499 acres on the
beaches of the Gulf of Mexico in south Walton County. The
community includes approximately 1,140 residential units, as
well as the WaterColor Inn and Resort, the recipient of many
notable awards. The WaterColor Inn and Resort is operated on our
behalf by Noble House Hotels & Resorts, a boutique
hotel ownership and management company with 13 properties
throughout the United States. Other WaterColor amenities include
a beach club, spa, tennis center, an award-winning upscale
restaurant, retail and commercial space and neighborhood parks.
WaterSound West Beach is located approximately four miles east
of WaterColor on the beach-side of County Road 30A. This
community is situated on 62 acres and includes
199 units with amenities that include private beach access
through the adjacent Deer Lake State Park and a community pool
and clubhouse facility.
WaterSound Beach is located approximately five miles east of
WaterColor and is planned to include approximately
511 units. Situated on approximately 256 acres,
WaterSound Beach includes over one mile of beachfront on the
Gulf of Mexico. The WaterSound Beach Club, a private, beachfront
facility featuring a 7,000 square-foot, free-form pool and
a restaurant, is located within the community.
WaterSound is situated on approximately 2,425 acres and is
planned for 1,432 residential units and approximately
450,000 square feet of commercial space. It is located
approximately three miles from WaterSound Beach north of
U.S. 98 in Walton County. WaterSound includes Origins, a
uniquely designed Davis Love III golf course, as well as a
community pool and clubhouse facility.
RiverCamps on Crooked Creek is situated on approximately
1,491 acres in western Bay County bounded by West Bay, the
Intracoastal Waterway and Crooked Creek. The community is
planned for 408 homes in a low-density, rustic setting with
access to various outdoor activities such as fishing, boating
and hiking. The community includes the RiverHouse, a waterfront
amenity featuring a pool, fitness center, meeting and dining
areas and temporary docking facilities.
Breakfast Point is a new primary home community situated on
approximately 132 acres located in Panama City Beach in Bay
County. It is located approximately sixteen miles south of the
new Northwest Florida Beaches International Airport. We plan to
initially develop 348 homesites and sell them to local and
national home builders.
WindMark Beach is a beachfront resort community situated on
approximately 2,020 acres in Gulf County near the town of
Port St. Joe. Plans for WindMark Beach include approximately
1,516 residential units and 76,000 square feet of
commercial space. The community features a waterfront Village
Center that includes a restaurant, a community pool and
clubhouse facility, an amphitheater and approximately
42,000 square feet of
6
commercial space. The community is planned to include
approximately 14 miles of walkways and boardwalks,
including a 3.5-mile beachwalk.
SummerCamp Beach is located on the Gulf of Mexico in Franklin
County approximately 46 miles south of Tallahassee. The
community is situated on approximately 762 acres and
includes the SummerCamp Beach Club, a beachfront facility with a
pool, restaurant, boardwalks and canoe and kayak rentals. Plans
for SummerCamp Beach include approximately 499 units.
SouthWood is located on approximately 3,370 acres in
southeast Tallahassee. Planned to include approximately 4,770
residential units, SouthWood includes an 18-hole golf course and
club and a traditional town center with restaurants,
recreational facilities, retail shops and offices. Over 35% of
the land in this community is designated for open space,
including a
123-acre
central park.
RiverTown, situated on approximately 4,170 acres located in
St. Johns County south of Jacksonville, is currently planned for
4,500 housing units and 500,000 square feet of commercial
space. Phase I of RiverTown was re-launched in 2010, focusing on
the first 800 units, and will feature an amenity center
with pool, tennis courts and playing fields. The centerpiece of
the community will be Riverfront Park, a
58-acre
nature park along the St. Johns River.
Commercial
Real Estate
Our commercial real estate segment plans, develops and sells or
leases real estate for commercial purposes. We focus on
commercial development in Northwest Florida because of our large
land holdings surrounding the new Northwest Florida Beaches
International Airport, along roadways and near or within
business districts in the region. We provide development
opportunities for national and regional retailers and our
strategic partners in Northwest Florida. As part of our strategy
to generate recurring revenues, we provide build-to-suit and
ground leases to commercial users. We also offer land for
commercial and light industrial uses within large and
small-scale commerce parks as well as a wide range of
multi-family rental projects. We also develop commercial parcels
within or near existing residential development projects.
In 2010, we launched VentureCrossings Enterprise Centre, a
1,000 acre commercial development adjacent to the Northwest
Florida Beaches International Airport. CB Richard Ellis Group,
Inc., the worlds largest commercial real estate services
firm is soliciting global office, retail and industrial users
for this prime development location.
Similar to our residential projects, we seek to minimize our
capital expenditures for commercial development by either
partnering with third parties for the development of certain new
commercial projects or selling entitled land to third-party
developers or investors.
Rural
Land Sales
Our rural land sales segment markets and sells rural land from
our holdings primarily in Northwest Florida. Although the
majority of the land sold in this segment is undeveloped
timberland, some parcels include the benefits of limited
development activity including improved roads, ponds and
fencing. Our rural land sales segment also sells credits to
developers from our wetlands mitigation banks.
We sell parcels of varying sizes ranging from less than one acre
to thousands of acres. The pricing of these parcels varies
significantly based on size, location, terrain, timber quality
and other local factors. We made a strategic decision in 2009 to
sell fewer large tracts of rural land in order to preserve our
timberland resources. We used this strategy during 2010 and
expect to continue this strategy in 2011.
The vast majority of the holdings marketed by our rural land
sales segment will continue to be managed as timberland until
sold. The revenues and income from our timberland operations are
reflected in the results of our forestry segment.
7
Forestry
Our forestry segment focuses on the harvesting of our timber and
management of our extensive timber holdings. Revenues are
generated primarily through the sale of sawtimber and pulpwood,
and land management services for conservation properties. Our
principal forestry products are pine pulpwood and sawtimber logs.
On December 31, 2010, the estimate of our standing
inventory was approximately 16.8 million tons of pine and
5.4 million tons of hardwood. Our forestry staff plans and
oversees our silvicultural activities, thinning and final
harvest operations, and the reforestation of our timberlands.
Silviculture, harvesting, road maintenance and reforestation
activities are conducted by local independent contractors under
agreements that are generally renewed annually.
In November 2010, we entered into a new supply agreement with
Smurfit-Stone Container Corporation that requires us to deliver
and sell a total of 3.9 million tons of pulpwood through
2017. In addition, we sell stumpage and delivered logs to other
regional mills that produce products other than pulp, including
lumber, wood pellet, and oriented strand board manufacturers.
During the first four months of 2010, we also sold energy
feedstock to customers under the Biomass Crop Assistance Program
sponsored by the federal government.
Supplemental
Information
Information regarding the revenues, earnings and total assets of
each of our operating segments can be found in Note 17 to
our Consolidated Financial Statements included in this Report.
Substantially all of our revenues are generated from domestic
customers. All of our assets are located in the United States.
Competition
The real estate development business is highly competitive and
fragmented. With respect to our residential real estate
business, our prospective customers generally have a variety of
choices of new and existing homes and homesites near our
developments when considering a purchase. As a result of the
housing crisis over the past several years, the number of resale
homes on the market have dramatically increased, which further
increases competition for the sale of our residential products.
We compete with numerous developers of varying sizes, ranging
from local to national in scope, some of which may have greater
financial resources than we have. We attempt to differentiate
our products primarily on the basis of community design,
quality, uniqueness, amenities, location and developer
reputation.
Employees
As of February 1, 2011, we had
118 employees. Our employees work in the
following segments:
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Residential real estate
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35
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Commercial real estate
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7
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Rural land sales
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7
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Forestry
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19
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Corporate and other
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50
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Total
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118
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Available
Information
Our most recent Annual Report on
Form 10-K,
Quarterly Reports on
Form 10-Q,
Current Reports on
Form 8-K,
and amendments to those reports may be viewed or downloaded
electronically, free of charge, from our website:
http://www.joe.com
as soon as reasonably practicable after we electronically file
such material with, or furnish it to, the Securities and
Exchange Commission (SEC). In addition, you may read
and copy any materials we file with SEC at the SECs Public
Reference Room at 100F Street, NE, Washington, DC 20549. To
obtain information on the operation of the Public Reference
room, you may call the SEC at
1-800-SEC-0330.
Our recent press releases are also available to be viewed or
downloaded electronically at
8
http://www.joe.com.
We will also provide electronic copies of our SEC filings free
of charge upon request. Any information posted on or linked from
our website is not incorporated by reference into this Annual
Report on
Form 10-K.
The SEC also maintains a website at
http://sec.gov,
which contains reports, proxy and information statements and
other information regarding issuers that file electronically
with the SEC.
The following are what we believe to be the principal risks that
could cause a material adverse effect on our business, financial
condition, results of operations, cash flows, strategies and
prospects.
A
continued downturn in the demand for real estate, combined with
the increase in the supply of real estate available for sale and
declining prices, will continue to adversely impact our
business.
The United States housing market continues to experience a
significant downturn. Florida, one of the hardest hit states,
has experienced a substantial, continuing decline in demand in
most of its residential real estate markets. The collapse of the
housing market contributed to the recent recession in the
national economy, which exerted further downward pressure on
real estate demand. Significantly tighter lending standards for
borrowers are also having a significant negative effect on
demand. A record number of homes in foreclosure and forced sales
by homeowners under distressed economic conditions are
significantly contributing to the high levels of inventories of
homes and homesites available for sale. The collapse of real
estate demand and high levels of inventories have caused land
and other real estate prices to significantly decline.
These adverse market conditions have negatively affected our
real estate products. Revenues from our residential and
commercial real estate segments have drastically declined in the
past several years, which has had an adverse affect on our
financial condition and results of operations. Our lack of
revenues reflects not only fewer sales, but also declining
prices for our residential and commercial real estate products.
We have also seen lower demand and pricing weakness in our rural
land sales segment.
We do not know how long the downturn in the real estate market
will last, whether it will worsen or when real estate markets
will return to more normal conditions. Unemployment, lack of
consumer confidence and other adverse consequences of the recent
economic recession could significantly delay a recovery in real
estate markets. Our business will continue to suffer until
market conditions improve. If market conditions were to worsen,
the demand for our real estate products could further decline,
negatively impacting our earnings, cash flow, liquidity and
financial condition.
A
further downturn in national or regional economic conditions,
especially in Florida, could adversely impact our
business.
The recent collapse of the housing market and crisis in the
credit markets resulted in a recession in the national economy,
after which high unemployment, decreased levels of gross
domestic product and significantly reduced consumer spending
have persisted. During such times, potential customers often
defer or avoid real estate purchases due to the substantial
costs involved. Furthermore, a significant percentage of our
planned residential units are resort and seasonal products,
purchases of which are even more sensitive to adverse economic
conditions. Businesses and developers are also less willing to
invest in commercial projects during a recession. Our real
estate sales, revenues, financial condition and results of
operations have suffered as a result.
Florida, as one of the states hardest hit by the recent
recession and lingering economic downturn, could take longer to
recover than the rest of the nation. Our business is especially
sensitive to economic conditions in Florida, where all of our
developments are located, and the Southeast region of the United
States, which in the past has produced a high percentage of
customers for the resort and seasonal products in our Northwest
Florida communities.
We expect the prolonged effects of the recent recession to
continue to have a material adverse effect on our business,
results of operations and financial condition.
9
Our
business is concentrated in Northwest Florida. As a result, our
long-term financial results are largely dependent on the
economic growth of Northwest Florida.
The economic growth of Northwest Florida, where most of our land
is located, is an important factor in creating demand for our
products and services. Two important factors in the economic
growth of the region are the completion of significant
infrastructure improvements and the creation of new jobs.
The economic growth of Northwest Florida depends upon state and
local governments, in combination with the private sector, to
plan and complete significant infrastructure improvements in the
region, such as new roads, medical facilities and schools. The
future economic growth of Northwest Florida and our financial
results may be adversely affected if its infrastructure is not
improved. There can be no assurance that new improvements will
occur or that existing projects will be completed.
Attracting significant new employers that can create new,
high-quality jobs is also a key factor in the economic growth of
Northwest Florida. Northwest Florida has traditionally lagged
behind the rest of Florida in economic growth, and as a result
its residents have a lower per capita income than residents in
other parts of the state. In order to improve the economy of the
region, state and local governments, along with the private
sector, must seek to attract large employers capable of paying
high salaries to large numbers of new employees. State
governments, particularly in the Southeast, and local
governments within Florida compete intensely for new jobs. There
can be no assurance that efforts to attract significant new
employers to locate facilities in Northwest Florida will be
successful or that new employers will want to locate their
businesses in Northwest Florida. The future economic growth of
Northwest Florida and our financial results may be adversely
affected if substantial job growth is not achieved.
If we
are not able to generate sufficient cash to maintain and enhance
our operations and to develop our real estate holdings, our
financial condition and results of operations could be
negatively impacted.
We operate in a capital intensive industry and require
significant cash to maintain our competitive position. Although
we have significantly reduced capital expenditures and operating
expenses during the current real estate downturn, we will need
significant cash in the future to maintain and enhance our
operations and to develop our real estate holdings. We obtain
funds for our operating expenses and capital expenditures
through cash flow from operations, property sales and
financings. Due to the operating losses and low levels of cash
currently generated by our operations, we are continuing to
explore alternative methods and strategies for generating
additional cash, such as ways to maximize the use of our timber
and exploring other strategic alternatives. We cannot guarantee,
however, that any of these alternative cash sources or
strategies will be viable, significant or successful. Failure to
obtain sufficient cash when needed may limit our development
activities, cause us to further reduce our operations or cause
us to sell desirable assets on unfavorable terms, any of which
could have a material adverse affect on our financial condition
and results of operations.
If our cash flow proves to be insufficient, due to the
continuing real estate downturn, unanticipated expenses or
otherwise, we may need to obtain additional financing from
third-party lenders in order to support our plan of operations.
Additional funding, whether obtained through public or private
debt or equity financing, or from strategic alliances, may not
be available when needed or may not be available on terms
acceptable to us, if at all.
We have a $125 million revolving credit facility with
adjustable interest rates that we can draw upon to provide cash
for operations
and/or
capital expenditures. Increases in interest rates can make it
more expensive for us to use this credit facility or obtain
funds from other sources that we need to operate our business.
The
Deepwater Horizon oil spill has had, and future oil spill
incidents in the Gulf of Mexico could have, an adverse impact on
our properties, results of operations and stock price.
Furthermore, if drilling for oil or natural gas is permitted off
the coast of Northwest Florida, our business may be adversely
affected.
In April 2010, the Deepwater Horizon drilling platform exploded
and sank in the Gulf of Mexico off the coast of Louisiana
causing a massive oil spill. Millions of barrels of oil were
released into the Gulf over a period of months causing
widespread environmental damage. The ruptured oil well was
permanently contained
10
in September 2010. Much uncertainty remains, however, about the
extent of the environmental damage from the oil and other
pollutants that have been discharged into the Gulf and the
duration of the negative effects from the spill, including
negative consumer perception regarding the Gulf region including
Northwest Florida. Although the full economic and environmental
effects of the oil spill are uncertain at this time, we believe
that it has had a negative impact on our properties, results of
operations and stock price. Future oil spill incidents, or the
prospect of future oil spill incidents, could also negatively
affect our properties, results of operations and stock price.
To date, federal and state laws have prevented the construction
of unsightly drilling platforms off the coast of Florida and
have preserved the natural beauty of the states coastline
and beaches. This natural coastal beauty is an important
positive factor in Floridas tourist-based economy and
contributes significantly to the value of our properties in
Northwest Florida.
If drilling platforms are permitted to be built off the coast of
Northwest Florida, potential purchasers may find our coastal
properties to be less attractive, or may perceive greater risks
from possible future oil spills, which may have an adverse
effect on our business.
We
have significant operations and properties in Florida that could
be materially and adversely affected in the event of a
hurricane, natural disaster or other significant disruption. The
prospect of hurricanes could also negatively impact demand for
our real estate products.
Our corporate headquarters and our properties are located in
Florida, where major hurricanes have occurred. Because of its
location between the Gulf of Mexico and the Atlantic Ocean,
Florida is particularly susceptible to the occurrence of
hurricanes. Depending on where any particular hurricane makes
landfall, our developments in Florida, especially our coastal
properties and corporate headquarters facility in Northwest
Florida, could experience significant, if not catastrophic,
damage. Such damage could materially delay sales in affected
communities or could lessen demand for products in those
communities. If our corporate headquarters facility is damaged
or destroyed, we may have difficulty performing certain
corporate and operational functions.
Importantly, regardless of actual damage to a development, the
occurrence and frequency of hurricanes in Florida and the
southeastern United States could negatively impact demand for
our real estate products because of consumer perceptions of
hurricane risks. For example, the southeastern United States
experienced a record-setting hurricane season in 2005, including
Hurricane Katrina, which caused severe devastation to New
Orleans and the Mississippi Gulf Coast and received prolonged
national media attention. Although our properties were not
significantly impacted, we believe that the 2005 hurricane
season had an immediate negative impact on sales of our resort
residential products. Another severe hurricane or hurricane
season in the future could have a similar negative effect on our
real estate sales.
In addition to hurricanes, the occurrence of other natural
disasters and climate conditions in Florida, such as tornadoes,
floods, fires, unusually heavy or prolonged rain, droughts and
heat waves, could have a material adverse effect on our ability
to develop and sell properties or realize income from a number
of our projects. Furthermore, an increase in sea levels due to
long-term global warming could have a material adverse affect on
our coastal properties. The occurrence of natural disasters and
the threat of adverse climate changes could also have a
long-term negative effect on the attractiveness of Florida as a
location for resort, seasonal
and/or
primary residences and as a location for new employers that can
create high-quality jobs needed to spur growth in Northwest
Florida.
Additionally, we are susceptible to manmade disasters or
disruptions, such as oil spills, acts of terrorism, power
outages and communications failures. If a hurricane, natural
disaster or other significant disruption occurs, we may
experience disruptions to our operations and properties, which
could have a material adverse effect on our business and our
results of operations.
11
If the
new Northwest Florida Beaches International Airport is not
successful, we may not realize the economic benefits that we are
anticipating from the new airport.
We believe that the recent relocation of the Panama City-Bay
County International Airport is critically important to the
overall economic development of Northwest Florida. We anticipate
that the airport will provide a catalyst for value creation in
the property we own surrounding the airport, as well as our
other properties throughout Northwest Florida.
Southwest Airlines provides air service to the new airport. If
Southwest Airlines service fails to grow, or if Southwest
Airlines chooses to terminate its service at the new airport or
chooses to commence service at another airport in the region,
the new airport may not be successful, and we may not realize
the economic benefits that we are anticipating from the new
airport.
In addition, if Southwest Airlines service to the new
airport is unsuccessful, we would be required pursuant to our
agreement with Southwest Airlines to reimburse Southwest
Airlines if it incurs losses during the first three years of
service. Although we have the right to terminate our agreement
with Southwest Airlines if payments exceed certain amounts, the
required payments under the agreement could have an adverse
affect on our financial results.
The airport must successfully compete with the other airports in
the region. For example, airports in Pensacola, Destin and
Tallahassee, Florida, and Dothan, Alabama aggressively compete
for passengers in Northwest Florida. There can be no assurance
that the region can support all of the existing airports. If the
airport fails to successfully compete with the other airports in
the region, we may not realize the economic benefits that we are
anticipating from the new airport.
Limitations
on the access to the airport runway at the new Northwest Florida
Beaches International Airport may have an adverse effect on the
demand for our West Bay Sector lands adjacent to the new airport
and our results of operations.
Our land donation agreement with the airport authority and the
deed for the airport land provide access rights to the airport
runway from our adjacent lands. We subsequently entered into an
access agreement with the airport authority that outlines the
process for implementing access to the airport runway. Under the
terms of the access agreement, we are subject to the
requirements of the airport authority, including but not limited
to the laws administered by the Federal Aviation Administration
(the FAA), the Florida Department of Environmental
Protection, the U.S. Army Corps of Engineers, Bay County
and Panama City. Should security measures at airports become
more restrictive in the future due to circumstances beyond our
control, FAA regulations governing these access rights may
impose additional limitations that could significantly impair or
restrict access rights.
In addition, we are required to obtain environmental permits
from the U.S. Army Corps of Engineers and Floridas
Department of Environmental Protection in order to develop the
land necessary for access from our planned areas of commercial
development to the airport runway. Such permits are often
subject to a lengthy approval process, and there can be no
assurance that such permits will be issued, or that they will be
issued in a timely manner.
We believe that runway access is a valuable attribute of some of
our West Bay Sector lands adjacent to the new airport, and the
failure to maintain such access, or the imposition of
significant restrictions on such access, could adversely affect
the demand for such lands and our results of operations.
Changes
in the demographics affecting projected population growth in
Florida, particularly Northwest Florida, including a decrease in
the migration of Baby Boomers, could adversely affect our
business.
Florida has experienced strong population growth since World War
II, including during the real estate boom in the first half of
the last decade. In recent years, however, the rate of net
migration into Florida has drastically declined. The significant
decline in the rate of in-migration could reflect a number of
factors affecting Florida, including difficult economic
conditions, rising foreclosures, restrictive credit, the
occurrence of hurricanes and increased costs of living. Also,
because of the housing collapse across the nation, people
12
interested in moving to Florida may have delayed or cancelled
their plans due to difficulties selling their existing homes.
The success of our primary communities will be dependent on
strong in-migration population expansion in our regions of
development, primarily Northwest Florida. We also believe that
Baby Boomers seeking retirement or vacation homes in Florida
will remain important target customers for our real estate
products in the future. Floridas population growth could
be negatively affected in the future by factors such as adverse
economic conditions, the occurrence of hurricanes or oil spills
and the high cost of real estate, insurance and property taxes.
Furthermore, those persons considering moving to Florida may not
view Northwest Florida as an attractive place to live or own a
second home and may choose to live in another region of the
state. In addition, as an alternative to Florida, other states
such as Georgia, North and South Carolina and Tennessee are
increasingly becoming retirement destinations and are attracting
retiring Baby Boomers and the workforce population who may have
otherwise considered moving to Florida. If Florida, especially
Northwest Florida, experiences an extended period of slow
growth, or even net out-migration, our business, results of
operations and financial condition would suffer.
We are
dependent upon national, regional and local homebuilders as
customers, but our ability to attract homebuilder customers and
their ability or willingness to satisfy their purchase
commitments may be uncertain considering the current real estate
downturn.
We no longer build homes in our developments, so we are highly
dependent upon our relationships with national, regional and
local homebuilders to be the primary customers for our homesites
and to provide construction services at our residential
developments. Because of the collapse of real estate markets
across the nation, including our markets, homebuilders are
struggling to survive and are significantly less willing to
purchase homesites and invest capital in speculative
construction. The homebuilder customers that have already
committed to purchase homesites from us could decide to reduce,
delay or cancel their existing commitments to purchase homesites
in our developments. Homebuilders also may not view our
developments as desirable locations for homebuilding operations,
or they may choose, in light of current market conditions, to
purchase land from distressed sellers. Any of these events could
have an adverse effect on our results of operations.
Our
business model is dependent on transactions with strategic
partners. We may not be able to successfully (1) attract
desirable strategic partners; (2) complete agreements with
strategic partners, and/or (3) manage relationships with
strategic partners going forward, any of which could adversely
affect our business.
We have increased our focus on executing our development and
value creation strategies through joint ventures and strategic
relationships. We are actively seeking strategic partners for
alliances or joint venture relationships as part of our overall
strategy for particular developments. These joint venture
partners may bring development experience, industry expertise,
financial resources, financing capabilities, brand recognition
and credibility or other competitive assets. We cannot assure,
however, that we will have sufficient resources, experience
and/or
skills to locate desirable partners. We also may not be able to
attract partners who want to conduct business in Northwest
Florida, our primary area of focus, and who have the assets,
reputation or other characteristics that would optimize our
development opportunities.
Once a partner has been identified, actually reaching an
agreement on a transaction may be difficult to complete and may
take a considerable amount of time considering that negotiations
require careful balancing of the parties various
objectives, assets, skills and interests. A formal partnership
with a joint venture partner may also involve special risks such
as:
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we may not have voting control over the joint venture;
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the venture partner may take actions contrary to our
instructions or requests, or contrary to our policies or
objectives with respect to the real estate investments;
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the venture partner could experience financial
difficulties, and
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actions by a venture partner may subject property owned by the
joint venture to liabilities greater than those contemplated by
the joint venture agreement or have other adverse consequences.
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Joint ventures have a high failure rate. A key complicating
factor is that strategic partners may have economic or business
interests or goals that are inconsistent with ours or that are
influenced by factors unrelated to our business. These competing
interests lead to the difficult challenges of successfully
managing the relationship and communication between strategic
partners and monitoring the execution of the partnership plan.
We cannot assure that we will have sufficient resources,
experience
and/or
skills to effectively manage our ongoing relationships with our
strategic partners. We may also be subject to adverse business
consequences if the market reputation of a strategic partner
deteriorates. If we cannot successfully execute transactions
with strategic partners, our business could be adversely
affected.
If the
fair values of our homes and homesites substantially completed
and ready for sale which management intends to sell in the near
term, or the undiscounted cash flows of certain other real
estate assets were to drop below the book value of those
properties, we would be required to write down the book value of
those properties, which would have an adverse affect on our
balance sheet and our earnings.
Unlike most other real estate developers, we have owned the
majority of our land for many years, having acquired most of our
land in the 1930s and 1940s. Consequently, we have a
very low initial cost basis in the majority of our lands. In
certain instances, however, we have acquired properties at
market values for project development. Also, many of our
projects have expensive amenities, such as pools, golf courses
and clubs, or feature elaborate commercial areas requiring
significant capital expenditures. Many of these costs are
capitalized as part of the book value of the project land.
Adverse market conditions, in certain circumstances, may require
the book value of real estate assets to be decreased, often
referred to as a write-down or
impairment. A write-down of an asset would decrease
the book value of the asset on our balance sheet and would
reduce our earnings for the period in which the write-down is
recorded.
If market conditions were to continue to deteriorate, and the
fair values of our homes and homesites substantially completed
and ready for sale that management intends to sell, or the
undiscounted cash flows of other properties, were to fall below
the book value of these assets, we could be required to take
additional write downs of the book value of those assets.
A
securities class action lawsuit is pending against us involving
our past public disclosures, and the outcome of this lawsuit and
any related derivative lawsuits that may be filed in the future
could have an adverse effect on our business and stock
price.
Two securities class action lawsuits have been filed against us
and certain of our officers and directors, relating to our past
disclosures and alleging, among other things, violations of the
securities laws. These two lawsuits have been consolidated into
one case. There may also be additional derivative lawsuits filed
by shareholders relating to the same matters described in the
securities class action suit. We cannot predict the outcome of
the pending lawsuit or any future lawsuits. Substantial damages
or other monetary remedies assessed against us could have an
adverse effect on our business and stock price.
An
adverse outcome of the informal inquiry being conducted by the
SEC, or an initiation by the SEC of a formal inquiry or
investigation, could have an adverse effect on our business and
stock price.
In January 2011, the SEC commenced an informal inquiry into our
accounting practices for impairment of investment in real estate
assets. We intend to fully cooperate with the SEC in connection
with the informal inquiry. We are unable to predict the outcome
of the informal inquiry or whether a formal inquiry or
investigation will be initiated. An adverse outcome of the
informal inquiry or an initiation of a formal inquiry or
investigation by the SEC could have an adverse effect on our
business and stock price.
14
We are
exposed to risks associated with real estate development that
could adversely impact our results of operations, cash flows and
financial condition.
Our real estate development activities entail risks that could
adversely impact our results of operations, cash flows and
financial condition, including:
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construction delays or cost overruns, which may increase project
development costs;
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claims for construction defects after property has been
developed, including claims by purchasers and property
owners associations;
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an inability to obtain required governmental permits and
authorizations;
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an inability to secure tenants necessary to support commercial
projects, and
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compliance with building codes and other local regulations.
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Significant
competition could have an adverse effect on our
business.
A number of residential and commercial developers, some with
greater financial and other resources, compete with us in
seeking resources for development and prospective purchasers and
tenants. Competition from other real estate developers may
adversely affect our ability to:
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attract purchasers and sell residential and commercial real
estate;
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sell undeveloped rural land;
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attract and retain experienced real estate development
personnel; and
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obtain construction materials and labor.
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We also face competition in our forestry business which could
have a negative impact on the prices paid for our timber
products.
The
cyclical nature of our real estate operations could adversely
affect our results of operations.
The real estate industry is cyclical and can experience
downturns based on consumer perceptions of real estate markets
and other cyclical factors, which factors may work in
conjunction with or be wholly unrelated to general economic
conditions. Furthermore, our business is affected by seasonal
fluctuations in customers interested in purchasing real estate,
with the spring and summer months traditionally being the most
active time of year for customer traffic and sales. Also, our
supply of homesites available for purchase fluctuates from time
to time. As a result, our real estate operations are cyclical,
which may cause our quarterly revenues and operating results to
fluctuate significantly from quarter to quarter and to differ
from the expectations of public market analysts and investors.
If this occurs, the trading price of our stock could also
fluctuate significantly.
Our
business is subject to extensive regulation that may restrict,
make more costly or otherwise adversely impact our ability to
conduct our operations.
Approval to develop real property in Florida entails an
extensive entitlements process involving multiple and
overlapping regulatory jurisdictions and often requiring
discretionary action by local government. This process is often
political, uncertain and may require significant exactions in
order to secure approvals. Real estate projects in Florida must
generally comply with the provisions of the Local Government
Comprehensive Planning and Land Development Regulation Act
(the Growth Management Act) and local land
development regulations. In addition, development projects that
exceed certain specified regulatory thresholds require approval
of a comprehensive Development of Regional Impact, or DRI,
application. Compliance with the Growth Management Act, local
land development regulations and the DRI process is usually
lengthy and costly and can be expected to materially affect our
real estate development activities.
15
The Growth Management Act requires local governments to adopt
comprehensive plans guiding and controlling future real property
development in their respective jurisdictions and to evaluate,
assess and keep those plans current. Included in all
comprehensive plans is a future land use map which sets forth
allowable land use development rights. Since most of our land
has an agricultural or similar land use, we are
required to seek an amendment to the future land use map to
develop residential, commercial and mixed-use projects. Approval
of these comprehensive plan map amendments is highly
discretionary.
All development orders and development permits must be
consistent with the comprehensive plan. Each plan must address
such topics as future land use and capital improvements and make
adequate provision for a multitude of public services including
transportation, schools, solid waste disposal, sanitation,
sewerage, potable water supply, drainage, affordable housing,
open space and parks. The local governments comprehensive
plans must also establish levels of service with
respect to certain specified public facilities, including roads
and schools, and services to residents. In many areas,
infrastructure funding has not kept pace with growth, causing
facilities to operate below established levels of service. Local
governments are prohibited from issuing development orders or
permits if the development will reduce the level of service for
public facilities below the level of service established in the
local governments comprehensive plan, unless the developer
either sufficiently improves the services up front to meet the
required level or provides financial assurances that the
additional services will be provided as the project progresses.
In addition, local governments that fail to keep their plans
current may be prohibited by law from amending their plans to
allow for new development.
The DRI review process includes an evaluation of a
projects impact on the environment, infrastructure and
government services, and requires the involvement of numerous
state and local environmental, zoning and community development
agencies. Local government approval of any DRI is subject to
appeal to the Governor and Cabinet by the Florida Department of
Community Affairs, and adverse decisions by the Governor or
Cabinet are subject to judicial appeal. The DRI approval process
is usually lengthy and costly, and conditions, standards or
requirements may be imposed on a developer that may materially
increase the cost of a project.
Changes in the Growth Management Act or the DRI review process
or the interpretation thereof, new enforcement of these laws or
the enactment of new laws regarding the development of real
property could lead to new or greater liabilities that could
materially adversely affect our business, profitability or
financial condition.
Environmental
and other regulations may have an adverse effect on our
business.
Our properties are subject to federal, state and local
environmental regulations and restrictions that may impose
significant limitations on our development ability. In most
cases, approval to develop requires multiple permits which
involve a long, uncertain and costly regulatory process. Most of
our land holdings contain jurisdictional wetlands, some of which
may be unsuitable for development or prohibited from development
by law. Development approval most often requires mitigation for
impacts to wetlands that require land to be conserved at a
disproportionate ratio versus the actual wetlands impacted and
approved for development. Much of our property is undeveloped
land located in areas where development may have to avoid,
minimize or mitigate for impacts to the natural habitats of
various protected wildlife or plant species. Much of our
property is in coastal areas that usually have a more
restrictive permitting burden and must address issues such as
coastal high hazard, hurricane evacuation, floodplains and dune
protection.
Environmental laws and regulations frequently change, and such
changes could have an adverse effect on our business. For
example, the Environmental Protection Agency (EPA)
released in January 2010 proposed new freshwater quality
criteria for Florida. There is a significant amount of
uncertainty about how the proposed freshwater criteria would be
implemented, including how they would relate to current state
regulations. In addition, the EPA proposes to release new
coastal water quality criteria for Florida in 2011. If adopted,
and depending on the implementation details, the EPAs
proposed water quality criteria could lead to new restrictions
and increased costs for our real estate development activities.
In addition, our current or past ownership, operation and
leasing of real property, and our current or past transportation
and other operations, are subject to extensive and evolving
federal, state and local environmental
16
laws and other regulations. The provisions and enforcement of
these environmental laws and regulations may become more
stringent in the future. Violations of these laws and
regulations can result in:
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civil penalties;
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remediation expenses;
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natural resource damages;
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personal injury damages;
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potential injunctions;
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cease and desist orders; and
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criminal penalties.
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In addition, some of these environmental laws impose strict
liability, which means that we may be held liable for any
environmental damages on our property regardless of fault.
Some of our past and present real property, particularly
properties used in connection with our previous transportation
and papermill operations, were involved in the storage, use or
disposal of hazardous substances that have contaminated and may
in the future contaminate the environment. We may bear liability
for this contamination and for the costs of cleaning up a site
at which we have disposed of or to which we have transported
hazardous substances. The presence of hazardous substances on a
property may also adversely affect our ability to sell or
develop the property or to borrow funds using the property as
collateral.
Changes in laws or the interpretation thereof, new enforcement
of laws, the identification of new facts or the failure of other
parties to perform remediation at our current or former
facilities could lead to new or greater liabilities that could
materially adversely affect our business, profitability or
financial condition.
If our
net worth declines, we could default on our revolving credit
facility which could have a material adverse effect on our
financial condition and results of operations.
We have a $125 million revolving credit facility available
to provide a source of funds for operations, capital
expenditures and other general corporate purposes. While we have
not yet needed to borrow any funds under this facility, it is
important to have in place as a ready source of financing,
especially in the current difficult economic conditions. The
credit facility contains financial covenants that we must meet
on a quarterly basis. These restrictive covenants require, among
other things, that our tangible net worth be not less than
$800 million. Compliance with this covenant will be
challenging if we continue to experience significant operating
losses, asset impairments, pension plan losses and other
reductions in our net worth.
If we do not comply with the minimum tangible net worth
covenant, we could have an event of default under our credit
facility. There can be no assurance that the bank will be
willing to amend the facility to provide for more lenient terms
prior to any such default, or that it will not charge
significant fees in connection with any such amendment. If we
had borrowings under the facility at the time of a default, the
bank could immediately accelerate all outstanding amounts and
file a mortgage on the majority of our properties to secure the
repayment of the debt. Even if we had no outstanding borrowings
under the facility at the time of a default, the bank may choose
to terminate the facility or seek to negotiate additional or
more severe restrictive covenants or increased pricing and fees.
We could be required to seek an alternative funding source,
which may not be available at all or available on acceptable
terms. Any of these events could have a material adverse effect
on our financial condition and results of operations.
Increases
in property insurance premiums and the decreasing availability
of homeowner property insurance in Florida could reduce customer
demand for homes and homesites in our
developments.
Homeowner property insurance companies doing business in Florida
have reacted to recent hurricanes by significantly increasing
premiums, requiring higher deductibles, reducing limits,
restricting coverage imposing exclusions, refusing to insure
certain property owners, and in some instances, ceasing
insurance operations in
17
the state. It is uncertain what effect these actions will have
on property insurance availability and rates in the state. This
trend of decreasing availability of insurance and rising
insurance rates could continue if there are severe hurricanes in
the future.
Furthermore, since the 2005 hurricane season, Floridas
state-owned property insurance company, Citizens Property
Insurance Corp., has significantly increased the number of its
outstanding policies, causing its potential claims exposure to
exceed $2 trillion. If there were to be a catastrophic hurricane
or series of hurricanes to hit Florida, the exposure of the
state government to property insurance claims could place
extreme stress on state finances and may ultimately cause taxes
in Florida to be significantly increased. The state may decide
to limit the availability of state-sponsored property insurance
in the future.
The high and increasing costs of property insurance premiums in
Florida, as well as the decrease in private property insurers,
could deter potential customers from purchasing a home or
homesite in one of our developments or make Northwest Florida
less attractive to new employers that can create high quality
jobs needed to spur growth in the region, either of which could
have a material adverse effect on our financial condition and
results of operations.
Mortgage
financing issues, including lack of supply of mortgage loans,
tightened lending requirements and possible future increases in
interest rates, could reduce demand for our
products.
Many purchasers of our real estate products obtain mortgage
loans to finance a substantial portion of the purchase price, or
they may need to obtain mortgage loans to finance the
construction costs of homes to be built on homesites purchased
from us. Also, our homebuilder customers depend on retail
purchasers who rely on mortgage financing. Many mortgage lenders
and investors in mortgage loans have recently experienced severe
financial difficulties arising from losses incurred on
sub-prime
and other loans originated before the downturn in the real
estate market. Despite unprecedented efforts by the federal
government to stabilize the nations banks, banking
operations remain unsettled and the future of certain financial
institutions remains uncertain. Because of these problems, the
supply of mortgage products has been constrained, and the
eligibility requirements for borrowers have been significantly
tightened. These problems in the mortgage lending industry could
adversely affect potential purchasers of our products, including
our homebuilder customers, thus having a negative effect on
demand for our products.
Despite the current problems in the mortgage lending industry,
interest rates for home mortgage loans have generally remained
low. Mortgage interest rates could increase in the future,
however, which could adversely affect the demand for residential
real estate. In addition, any changes in the federal income tax
laws which would remove or limit the deduction for interest on
home mortgage loans could have an adverse impact on demand for
our residential products. In addition to residential real
estate, increased interest rates and restrictions in the
availability of credit could also negatively impact sales of our
commercial properties or other land we offer for sale. If
interest rates increase and the ability or willingness of
prospective buyers to finance real estate purchases is adversely
affected, our sales, revenues, financial condition and results
of operations may be negatively affected.
Our stock price may decline or fluctuate significantly due
to market factors outside of our control.
The market price of our common stock has been volatile and may
decline or fluctuate significantly in response to many factors,
many of which are outside our control, including but not limited
to:
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actions by institutional shareholders or hedge funds;
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speculation in the press or investment community;
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the extent of short selling, hedging and other derivative
transactions involving shares of our common stock;
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publication of research reports and opinions about us or the
real estate industry in general;
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rumors or dissemination of false or misleading information about
us by other parties;
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adverse market reaction to our strategic initiatives and their
implementation;
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18
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additions or departures of key management personnel;
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changes in our management structure and board composition;
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informal or formal inquiries or investigations by the
SEC; and
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general economic and market conditions.
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These factors may cause the market price of our common stock to
decline regardless of our financial condition, results of
operation, business or prospects and could result in substantial
losses for our shareholders.
If
Fairholme Funds, Inc. controls us within the meaning of the
Investment Company Act of 1940, we may be unable to engage in
transactions with potential strategic partners, which could
adversely affect our business.
Fairholme Funds, Inc. (Fairholme) is an investment
company registered under the Investment Company Act of 1940 (the
Investment Company Act) that currently beneficially
owns approximately 24.98% of our outstanding common stock.
Fairholme Capital Management, L.L.C., which controls Fairholme,
is the investment advisor of accounts that in the aggregate own
an additional 5% of our common stock. Bruce R. Berkowitz and
Charles M. Fernandez, the Managing Member and President,
respectively, of Fairholme Capital Management, L.L.C., and the
President and Vice President, respectively, of Fairholme, will
become members of our Board of Directors upon filing of this
Form 10-K. Under the Investment Company Act, control
means the power to exercise a controlling influence over the
management or policies of a company, unless such power is solely
the result of an official position with such company. Any person
who owns beneficially, either directly or through one or more
controlled companies, more than 25% of the voting securities of
a company shall be presumed to control such company. The SEC,
however, has considered factors other than ownership of voting
securities in determining control, including an official
position with the company when such was obtained as a result of
the influence over the company. Accordingly, even if
Fairholmes beneficial ownership in us remains below 25%,
Fairholme may nevertheless be deemed to control us. The
Investment Company Act generally prohibits a company controlled
by an investment company from engaging in certain transactions
with any affiliate of the investment company or affiliates of
the affiliate, subject to limited exceptions. An affiliate of an
investment company is defined in the Investment Company Act as,
among other things, any company 5% or more of whose outstanding
voting securities are directly or indirectly owned, controlled,
or held with power to vote, by the investment company, a company
directly or indirectly controlling, controlled by, or under
common control with, the investment company or a company
directly or indirectly owning, controlling, or holding with
power to vote, 5% or more of the outstanding voting securities
of the investment company.
We believe that Fairholme is currently affiliated with a number
of entities, including RSC Holdings, Inc., WellCare Health
Plans, Inc., Winthrop Realty Trust, Regions Financial Corp., CIT
Group, Sears Holdings Corp. and MBIA, Inc. Due to this
affiliation, should Fairholme be deemed to control us, we may be
prohibited from engaging in certain transactions with these
entities and certain of their affiliates and any future
affiliates of Fairholme, unless one of the limited exceptions
applies. This could adversely affect our ability to enter into
transactions freely and compete in the marketplace.
In addition, significant penalties apply for companies found to
be in violation of the Investment Company Act.
If the
Smurfit-Stone mill in Panama City were to permanently cease
operations, the price we receive for our pine pulpwood may
decline, and the cost of delivering logs to alternative
customers could increase.
In November 2010, we entered into a new supply agreement with
Smurfit-Stone Container Corporation that requires us to deliver
and sell a total of 3.9 million tons of pulpwood through
2017. Smurfit-Stones Panama City mill is the largest
consumer of pine pulpwood logs within the immediate area in
which most of our timberlands are located. In July 2010,
Smurfit-Stone emerged from approximately 18 months of
bankruptcy protection, and during the first quarter of 2011, it
announced its acquisition by another company. Under the terms of
the supply agreement, Smurfit-Stone and its successor will be
liable for monetary damages as a result of the closure of the
mill due to economic reasons for a period of one year.
Nevertheless, if the Smurfit-Stone mill in Panama City were to
permanently cease operations, the price for our pulpwood may
decline, and the cost of delivering logs to alternative
customers could increase.
19
Changes
in our income tax estimates could affect our
profitability.
In preparing our consolidated financial statements, significant
management judgment is required to estimate our income taxes.
Our estimates are based on our interpretation of federal and
state tax laws. We estimate our actual current tax due and
assess temporary differences resulting from differing treatment
of items for tax and accounting purposes. The temporary
differences result in deferred tax assets and liabilities, which
are included in our consolidated balance sheets. Adjustments may
be required by a change in assessment of our deferred tax assets
and liabilities, changes due to audit adjustments by federal and
state tax authorities, and changes in tax laws and rates. To the
extent adjustments are required in any given period; we include
the adjustments in the tax provision in our financial
statements. These adjustments could materially impact our
financial position, cash flow and results of operations.
Increases
in real estate property taxes could reduce customer demand for
homes and homesites in our developments.
Florida experienced significant increases in property values
during the record-setting real estate activity in the first half
of the previous decade. As a result, many local governments have
been, and may continue aggressively re-assessing the value of
homes and real estate for property tax purposes. These larger
assessments increase the total real estate property taxes due
from property owners annually. Because of decreased revenues
from other sources because of the recession, many local
governments have also increased their property tax rates.
The current high costs of real estate property taxes in Florida,
and future increases in property taxes, could deter potential
customers from purchasing a lot or home in one of our
developments, or make Northwest Florida less attractive to new
employers that can create high-quality jobs needed to spur
growth in the region, either of which could have a material
adverse effect on our financial condition and results of
operations.
If
Wells Fargo & Companys Wachovia Bank subsidiary
(or any successor bank) were to fail and be liquidated, we could
be required to accelerate the payment of the deferred taxes on
our installment sale transactions. Our business, cash flows and
financial condition may be adversely affected if this
significant tax event were to occur.
During 2007 and 2008, we sold approximately 132,055 acres
of timberland in installment sale transactions for approximately
$183.3 million, which was paid in the form of
15-year
installment notes receivable. These installment notes are fully
backed by letters of credit issued by Wachovia Bank, N.A.
(subsequently acquired by Wells Fargo & Company) which
are secured by bank deposits in the amount of the purchase
price. The approximate aggregate taxable gain from these
transactions was $160.5 million, but the installment sale
structure allows us to defer paying taxes on these gains for
15 years. Meanwhile, we generated cash from these sales
(sometimes referred to as monetizing the notes) by
contributing the installment notes and bank letters of credit to
special purpose entities organized by us, and these special
purpose entities in turn issued to various institutional
investors notes payable backed by the installment notes and bank
letters of credit, and in some cases by a second letter of
credit issued for the account of the special purpose entity. The
special purpose entities have approximately $163.5 million
of these notes payable outstanding. These notes are payable
solely out of the assets of the special purpose entities (which
consist of the installment notes and the letters of credit). The
investors in the special purpose entities have no recourse
against us for payment of the notes. The special purpose
entities financial position and results of operations are
not consolidated in our financial statements.
Banks and other financial institutions experienced a high level
of instability in the recent economic crisis, resulting in
numerous bank and financial institution failures, hastily
structured mergers and acquisitions, and an unprecedented direct
infusion of billions of dollars of capital by the federal
government into banks and financial institutions. In late 2008,
Wells Fargo acquired Wachovia Corporation and its subsidiary,
Wachovia Bank, N.A., the holder of the deposits and the issuer
of the letter of credit obligations in our installment sale
transactions. Wells Fargo, as one of the largest banks in the
United States, would presumably receive the support of the
federal government if needed to prevent a failure of its banking
subsidiaries. There can be no
20
assurance, however, that Wells Fargos Wachovia Bank
subsidiary (or any successor bank) will not fail or that it
would receive government assistance sufficient to prevent a bank
failure.
If Wells Fargos Wachovia Bank subsidiary (or any successor
bank) were to fail and be liquidated, the installment notes
receivable, the letters of credit and the notes issued by the
special purpose entities to the institutional investors could be
virtually worthless or satisfied at a significant discount. As a
result, the taxes due on the $160.5 million gain would be
accelerated. An adverse tax event could result in an immediate
need for a significant amount of cash that may not be readily
available from our cash reserves, our revolving line of credit
or other third-party financing sources. Any such cash outlay,
even if available, could divert needed resources away from our
business or cause us to liquidate assets on unfavorable terms or
prices. Our business and financial condition may be adversely
affected if these significant tax events were to occur. In the
event of a liquidation of Wells Fargos Wachovia Bank
subsidiary (or any successor bank), we could also be required to
write-off the remaining retained interest recorded on our
balance sheet in connection with the installment sale
transactions, which would have an adverse effect on our results
of operations.
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Item 1B.
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Unresolved
Staff Comments
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None.
We own our principal executive offices located in WaterSound,
Florida.
We own approximately 574,000 acres, the majority of which
are located in Northwest Florida. Our land holdings include
approximately 403,000 acres within 15 miles of the
coast of the Gulf of Mexico. Most of our raw land assets are
managed as timberlands until designated for development. Also,
our lender has the right to record mortgages on approximately
530,000 acres of our land if there is an event of default
under our revolving credit facility.
For more information on our real estate assets, see Item 1.
Business above.
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Item 3.
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Legal
Proceedings
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Oil
Spill Lawsuits
We have filed three lawsuits against the parties we believe are
responsible for the Deepwater Horizon oil spill in the Gulf of
Mexico. The oil spill has had a negative impact on our
properties, results of operations and stock price. The three
lawsuits are described as follows:
On August 4, 2010, we filed a lawsuit in the Superior Court
of the State of Delaware in New Castle County against
Halliburton Energy Services, Inc. (Halliburton). The
lawsuit alleges that Halliburton, the cementing contractor for
the oil well, was grossly negligent in its management of the
well cementing process leading to the blowout of the well. We
are seeking compensatory and punitive damages.
On August 26, 2010, we filed a lawsuit in the Superior
Court of the State of Delaware in New Castle County against M-I,
L.L.C. (a/k/a M-I SWACO). The lawsuit alleges that
M-I SWACO, the drilling fluid contractor for the drilling rig,
was grossly negligent in the way that it managed and conducted
the use of drilling fluids to maintain well control leading to
the blowout of the well. We are seeking compensatory and
punitive damages.
On October 12, 2010, we filed a lawsuit in the Superior
Court of the State of Delaware in New Castle County against
Transocean Holdings, LLC, Transocean Offshore Deepwater
Drilling, Inc., Transocean Deepwater, Inc. and Triton Asset
Leasing GmbH (collectively, Transocean). The lawsuit
alleges that Transocean, the owner of the drilling rig, was
grossly negligent in the operation and maintenance of the
drilling rig and its equipment and in overseeing drilling
activities on the rig leading to the blowout of the well. We are
seeking compensatory and punitive damages.
21
All three of these cases were removed by the defendants to the
U.S. District Court for the District of Delaware, and we
filed motions to remand each case back to Delaware state court.
The Halliburton and M-I SWACO cases have since been transferred
to the Deepwater Horizon Multi-District Litigation in the
U.S. District Court for the Eastern District of Louisiana.
A hearing on the motion for removal in the Transocean case was
held in the U.S. District Court for the District of Delaware on
February 10, 2011, and a decision on the motion is pending.
Shareholder
Lawsuits
On November 3, 2010 and December 7, 2010, two
securities class action complaints were filed against us and
certain of our officers and directors in the Northern District
of Florida. These cases have been consolidated in the
U.S. District Court for the Northern District of Florida
and are captioned as Meyer v. The St. Joe Company et al.
(No. 5:11-cv-00027).
A consolidated class action complaint was filed in the case on
February 24, 2011.
The complaint was filed on behalf of persons who purchased our
securities between February 19, 2008 and October 12,
2010 and alleges that we and certain of our officers and
directors, among others, violated the Securities Act of 1933 and
Securities Exchange Act of 1934 by making false
and/or
misleading statements
and/or by
failing to disclose that, as the Florida real estate market was
in decline, we were failing to take adequate and required
impairments and accounting write-downs on many of our
Florida-based properties and as a result, our financial
statements materially overvalued our property developments. The
plaintiffs also allege that our financial statements were not
prepared in accordance with Generally Accepted Accounting
Principles, and that we lacked adequate internal and financial
controls, and as a result of the foregoing, our financial
statements were materially false and misleading. The complaint
seeks an unspecified amount in damages.
We believe that we have meritorious defenses to the
plaintiffs claims and intend to defend the action
vigorously.
Additionally, we have received four demand letters asking the
Board of Directors to initiate derivative litigation. To our
knowledge, no derivative lawsuits have yet been filed.
SEC
Inquiry
The SEC has notified us that it is conducting an informal
inquiry into our policies and practices concerning impairment of
investment in real estate assets. We intend to cooperate fully
with the SEC in connection with the informal inquiry. The
notification from the SEC does not indicate any allegations of
wrongdoing, and an inquiry is not an indication of any
violations of federal securities laws.
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Item 4.
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[Removed
and Reserved.]
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PART II
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Item 5.
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Market
for the Registrants Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities
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On February 25, 2011, we had approximately 1,412 registered
holders of record of our common stock. Our common stock is
listed on the New York Stock Exchange (NYSE) under
the symbol JOE.
22
The range of high and low prices for our common stock as
reported on the NYSE are set forth below:
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Common
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Stock Price
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High
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Low
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2010
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Fourth Quarter
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$
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25.39
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$
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17.04
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Third Quarter
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27.71
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22.80
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Second Quarter
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37.44
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21.25
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First Quarter
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34.15
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25.98
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2009
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Fourth Quarter
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$
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30.98
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$
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23.29
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Third Quarter
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34.28
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22.14
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Second Quarter
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27.45
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16.09
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First Quarter
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27.02
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14.53
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On February 18, 2011, the closing price of our common stock
on the NYSE was $28.10. We paid no dividends during 2010 or
2009, and we currently have no intention to pay any dividends in
the foreseeable future. In addition, our $125 million
revolving credit facility requires that we not pay dividends or
repurchase stock in amounts in excess of any cumulative net
income that we have earned since January 1, 2007.
The following table describes our purchases of our common stock
during the fourth quarter of 2010.
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(c)
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(d)
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Total Number of
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Maximum Dollar
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(a)
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(b)
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Shares Purchased as
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Amount that May
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Total Number
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Average
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Part of Publicly
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Yet Be Purchased
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of Shares
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Price Paid
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Announced Plans or
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Under the Plans or
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Period
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Purchased(1)
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per Share
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Programs(2)
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Programs
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(In thousands)
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Month Ended October 31, 2010
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10,631
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$
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24.64
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$
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103,793
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Month Ended November 30, 2010
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$
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103,793
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Month Ended December 31, 2010
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133
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$
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21.85
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$
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103,793
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(1)
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Represents shares surrendered by
executives as payment for the strike prices and taxes due on
exercised stock options and/or taxes due on vested restricted
stock.
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(2)
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For additional information
regarding our Stock Repurchase Program, see Note 2 to the
consolidated financial statements under the heading,
Earnings (loss) Per Share.
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The following performance graph compares our cumulative
shareholder returns for the period December 31, 2005,
through December 31, 2010, assuming $100 was invested on
December 31, 2005, in our common stock, in the S&P 500
Index and in a custom peer group of real estate related
companies, including the following:
AMB Property Corporation (AMB),
Developers Diversified Realty Corporation (DDR),
Duke Realty Corporation (DRE),
Highwoods Properties, Inc. (HIW),
Jones Lang LaSalle Incorporated (JLL),
Kimco Realty Corporation (KIM),
The Macerich Company (MAC),
MDC Holdings Inc. (MDC),
NVR, Inc. (NVR),
Plum Creek Timber Company, Inc. (PCL),
Regency Centers Corporation (REG),
Rayonier Inc. (RYN),
Toll Brothers Inc. (TOL), and
WP Carey & Co. LLC (WPC).
23
The total returns shown below assume that dividends are
reinvested. The stock price performance shown below is not
necessarily indicative of future price performance.
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12/31/05
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12/31/06
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12/31/07
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12/31/08
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12/31/09
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12/31/10
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The St. Joe Company
|
|
|
$
|
100
|
|
|
|
$
|
80.68
|
|
|
|
$
|
54.08
|
|
|
|
$
|
37.04
|
|
|
|
$
|
44.00
|
|
|
|
$
|
33.28
|
|
S&P 500 Index
|
|
|
$
|
100
|
|
|
|
$
|
115.79
|
|
|
|
$
|
112.15
|
|
|
|
$
|
76.95
|
|
|
|
$
|
97.32
|
|
|
|
$
|
119.98
|
|
Custom Real Estate Peer Group*
|
|
|
$
|
100
|
|
|
|
$
|
126.59
|
|
|
|
$
|
109.31
|
|
|
|
$
|
70.25
|
|
|
|
$
|
96.46
|
|
|
|
$
|
116.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
The total return for the Custom
Real Estate Peer Group was calculated using an equal weighting
for each of the stocks within the peer group.
|
24
|
|
Item 6.
|
Selected
Consolidated Financial Data
|
The following table sets forth Selected Consolidated Financial
Data for the Company on a historical basis for the five years
ended December 31, 2010. This information should be read in
conjunction with the consolidated financial statements of the
Company (including the related notes thereto) and
Managements Discussion and Analysis of Financial Condition
and Results of Operations, each included elsewhere in this
Form 10-K.
This historical Selected Consolidated Financial Data has been
derived from the audited consolidated financial statements and
revised for discontinued operations where applicable.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
(In thousands, except per share amounts)
|
|
|
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues(1)
|
|
$
|
99,540
|
|
|
$
|
138,257
|
|
|
$
|
258,158
|
|
|
$
|
371,551
|
|
|
$
|
519,184
|
|
Total expenses
|
|
|
151,094
|
|
|
|
347,612
|
|
|
|
283,711
|
|
|
|
348,975
|
|
|
|
455,143
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) profit
|
|
|
(51,554
|
)
|
|
|
(209,355
|
)
|
|
|
(25,553
|
)
|
|
|
22,576
|
|
|
|
64,041
|
|
Other (expense) income
|
|
|
(3,892
|
)
|
|
|
4,215
|
|
|
|
(36,643
|
)
|
|
|
(4,709
|
)
|
|
|
(9,640
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing operations before equity in (loss)
income of unconsolidated affiliates and income taxes
|
|
|
(55,446
|
)
|
|
|
(205,140
|
)
|
|
|
(62,196
|
)
|
|
|
17,867
|
|
|
|
54,401
|
|
Equity in (loss) income of unconsolidated affiliates
|
|
|
(4,308
|
)
|
|
|
(122
|
)
|
|
|
(330
|
)
|
|
|
(5,331
|
)
|
|
|
8,905
|
|
Income tax (benefit) expense
|
|
|
(23,849
|
)
|
|
|
(81,227
|
)
|
|
|
(26,921
|
)
|
|
|
659
|
|
|
|
22,010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing operations
|
|
|
(35,905
|
)
|
|
|
(124,035
|
)
|
|
|
(35,605
|
)
|
|
|
11,878
|
|
|
|
41,296
|
|
(Loss) income from discontinued operations(2)
|
|
|
|
|
|
|
(6,888
|
)
|
|
|
(1,568
|
)
|
|
|
(1,654
|
)
|
|
|
5,313
|
|
Gain on sale of discontinued operations(2)
|
|
|
|
|
|
|
75
|
|
|
|
|
|
|
|
29,128
|
|
|
|
10,368
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from discontinued operations(2)
|
|
|
|
|
|
|
(6,813
|
)
|
|
|
(1,568
|
)
|
|
|
27,474
|
|
|
|
15,681
|
|
Net (loss) income
|
|
|
(35,905
|
)
|
|
|
(130,848
|
)
|
|
|
(37,173
|
)
|
|
|
39,352
|
|
|
|
56,977
|
|
Less: Net (loss) income attributable to noncontrolling interest
|
|
|
(41
|
)
|
|
|
(821
|
)
|
|
|
(807
|
)
|
|
|
1,092
|
|
|
|
6,137
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributable to the Company
|
|
$
|
(35,864
|
)
|
|
$
|
(130,027
|
)
|
|
$
|
(36,366
|
)
|
|
$
|
38,260
|
|
|
$
|
50,840
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing operations attributable to the
Company
|
|
$
|
(0.39
|
)
|
|
$
|
(1.35
|
)
|
|
$
|
(0.38
|
)
|
|
$
|
0.15
|
|
|
$
|
0.48
|
|
(Loss) income from discontinued operations attributable to the
Company(2)
|
|
|
|
|
|
|
(0.07
|
)
|
|
|
(0.02
|
)
|
|
|
0.37
|
|
|
|
0.21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributable to the Company
|
|
|
(0.39
|
)
|
|
|
(1.42
|
)
|
|
|
(0.40
|
)
|
|
$
|
0.52
|
|
|
$
|
0.69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing operations attributable to the
Company
|
|
$
|
(0.39
|
)
|
|
$
|
(1.35
|
)
|
|
$
|
(0.38
|
)
|
|
$
|
0.15
|
|
|
$
|
0.47
|
|
(Loss) income from discontinued operations attributable to the
Company(2)
|
|
|
|
|
|
|
(0.07
|
)
|
|
|
(0.02
|
)
|
|
|
0.36
|
|
|
|
0.21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributable to the Company
|
|
|
(0.39
|
)
|
|
|
(1.42
|
)
|
|
$
|
(0.40
|
)
|
|
$
|
0.51
|
|
|
$
|
0.68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared and paid
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
0.48
|
|
|
$
|
0.64
|
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in real estate
|
|
$
|
755,392
|
|
|
$
|
767,006
|
|
|
$
|
909,658
|
|
|
$
|
944,529
|
|
|
$
|
1,213,562
|
|
Cash and cash equivalents
|
|
|
183,827
|
|
|
|
163,807
|
|
|
|
115,472
|
|
|
|
24,265
|
|
|
|
36,935
|
|
Property, plant and equipment, net
|
|
|
13,014
|
|
|
|
15,269
|
|
|
|
19,786
|
|
|
|
23,693
|
|
|
|
44,593
|
|
Total assets
|
|
|
1,051,695
|
|
|
|
1,116,944
|
|
|
|
1,237,353
|
|
|
|
1,263,965
|
|
|
|
1,560,396
|
|
Debt
|
|
|
54,651
|
|
|
|
57,014
|
|
|
|
68,635
|
|
|
|
541,181
|
|
|
|
627,056
|
|
Total equity
|
|
|
872,437
|
|
|
|
896,320
|
|
|
|
992,431
|
|
|
|
487,340
|
|
|
|
471,729
|
|
|
|
|
(1)
|
|
Total revenues include real estate
revenues from property sales, timber sales, resort and club
revenue and other revenues, primarily other rental revenues and
brokerage fees.
|
|
(2)
|
|
Discontinued operations include the
Victoria Hills Golf Club and St. Johns Golf and Country Club
golf course operations in 2009, Sunshine State Cypress, Inc. in
2008, fourteen commercial office buildings and Saussy Burbank in
2007, and four commercial office buildings in 2006. (See
Note 4 of Notes to Consolidated Financial Statements).
|
|
|
Item 7.
|
Managements
Discussion and Analysis of Financial Condition and Results of
Operations
|
Forward-looking
Statements
We make forward-looking statements in this Report, particularly
in the Managements Discussion and Analysis of Financial
Condition and Results of Operations, pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of
1995. Any statements in this Report 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,
should, forecast or similar expressions.
In particular, forward-looking statements include, among others,
statements about the following:
|
|
|
|
|
future operating performance, revenues, earnings and cash flows;
|
|
|
|
future residential and commercial demand, opportunities and
entitlements;
|
|
|
|
development approvals and the ability to obtain such approvals,
including possible legal challenges;
|
|
|
|
the number of units or commercial square footage 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;
|
|
|
|
the levels of resale inventory in our developments and the
regions in which they are located;
|
|
|
|
the development of relationships with strategic partners,
including commercial developers and homebuilders;
|
|
|
|
future amounts of capital expenditures;
|
|
|
|
the amount and timing of future tax refunds;
|
|
|
|
timeframes for future construction and development
activity; and
|
|
|
|
the projected operating results and economic impact of the new
Northwest Florida Beaches International Airport.
|
Forward-looking statements are not guarantees of future
performance and 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 above under the
heading Risk Factors. These statements are made as
of the date hereof based on our current expectations, and we
undertake no obligation to update the information contained in
this Report. New information, future events or risks may
26
cause the forward-looking events we discuss in this Report not
to occur. You are cautioned not to place undue reliance on any
of these forward-looking statements.
Overview
We own a large inventory of land suitable for development in
Florida. The majority of our land is located in Northwest
Florida and has a very low initial cost basis before considering
development costs. In order to increase the value of these core
real estate assets, we seek to reposition portions of our
substantial timberland holdings for higher and better uses. We
seek to create value in our land by securing entitlements for
higher and better land-uses, facilitating infrastructure
improvements, developing community amenities, undertaking
strategic and expert land planning and development, parceling
our land holdings in creative ways, performing land restoration
and enhancement and promoting economic development.
We have four operating segments: residential real estate,
commercial real estate, rural land sales and forestry.
Our residential real estate segment generates revenues from:
|
|
|
|
|
the sale of developed homesites to retail customers and builders;
|
|
|
|
the sale of parcels of entitled, undeveloped land;
|
|
|
|
the sale of housing units built by us;
|
|
|
|
resort and club operations;
|
|
|
|
rental income; and
|
|
|
|
brokerage fees on certain transactions.
|
Our commercial real estate segment generates revenues from the
sale or lease of developed and undeveloped land for retail,
multi-family, office, hotel and industrial uses and rental
income. Our rural land sales segment generates revenues from the
sale of parcels of undeveloped land and rural land with limited
development, easements and mitigation bank credits. Our forestry
segment generates revenues from the sale of pulpwood, sawtimber
and forest products and conservation land management services.
Our business, financial condition and results of operations
continued to be adversely effected during 2010 by the real
estate downturn and economic recession in the United States.
This challenging environment has exerted negative pressure on
the demand for all of our real estate products and contributed
to our net loss.
The large oil spill in the Gulf of Mexico from the Deepwater
Horizon incident has had a negative impact on our properties,
results of operations and stock price and has created
uncertainty about the future of the Gulf Coast region. The
Company filed three lawsuits in 2010 seeking the recovery of
damages against parties we believe are responsible for the oil
spill. The Company cannot be certain, however, of the amount of
any recovery or the ultimate success of its claims.
In 2010, we successfully continued our efforts to reduce cash
expenditures, eliminate expenses and increase our financial
flexibility. Our liquidity position improved due to the
utilization of our tax-loss carryback strategy, which resulted
in the receipt of a federal tax refund of $67.7 million in
2010. At December 31, 2010, we had $183.3 million of
cash and an undrawn $125 million revolving credit facility.
The grand opening of the new Northwest Florida Beaches
International Airport was held on May 23, 2010. In six
months of operation, passenger traffic at the new airport
exceeded that experienced at the old airport in all of 2009.
With the addition of Southwest Airlines and expanded service
from Delta Air Lines, passenger traffic at the new airport has
been consistently running at more than twice the level
experienced at the old airport. This is particularly noteworthy
considering the negative effects of the oil spill which occurred
just before the airport opened.
Our business continues to generate operating losses and low
levels of cash. On February 8, 2011, we announced that our
Board of Directors will explore financial and strategic
alternatives to enhance shareholder value. The Board intends to
consider the full range of available options including a revised
business plan,
27
operating partnerships, joint ventures, strategic alliances,
asset sales, strategic acquisitions and a merger or sale of the
Company. The Board of Directors has retained Morgan
Stanley & Company Inc. to assist it in the evaluation
of these alternatives. There can be no assurance that the
exploration of strategic alternatives will result in any
transaction, or that any such transaction or alternative would
significantly improve our operating results.
Critical
Accounting Estimates
The discussion and analysis of our financial condition and
results of operations is based upon our consolidated financial
statements, which have been prepared in accordance with
accounting principles generally accepted in the United States.
The preparation of these financial statements requires us to
make estimates and judgments that affect the reported amounts of
assets, liabilities, equity, revenues and expenses, and related
disclosures of contingent assets and liabilities. We base these
estimates on our historical and current experience and on
various other assumptions that management believes are
reasonable under the circumstances. We evaluate the results of
these estimates on an on-going basis. Managements
estimates form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent
from other sources. It is reasonably possible that these
estimates may change in the near term. Actual results may differ
from these estimates under different assumptions or conditions.
We believe the following critical accounting policies reflect
our more significant judgments and estimates used in the
preparation of our consolidated financial statements:
Investment in Real Estate and Cost of Real Estate
Sales. Costs associated with a specific real
estate project are capitalized during the development period. We
capitalize costs directly associated with development and
construction of identified real estate projects. Indirect costs
that clearly relate to a specific project under development,
such as internal costs of a regional project field office, are
also capitalized. We capitalize interest (up to total interest
expense) based on the amount of underlying expenditures and real
estate taxes on real estate projects under development. If we
determine not to complete a project, any previously capitalized
costs are expensed in the period in which the determination is
made.
Real estate inventory costs include land and common development
costs (such as roads, sewers and amenities), multi-family
construction costs, capitalized property taxes, capitalized
interest and certain indirect costs. Construction costs for
single-family homes are determined based upon actual costs
incurred. A portion of real estate inventory costs and estimates
for costs to complete are allocated to each unit based on the
relative sales value of each unit as compared to the estimated
sales value of the total project. These estimates are
reevaluated at least annually and more frequently if warranted
by market conditions or other factors, with any adjustments
being allocated prospectively to the remaining units available
for sale.
We devote resources to the conceptual design, planning,
permitting and construction of certain key projects currently
under development, and we will maintain this process for certain
select communities going forward. This strategy is dependent on
our Board of Directors maintaining this strategy and our intent
and ability to hold and sell these key projects in most cases,
over a long-term horizon.
The accounting estimate related to real estate impairment
evaluation is susceptible to change due to the use of
assumptions about future sales proceeds and future expenditures.
For projects under development, an estimate of future cash flows
on an undiscounted basis is performed using estimated future
expenditures necessary to maintain the existing project and
using managements best estimates about future sales prices
and holding periods. The projection of undiscounted cash flows
requires that management develop various assumptions including:
|
|
|
|
|
the projected pace of sales of homesites based on estimated
market conditions and the Companys development plans;
|
|
|
|
projected price appreciation over time, which can generally
range from 0% to 7% annually;
|
|
|
|
the amount and trajectory of price appreciation over the
estimated selling period;
|
28
|
|
|
|
|
the length of the estimated development and selling periods,
which can range from 5 years to 17 years depending on the size
of the development and the number of phases to be developed;
|
|
|
|
the amount of remaining development costs and holding costs to
be incurred over the selling period;
|
|
|
|
in situations where development plans are subject to change, the
amount of entitled land subject to bulk land sales or
alternative use and the estimated selling prices of such
property;
|
|
|
|
for commercial development property, future pricing which is
based on sales of comparable property in similar markets; and
|
|
|
|
assumptions regarding the intent and ability to hold individual
investments in real estate over projected periods and related
assumptions regarding available liquidity to fund continued
development.
|
For operating properties, an estimate of undiscounted cash flows
requires management to make similar assumptions about the use
and eventual disposition of such properties. Some of the
significant assumptions that are used to develop the
undiscounted cash flows include:
|
|
|
|
|
for investments in hotel and rental condominium units, average
occupancy and room rates, revenues from food and beverage and
other amenity operations, operating expenses and capital
expenditures, and the amount of proceeds to be realized upon
eventual disposition of such properties as condo-hotels or
condominiums, based on current prices for similar units
appreciated to the expected sale date;
|
|
|
|
for investments in commercial or retail property, future
occupancy and rental rates and the amount of proceeds to be
realized upon eventual disposition of such property at a
terminal capitalization rate; and
|
|
|
|
for investments in golf courses, future rounds and greens fees,
operating expenses and capital expenditures, and the amount of
proceeds to be realized upon eventual disposition of such
properties at a multiple of terminal year cash flows.
|
Other properties that management does not intend to sell in the
near term or under current market conditions are evaluated for
impairment based on managements best estimate of the
long-term use and eventual disposition of the property.
The results of impairment analyses for development and operating
properties are particularly dependent on the estimated holding
and selling period for each asset group, which can be up to
35 years for certain properties with long range development
plans. The estimated holding period is based on
managements current intent for the use and disposition of
each property, which could be subject to change in future
periods if the strategic direction of the Company as set by
management and approved by the Board of Directors were to
change. If the excess of undiscounted cash flows over the
carrying value of a property is small, there is a greater risk
of future impairment in the event of such changes. Excluding any
properties that have been written down to fair value, at
December 31, 2010 the Company has one development property
with a carrying value of approximately $23 million whose
current undiscounted cash flows is approximately 110% of its
carrying value.
Fair Value Measurements We follow the fair
value provisions of ASC 820 Fair Value
Measurements and Disclosures (ASC 820) for our
financial and non-financial assets and liabilities.
ASC 820, among other things, defines fair value,
establishes a consistent framework for measuring fair value and
expands disclosure for each major asset and liability category
measured at fair value on either a recurring or nonrecurring
basis. ASC 820 clarifies that fair value is an exit price,
representing the amount that would be received to sell an asset
or paid to transfer a liability in an orderly transaction
between market participants. As such, fair value is a
market-based measurement that should be determined based on
assumptions that market participants would use in pricing an
asset or liability. As a basis for considering such assumptions,
ASC 820 establishes a three-tier fair value hierarchy,
which prioritizes the inputs used in measuring fair value as
follows:
Level 1. Observable inputs such as quoted
prices in active markets;
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|
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|
Level 2.
|
Inputs, other than the quoted prices in active markets, that are
observable either directly or indirectly; and
|
|
|
Level 3.
|
Unobservable inputs in which there is little or no market data,
such as internally-developed valuation models which require the
reporting entity to develop its own assumptions.
|
29
Our assets and liabilities utilizing Level 2 and 3 inputs
in fair value calculations and the associated underlying
assumptions include the following:
Investment in real estate Our investments in
real estate are carried at cost unless circumstances indicate
that the carrying value of the assets may not be recoverable. If
we determine that an impairment exists due to the inability to
recover an assets carrying value, a provision for loss is
recorded to the extent that the carrying value exceeds estimated
fair value. If such assets were held for sale, the provision for
loss would be recorded to the extent that the carrying value
exceeds estimated fair value less costs to sell.
Depending on the asset, we use varying methods to determine fair
value, such as (i) analyzing expected discounted future
cash flows, (ii) determining resale values by market, or
(iii) applying a capitalization rate to net operating
income using prevailing rates in a given market.
We review our long-lived assets for impairment whenever events
or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Homes and homesites
substantially completed and ready for sale, which management
intends to sell in the near term under current market
conditions, are measured at the lower of carrying value or fair
value less costs to sell. The fair value of these properties is
determined based upon final sales prices of inventory sold
during the period or estimates of selling prices based on
current market data. Other properties that management does not
intend to sell in the near term or under current market
conditions including development and operating properties, are
evaluated for impairment based on managements best
estimate of the long-term use and eventual disposition of the
property. For projects under development, an estimate of future
cash flows on an undiscounted basis is performed using estimated
future expenditures necessary to maintain and complete the
existing project and using managements best estimates
about future sales prices, sales volumes, sales velocity and
holding periods. The estimated length of expected development
periods, related economic cycles and inherent uncertainty with
respect to these projects such as the impact of changes in
development plans and our intent and ability to hold the
projects through the development period, could result in changes
to these estimates. For operating properties, an estimate of
undiscounted cash flows requires management to make similar
assumptions about the use and eventual disposition of such
properties.
In the event that projected future undiscounted cash flows are
not adequate to recover the carrying value of a property,
impairment is indicated and we would be required under generally
accepted accounting principles to write down the asset to its
fair value. Fair value of a property may be derived either from
discounting projected cash flows at an appropriate discount
rate, through appraisals of the underlying property, or a
combination thereof.
Generally accepted accounting principles only allow an
impairment to be recorded when the undiscounted cash flows for
these properties are less than the carrying value. We do not
calculate projected cash flows on a discounted basis, or obtain
appraisals, to determine the fair values of such properties
unless an impairment is indicated. The fair value of a property
at a point in time may be less than its carrying value due to
current market conditions.
In the event that our estimates of undiscounted cash flows are
decreased in future periods due to changes in assumptions
arising from economic or other factors, we could be required to
recognize impairment losses. In addition, if our intentions to
hold our real estate investments were to change, we could be
required to recognize impairment losses.
Retained interest We have recorded a retained
interest with respect to the monetization of certain installment
notes through the use of qualified special purpose entities,
which is recorded in other assets. The retained interest is an
estimate based on the present value of cash flows to be received
over the life of the installment notes. We recognize interest
income over the life of the retained interest using the
effective yield method with discount rates ranging from 2%-7%.
This income adjustment is being recorded as an offset to loss on
monetization of notes over the life of the installment notes. In
addition, fair value may be adjusted at each reporting date
when, based on managements assessment of current
information and events, there is a favorable or adverse change
in estimated cash flows from cash flows previously projected.
30
Pension asset Our cash balance
defined-benefit pension plan holds a royalty investment for
which there is no quoted market price. Fair value of the royalty
investment is estimated based on the present value of future
cash flows, using managements best estimate of key
assumptions, including discount rates.
Standby guarantee liability On
October 21, 2009, we entered into a strategic alliance
agreement with Southwest Airlines to facilitate the commencement
of low-fare air service in May 2010 to the new Northwest Florida
Beaches International Airport in Northwest Florida. We have
agreed to reimburse Southwest Airlines if it incurs losses on
its service at the new airport during the first three years of
service. The agreement also provides that Southwests
profits from the air service during the term of the agreement
will be shared with us up to the maximum amount of our
break-even payments. We measured the standby guarantee liability
at fair value based upon a discounted cash flow analysis based
on our best estimates of future cash flows to be paid by us
pursuant to the strategic alliance agreement. These cash flows
were estimated using numerous estimates including future fuel
costs, passenger load factors, air fares, seasonality and the
timing of the commencement of service. The fair value of the
liability could fluctuate up or down significantly as a result
of changes in assumptions related to these estimates and could
have a material impact on our operating results.
Pension Plan. We sponsor a cash balance
defined-benefit pension plan covering a majority of our
employees. The accounting for pension benefits is determined by
specialized accounting and actuarial methods using numerous
estimates, including discount rates, expected long-term
investment returns on plan assets, employee turnover, mortality
and retirement ages, and future salary increases. Changes in
these key assumptions can have a significant effect on the
pension plans impact on the financial statements of the
Company. For example, in 2010, a 1% increase in the assumed
long-term rate of return on pension assets would have resulted
in a $0.8 million increase in pre-tax income
($0.5 million net of tax). However, a 1% decrease in the
assumed long-term rate of return would have caused an equivalent
decrease in pre-tax income. A 1% increase or decrease in the
assumed discount rate would have resulted in a less than
$0.1 million change in pre-tax income. Our pension plan was
overfunded and we do not expect to make contributions to the
pension plan in the future. The ratio of plan assets to
projected benefit obligation was 240% at December 31, 2010.
Stock-Based Compensation. We offer stock
incentive plans whereby awards may be granted to certain of our
employees and non-employee directors in the form of restricted
shares of our common stock or options to purchase our common
stock. Stock-based compensation cost is measured at the grant
date based on the fair value of the award and is typically
recognized as expense on a straight-line basis over the
requisite service period, which is the vesting period.
In February 2010, 2009 and 2008, we granted certain of our
executives and other key employees restricted stock awards with
vesting based upon the achievement of certain market conditions
that are defined as our total shareholder return as compared to
the total shareholder return of certain peer groups during a
three-year performance period.
We currently use a Monte Carlo simulation pricing model to
determine the fair value of our market condition awards. The
determination of the fair value of market condition-based awards
is affected by the stock price as well as assumptions regarding
a number of other variables. These variables include expected
stock price volatility over the requisite performance term of
the awards, the relative performance of our stock price and
shareholder returns compared to those companies in our peer
groups and a risk-free interest rate assumption. Compensation
cost is recognized regardless of the achievement of the market
condition, provided the requisite service period is met.
Income Taxes. In preparing our consolidated
financial statements, significant management judgment is
required to estimate our income taxes. Our estimates are based
on our interpretation of federal and state tax laws. We estimate
our actual current tax due and assess temporary differences
resulting from differing treatment of items for tax and
accounting purposes. The temporary differences result in
deferred tax assets and liabilities, which are included in our
consolidated balance sheets. We record a valuation allowance
against our deferred tax assets based upon our analysis of the
timing and reversal of future taxable amounts and our history
and future expectations of taxable income. Adjustments may be
required by a change in assessment of our deferred tax assets
and liabilities, changes due to audit adjustments by federal and
state tax authorities, and changes in tax laws. To the extent
adjustments are required in any given period we will include the
31
adjustments in the tax provision in our financial statements.
These adjustments could materially impact our financial
position, cash flow and results of operation.
At December 31, 2010, we had a federal net operating loss
carryforward of approximately $62.1 million and a state net
operating loss carryforward of approximately
$538.4 million. These net operating losses are available to
offset future federal and state taxable income through 2030. At
December 31, 2010, we recorded a valuation allowance
against certain of our deferred tax assets of approximately
$0.1 million. The valuation allowance at 2010 was related
to state net operating and charitable loss carryforwards that in
the judgment of management are not likely to be realized.
Realization of our net deferred tax assets is dependent upon us
generating sufficient taxable income in future years in the
appropriate tax jurisdictions to obtain a benefit from the
reversal of deductible temporary differences and from loss
carryforwards. Based on the timing of reversal of future taxable
amounts and our history and future expectations of reporting
taxable income, we believe that it is more likely than not that
we will realize the benefits of these deductible differences,
net of the existing valuation allowance, at December 31,
2010.
Correction
of Prior Period Errors
In the first quarter of 2010, the Company determined that
approximately $2.6 million ($1.6 million net of tax)
of stock compensation expense related to the acceleration of the
service period for retirement eligible employees should have
been recognized in periods prior to 2010. Accordingly, the
consolidated balance sheet for December 31, 2009 has been
adjusted to reduce deferred income taxes, net, by
$1.0 million and increase common stock by $2.6 million
to reflect the correction of this error, with a corresponding
$1.6 million reduction recorded to retained earnings. This
correction is similarly reflected as an adjustment to common
stock and retained earnings as of December 31, 2009 and
2008 in the consolidated statement of changes in equity. The
correction of this error also affected the consolidated
statements of operations for the years ended December 31,
2009 and 2008 and consolidated statement of cash flows for the
years ended December 31, 2009 and 2008. These corrections
were not considered material to prior period financial
statements.
During 2010, the Company determined that an additional liability
for certain of its Community Development District
(CDD) debt that is probable and reasonably estimable
of repayment by the Company in the future should have been
recognized in periods prior to 2010. Accordingly, the
consolidated balance sheet for December 31, 2009 has been
adjusted to increase debt and investment in real estate by
$17.5 million. There was no impact on the consolidated
statement of operations, cash flows or equity. This correction
was not considered material to prior period financial statements.
32
Results
of Operations
Consolidated
Results
The following table sets forth a comparison of our revenues and
expenses for the three years ended December 31, 2010, 2009
and 2008.
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|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
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2010 vs. 2009
|
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|
2009 vs. 2008
|
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|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
Difference
|
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|
% Change
|
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|
Difference
|
|
|
% Change
|
|
|
|
(Dollars in millions)
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate sales
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$
|
38.9
|
|
|
$
|
78.8
|
|
|
$
|
194.6
|
|
|
$
|
(39.9
|
)
|
|
|
(51
|
)%
|
|
$
|
(115.8
|
)
|
|
|
(60
|
)%
|
Resort and club revenues
|
|
|
29.4
|
|
|
|
29.7
|
|
|
|
32.8
|
|
|
|
(0.3
|
)
|
|
|
(1
|
)
|
|
|
(3.1
|
)
|
|
|
(9
|
)
|
Timber sales
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|
|
28.8
|
|
|
|
26.6
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|
|
|
26.6
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|
|
|
2.2
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
Other revenues
|
|
|
2.4
|
|
|
|
3.2
|
|
|
|
4.2
|
|
|
|
(0.8
|
)
|
|
|
(25
|
)
|
|
|
(1.0
|
)
|
|
|
(24
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
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|
$
|
99.5
|
|
|
$
|
138.3
|
|
|
$
|
258.2
|
|
|
$
|
(38.8
|
)
|
|
|
(28
|
)%
|
|
$
|
(119.9
|
)
|
|
|
(46
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of real estate sales
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|
$
|
8.5
|
|
|
$
|
60.4
|
|
|
$
|
53.1
|
|
|
$
|
(51.9
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)
|
|
|
(86
|
)%
|
|
$
|
7.3
|
|
|
|
14
|
%
|
Cost of resort and club revenues
|
|
|
31.5
|
|
|
|
32.3
|
|
|
|
38.6
|
|
|
|
(0.8
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)
|
|
|
(2
|
)
|
|
|
(6.3
|
)
|
|
|
(16
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)
|
Cost of timber sales
|
|
|
20.2
|
|
|
|
19.1
|
|
|
|
19.8
|
|
|
|
1.1
|
|
|
|
6
|
|
|
|
(0.7
|
)
|
|
|
(4
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)
|
Cost of other revenues
|
|
|
2.1
|
|
|
|
2.2
|
|
|
|
3.0
|
|
|
|
(0.1
|
)
|
|
|
(5
|
)
|
|
|
(0.8
|
)
|
|
|
(27
|
)
|
Other operating expenses
|
|
|
34.8
|
|
|
|
40.0
|
|
|
|
53.5
|
|
|
|
(5.2
|
)
|
|
|
(13
|
)
|
|
|
(13.5
|
)
|
|
|
(25
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
97.1
|
|
|
$
|
154.0
|
|
|
$
|
168.0
|
|
|
$
|
(56.9
|
)
|
|
|
(37
|
)%
|
|
$
|
(14.0
|
)
|
|
|
(8
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The decrease in real estate sales revenues and cost of real
estate sales for 2010 as compared with 2009 is primarily due to
a decrease of $48.7 million in sales in our residential
real estate segment, partially offset by an increase of
$11.6 million in revenue in our rural land segment.
Revenues in 2009 included $32.2 million from the sale of
non-strategic assets. Gross margin on real estate sales
increased to 78% from 23% during 2010 compared to 2009 due to
the relative mix of rural land sales. Residential real estate
sales continued to remain weak in 2010 as a result of many
factors, including oversupply, depressed prices in the Florida
real estate markets, poor economic conditions and the oil spill
from the Deepwater Horizon incident in the Gulf of Mexico.
The decrease in real estate sales revenues during 2009 compared
to 2008 was primarily due to our decision to decrease sales in
our rural land sales segment. Approximately $14.3 million,
or 10%, of our 2009 revenues were generated by rural land sales
compared to $162.0 million, or 63%, in 2008. Cost of real
estate sales increased during 2009 compared to 2008 as a result
of the sale of non-strategic assets within our residential real
estate segment. Our gross margin on real estate sales decreased
to 23% from 73% during 2009 compared to 2008, primarily as a
result of the decrease in high margin rural land sales relative
to our sales mix.
Resort and club revenues decreased by $0.3 million, or 1%,
in 2010 as compared with 2009 due to lower vacation rental
occupancy due to the Deepwater Horizon incident. Cost of resort
and club revenues decreased by $0.8 million, or 2%, due to more
efficient operations of our resort and clubs and reduced
staffing levels. Resort and club revenues decreased during 2009
compared to 2008 due to lower vacation rental occupancy and
lower hotel and vacation rental rates. Cost of resort and club
revenues decreased during 2009 compared to 2008 as a result of
reduced staffing levels and more efficient operation of our
resort and clubs. Our gross margin on resort and club operations
improved to (9) % during 2009 compared to (18) % during 2008 as
a result of increased operating efficiencies. For further
detailed discussion of revenues and expenses, see Segment
Results below.
Timber revenues increased $2.2 million, or 8%, in 2010 as
compared to 2009 primarily due to improved prices for pine
pulpwood and sawtimber and payments received from the federal
government under the Biomass Crop Assistance Program. Timber
sales in 2009 approximated revenues achieved in 2008. Cost of
timber sales increased $1.1 million, or 6%, in 2010 as
compared to 2009 due primarily to expenditures made to collect
timber inventory data on the Companys timberlands. Cost of
timber sales declined $0.6 million, or 4%, in 2009 as
compared to 2008 due to a decrease in certain maintenance
expenses.
33
Other operating expenses decreased by $5.2 million, or 13%,
in 2010 compared to 2009 due to lower general and administrative
expenses as a result of our restructuring efforts and the sale
of certain properties in 2009, which reduced 2010 carrying
costs, partially offset by a $4.9 million reserve for
litigation. Other operating expenses decreased by
$13.5 million, or 25%, in 2009 over 2008. The decrease was
due to lower general and administrative expenses primarily as a
result of our restructuring efforts and reduction of certain
carrying costs of properties.
Corporate Expense. Corporate expense,
consisting of corporate general and administrative expenses,
increased $2.7 million, or 11%, in 2010 over 2009. The
increase in corporate expense is primarily due to legal fees and
clean up costs totaling $4.2 million associated with costs
resulting from the Deepwater Horizon incident. These costs were
partially offset by a reduction in employee and administrative
costs as a result of reduced headcount and cost savings
initiatives. We may incur significant additional legal costs in
the near term in connection with the Deepwater Horizon incident,
the securities class action lawsuit, the SEC informal inquiry
and other legal matters.
Corporate expense decreased $6.4 million, or 21%, to
$24.3 million in 2009 over 2008. Our overall employee and
administrative costs decreased as a result of a reduction in
headcount. Lower payroll related costs in 2008 attributable to
staffing reductions were offset by additional deferred
compensation expense. During early 2008, we granted certain
members of management shares of restricted stock with vesting
conditions based on our performance over a three-year period. We
recognized approximately $3.3 million of additional expense
related to these grants during 2008.
Pension settlement charge. On
June 18, 2009, as plan sponsor, we signed a commitment for
the pension plan to purchase a group annuity contract from
Massachusetts Mutual Life Insurance Company for the benefit of
the retired participants and certain other former employee
participants in our pension plan. Current and former employees
with cash balances in the pension plan were not affected by the
transaction. The purchase price of the annuity was approximately
$101.0 million, which was funded from the assets of the
pension plan on June 25, 2009 and included a premium to
assume these obligations. The transaction resulted in the
transfer and settlement of pension benefit obligations of
approximately $93.0 million which represented the
obligation prior to the annuity purchase of the affected
retirees and vested terminated employees. In addition, we
recorded a non-cash pre-tax settlement charge to earnings during
2009 of $44.7 million and an offsetting $44.7 million
pre-tax credit in Accumulated Other Comprehensive Income on our
Consolidated Balance Sheet. As a result of this transaction, we
were able to significantly increase the funded status ratio
thereby reducing the potential for future funding requirements.
We also recorded additional pension charges of
$4.1 million, $1.3 million and $4.2 million
during 2010, 2009 and 2008, respectively, as a result of reduced
employment levels in connection with our restructuring programs.
34
Impairment Losses. During the past
three years, we have recorded significant impairment charges as
a result of the decline in demand and market prices in our real
estate markets. The following table summarizes our impairment
charges for the three years ended December 31, 2010, 2009
and 2008:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
(In millions)
|
|
|
Investment in Real Estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
Homes and homesites various residential communities
|
|
$
|
4.3
|
|
|
$
|
7.3
|
|
|
$
|
12.0
|
|
Investment in unconsolidated affiliates
|
|
|
3.8
|
|
|
|
|
|
|
|
|
|
Abandoned development plans
|
|
|
|
|
|
|
7.2
|
|
|
|
|
|
Victoria Park community
|
|
|
|
|
|
|
60.9
|
|
|
|
|
|
SevenShores condominium and marina development project
|
|
|
|
|
|
|
6.7
|
|
|
|
28.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
8.1
|
|
|
|
82.1
|
|
|
|
40.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes Receivable:
|
|
|
|
|
|
|
|
|
|
|
|
|
Saussy Burbank
|
|
|
|
|
|
|
10.1
|
|
|
|
|
|
Advantis
|
|
|
|
|
|
|
7.4
|
|
|
|
|
|
Various builder notes
|
|
|
0.5
|
|
|
|
1.9
|
|
|
|
1.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
0.5
|
|
|
|
19.4
|
|
|
|
1.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill and other:
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill Arvida
|
|
|
|
|
|
|
|
|
|
|
19.0
|
|
Other long-term assets
|
|
|
|
|
|
|
1.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
1.1
|
|
|
|
19.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total impairment charges-continuing operations
|
|
|
8.6
|
|
|
|
102.6
|
|
|
|
60.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Victoria Hills Golf Club
|
|
|
|
|
|
|
6.9
|
|
|
|
|
|
St. Johns Golf and Country Club
|
|
|
|
|
|
|
3.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total impairment charges discontinued operations
|
|
|
|
|
|
|
10.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total impairment charges
|
|
$
|
8.6
|
|
|
$
|
113.0
|
|
|
$
|
60.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in Real Estate:
We review our long-lived assets for impairment whenever events
or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Homes and homesites
substantially completed and ready for sale and which management
intends to sell in the near-term under current market
conditions, are measured at the lower of carrying value or fair
value less costs to sell. Other properties that management does
not intend to sell in the near term or under current market
conditions are evaluated for impairment based upon
managements best estimate of the long-term use and the
eventual disposition of the property. For projects under
development, an estimate of future cash flows on an undiscounted
basis is performed using estimated future expenditures necessary
to maintain and complete the existing project and using
managements best estimates about future sales prices and
holding periods. The continued decline in demand and market
prices for residential real estate during 2008 through 2010
caused us to reevaluate certain carrying amounts within our
residential real estate segment. During 2010, we recorded a
$3.8 million impairment on our investment in East
San Marco L.L.C., a joint venture located in Jacksonville,
Florida and approximately $4.3 million in impairment
charges on homes and homesites.
Given the downturn in our real estate markets, we implemented a
tax strategy in 2009 to benefit from the sale of certain
non-strategic assets at a loss. Under federal tax rules, losses
from asset sales realized in 2009
35
can be carried back and applied to taxable income from 2007,
resulting in a federal income tax refund for 2009.
As part of this strategy, during 2009, we conducted a nationally
marketed sale process for the disposition of the remaining
assets of our non-strategic Victoria Park community in Deland,
Florida, including homes, homesites, undeveloped land, notes
receivable and a golf course. Based on the likelihood of the
closing of the sale, we determined on December 15, 2009
that an impairment charge for $67.8 million was necessary.
We completed the sale on December 17, 2009 for
$11.0 million.
In addition, we completed the sale of our SevenShores
condominium and marina development project for $7.0 million
earlier in 2009, which resulted in an impairment charge of
$6.7 million due to lower market pricing. We also wrote-off
$7.2 million of capitalized costs related to abandoned
development plans in certain of our communities in 2009. We also
sold our St. Johns Golf and Country Club for $3.0 million
in December 2009 which resulted in an impairment charge of
$3.5 million.
As a result of our property impairment analyses for 2008, we
recorded impairment charges related to investment in real estate
of $40.3 million consisting of $12.0 million related
to completed homes in several communities and $28.3 million
related to our SevenShores condominium and marina development
project.
The SevenShores condominium project was written down in the
fourth quarter of 2008 to approximate the fair market value of
land entitled for 278 condominium units. This write-down was
necessary because we elected not to exercise our option to
acquire additional land under our option agreement. Certain
costs had previously been incurred with the expectation that the
project would include 686 units.
A continued decline in demand and market prices for our real
estate products may require us to record additional impairment
charges in the future.
Notes Receivable:
We evaluate the carrying value of notes receivable at each
reporting date. Notes receivable balances are adjusted to net
realizable value based upon a review of entity specific facts or
when terms are modified. During 2009, we settled our notes
receivable with Saussy Burbank for less than book value and
recorded a charge of $9.0 million. As part of the
settlement, we agreed to take back previously collateralized
inventory consisting of lots and homes which were valued at
current estimated sales prices, less costs to sell.
Subsequently, all the lots and homes were sold which resulted in
an additional impairment charge of $1.1 million. We also
recorded a charge of $7.4 million related to the write-off
of the outstanding Advantis note receivable balance during 2009
as the amount was determined to be uncollectible.
In addition, we received a deed in lieu of foreclosure related
to a $4.0 million builder note receivable during 2009 and
renegotiated terms related to certain other builder notes
receivable during 2010, 2009 and 2008. These events resulted in
additional impairment charges of $0.5 million,
$1.9 million and $1.0 million in 2010, 2009 and 2008,
respectively. Because of the ongoing challenges in our real
estate markets and tightened credit conditions, we may be
required to record additional write-downs of the carrying value
of our notes receivable and ultimately such notes may not be
collectible.
Goodwill:
Goodwill is recorded when the purchase price paid for an
acquisition exceeds the estimated fair value of the net
identified tangible and intangible assets acquired. An
impairment is considered to exist if fair value is less than the
carrying amount of the assets, including goodwill. The estimated
fair value is generally determined on the basis of discounted
future cash flows. As of December 31, 2010, no goodwill is
recorded on our Consolidated Balance Sheet. During our
2008 year-end assessment, we determined that our remaining
goodwill which originated from our 1997 acquisition of certain
assets of Arvida Company and its affiliates was not recoverable
based upon a discounted cash flow analysis. Accordingly, an
impairment charge of $19.0 million was recorded in the
residential real estate segment.
Restructuring Charges. We announced on
March 17, 2010 that we are relocating our corporate
headquarters from Jacksonville, Florida to VentureCrossings
Enterprise Centre our development adjacent to the
36
new Northwest Florida Beaches International Airport in Bay
County, Florida. We are also consolidating existing offices from
Tallahassee, Port St. Joe and Walton County into the new
location. The relocation to our temporary headquarters facility
in Walton County is expected to be completed during 2011.
We have incurred and expect to incur additional charges to
earnings in connection with the relocation related primarily to
termination and relocation benefits for employees, as well as
certain ancillary facility-related costs. Such charges are
expected to be cash expenditures. Based on employee responses to
the announced relocation, we estimate that total relocation
costs should be approximately $4.8 million (pre-tax), of
which $2.5 million was recorded during 2010. The relocation
costs include relocation bonuses, temporary lodging expenses,
resettlement expenses, tax payments, shipping and storage of
household goods, and closing costs for housing transactions.
These estimates are based on significant assumptions, such as
current home values, however actual results could differ
materially from these estimates.
Restructuring charges also include termination benefits in
connection with our
2006-2009
restructuring plans. We recorded restructuring charges of
$5.3 million, $5.4 million and $4.3 million in
2010, 2009 and 2008, respectively. The charges primarily relate
to one-time termination benefits in connection with our employee
headcount reductions. For further discussion, see Note 11,
Restructuring, in the Notes to the Consolidated Financial
Statements.
Other Income (Expense). Other income
(expense) consists primarily of investment income, interest
expense, gains and losses on sales and dispositions of assets,
fair value adjustment related to the retained interest of
monetized installment note receivables, loss on early
extinguishment of debt, expense related to our standby guarantee
liability and other income. Total other (expense) income was
$(3.9) million, $4.2 million and $(36.6) million
during 2010, 2009 and 2008, respectively.
Investment income, net decreased approximately
$1.2 million, or 45%, during 2010 as compared with 2009 and
$3.4 million, or 56.1%, during 2009 as compared with 2008
both
year-over-year
decreases were attributable to lower investment returns on our
cash balances.
Interest expense increased by $7.5 million during 2010 as
compared with 2009 primarily due to interest recorded on a
reserve for litigation of $4.2 million and, to a lesser
extent, interest on our community development district debt
obligations not being capitalized in 2010 due to reduced
spending levels. Interest expense decreased by approximately
$3.3 million during 2009 as compared with 2008, primarily
as a result of our reduced debt levels. During 2008 we recorded
a $30.6 million loss on the early extinguishment of debt
which consisted of $0.7 million related to the write-off of
unamortized loan costs on our prior credit facility and
$29.9 million in connection with the prepayment of our
senior notes.
Other, net increased $0.5 million during 2010 as compared
with 2009 and $10.4 million during 2009 compared with 2008.
Included in 2009 is a $0.8 million expense related to our
Southwest Airlines standby guarantee liability. Included in 2008
was a loss of $8.2 million related to the fair value
adjustment of our retained interest in monetized installment
notes receivable and $1.9 million related to the write-off
of the net book value on certain abandoned property.
Equity in Loss of Unconsolidated
Affiliates. We have investments in affiliates
that are accounted for by the equity method of accounting. These
investments consist primarily of three residential joint
ventures, two of which are now substantially sold out. Equity in
loss of unconsolidated affiliates totaled $(4.3) million in
2010, $(0.1) million in 2009, $(0.3) million in 2008.
During 2010, we determined that our investment in East
San Marco, L.L.C. had experienced an other than temporary
decline in value and we recorded a $3.8 million impairment
charge to write our investment down to its current fair value.
Income Tax Benefit. Income tax benefit,
including income tax on discontinued operations, totaled
$(23.8) million, $(85.7) million and
$(27.9) million for the years ended December 31, 2010,
2009 and 2008, respectively. Our effective tax rate was 39.9%,
39.7% and 43.5% for the years ended December 31, 2010, 2009
and 2008, respectively. Our effective tax rate decreased in 2009
compared to 2008 due to the impact of certain permanent items.
37
Discontinued Operations. Loss from
discontinued operations consists of the results associated with
our Victoria Hills Golf Club and St. Johns Golf and Country Club
golf course operations, our sawmill and mulch plant (Sunshine
State Cypress) the sales of our office building portfolio and
Saussy Burbank. Loss, net of tax, totaled zero,
$(6.8) million and $(1.6) million in 2010, 2009 and
2008, respectively. The operating results associated with these
assets have been classified as discontinued operations for all
periods presented through the period in which they were sold.
See Segment Results below for further discussion regarding our
discontinued operations.
Segment
Results
Residential
Real Estate
Our residential real estate segment typically plans and develops
mixed-use resort, primary and seasonal residential communities
of various sizes, primarily on our existing land. We own large
tracts of land in Northwest Florida, including significant Gulf
of Mexico beach frontage and waterfront properties, and land
near Jacksonville and Tallahassee.
Our residential sales remain weak. The real estate downturn,
weak economic recovery and the oil spill from the Deepwater
Horizon incident in the Gulf of Mexico have all exerted negative
pressure on the demand for real estate products in our markets.
Inventories of resale homes and homesites remain high in our
markets and prices remain depressed. We also believe that the
oil spill negatively impacted our resort and club operating
results during the summer of 2010. With the U.S. and
Florida economies battling the adverse effects of home
foreclosures, severely restrictive credit, significant
inventories of unsold homes and recessionary economic
conditions, the timing of a sustainable recovery remains
uncertain.
We implemented a tax strategy in 2009, due to the ongoing
downturn in our real estate markets, to sell certain
non-strategic assets and to carry-back any losses on the sales
to our taxable income in 2007. We disposed of the remaining
assets of Victoria Park, Artisan Park and the SevenShores
condominium and marina development project, all located in
Central Florida, and St. Johns Golf and Country Club in
Northeast Florida. These four sales generated cash of
$27.1 million and produced an aggregate tax benefit of
approximately $35.1 million, which we received in 2010 as
part of our federal tax refund. These sales also significantly
reduced our holding costs going forward.
We devote resources to the conceptual design, planning and
construction of certain key projects currently under
development, and we will maintain this process for select
communities going forward. The success of this strategy is
dependent on our Board of Directors maintaining this strategy
and our intent and ability to hold and sell these key projects,
in most cases, over a long-term horizon.
We continue to plan our development efforts on reprogramming and
repositioning certain of our existing residential projects in
preparation for a future market recovery. For example, at our
RiverTown community, we amended our Development Order to
strategically reprioritize product delivery in response to
market demand while at the same time deferring the need to incur
certain costs. In another instance, we launched development
efforts at our new Breakfast Point community responding to
demand for primary housing in Bay County.
The table below sets forth the results of continuing operations
of our residential real estate segment for the three years ended
December 31, 2010, 2009 and 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
(In millions)
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate sales
|
|
$
|
8.7
|
|
|
$
|
57.4
|
|
|
$
|
28.6
|
|
Resort and club revenues
|
|
|
29.4
|
|
|
|
29.7
|
|
|
|
32.7
|
|
Other revenues
|
|
|
2.2
|
|
|
|
2.7
|
|
|
|
4.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
40.3
|
|
|
|
89.8
|
|
|
|
65.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
(In millions)
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of real estate sales
|
|
|
6.4
|
|
|
|
54.7
|
|
|
|
24.1
|
|
Cost of resort and club revenues
|
|
|
31.5
|
|
|
|
32.3
|
|
|
|
38.6
|
|
Cost of other revenues
|
|
|
2.1
|
|
|
|
2.1
|
|
|
|
3.0
|
|
Other operating expenses
|
|
|
23.9
|
|
|
|
30.8
|
|
|
|
43.0
|
|
Depreciation and amortization
|
|
|
10.0
|
|
|
|
10.9
|
|
|
|
10.4
|
|
Impairment loss
|
|
|
4.8
|
|
|
|
94.8
|
|
|
|
60.3
|
|
Restructuring charge
|
|
|
1.0
|
|
|
|
0.9
|
|
|
|
1.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
79.7
|
|
|
|
226.5
|
|
|
|
180.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (expense) income
|
|
|
(7.8
|
)
|
|
|
(1.1
|
)
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax (loss) from continuing operations
|
|
$
|
(47.2
|
)
|
|
$
|
(137.8
|
)
|
|
$
|
(115.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended December 31, 2010 Compared to Year Ended
December 31, 2009
Real estate sales include sales of homes and homesites. Cost of
real estate sales includes direct costs (e.g., development and
construction costs), selling costs and other indirect costs
(e.g., construction overhead, capitalized interest, warranty and
project administration costs). Resort and club revenues and cost
of resort and club revenues include results of operations from
the WaterColor Inn, WaterColor, WaterSound and WindMark Beach
vacation rental programs and other resort, golf, club and marina
operations. Other revenues and cost of other revenues consist
primarily of brokerage fees and rental operations.
The following table sets forth the components of our real estate
sales and cost of real estate sales related to homes and
homesites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2010
|
|
|
Year Ended December 31, 2009
|
|
|
|
Homes
|
|
|
Homesites
|
|
|
Total
|
|
|
Homes
|
|
|
Homesites
|
|
|
Total
|
|
|
|
(Dollars in millions)
|
|
|
Sales
|
|
$
|
1.0
|
|
|
$
|
7.5
|
|
|
$
|
8.5
|
|
|
$
|
24.8
|
|
|
$
|
6.5
|
|
|
$
|
31.3
|
|
Cost of sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct costs
|
|
|
0.7
|
|
|
|
4.0
|
|
|
|
4.7
|
|
|
|
18.8
|
|
|
|
3.9
|
|
|
|
22.7
|
|
Selling costs
|
|
|
0.1
|
|
|
|
1.0
|
|
|
|
1.1
|
|
|
|
1.7
|
|
|
|
0.2
|
|
|
|
1.9
|
|
Other indirect costs
|
|
|
0.1
|
|
|
|
0.4
|
|
|
|
0.5
|
|
|
|
3.5
|
|
|
|
0.5
|
|
|
|
4.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of sales
|
|
|
0.9
|
|
|
|
5.4
|
|
|
|
6.3
|
|
|
|
24.0
|
|
|
|
4.6
|
|
|
|
28.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
$
|
0.1
|
|
|
$
|
2.1
|
|
|
$
|
2.2
|
|
|
$
|
0.8
|
|
|
$
|
1.9
|
|
|
$
|
2.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit margin
|
|
|
10
|
%
|
|
|
28
|
%
|
|
|
26
|
%
|
|
|
3
|
%
|
|
|
29
|
%
|
|
|
9
|
%
|
Units sold
|
|
|
2
|
|
|
|
83
|
|
|
|
85
|
|
|
|
84
|
|
|
|
80
|
|
|
|
164
|
|
Home sales and home closings decreased during 2010 compared to
2009 primarily as a result of a decrease in the inventory of
finished homes. The company has exited the homebuilding business
to retail customers. As a result of this strategy, homesite
closings and revenues increased for the year ended
December 31, 2010 due to sales of homesites to national and
local homebuilders. The sales to the homebuilders may generate
additional revenues and gross profit in future periods upon the
sale to the end-user. The gross profit margin on sales of
homesites remained constant
year-over-year.
Although not included in the homes and homesites table, real
estate sales include land sales of $0.2 million with
related cost of sales of $0.1 million for the year ended
December 31, 2010. In 2009, land sales and land costs of
sales of $26.1 million were included in real estate sales.
The 2009 real estate revenues and cost of sales consisted
primarily of $12.5 million at SevenShores,
$10.4 million at Victoria Park
39
(excluding $0.6 million of golf course revenues and cost of
sales, which are included in discontinued operations) and
$2.8 million of Saussy Burbank property.
The following table sets forth homes and homesite sales activity
by geographic region and property type:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2010
|
|
|
Year Ended December 31, 2009
|
|
|
|
Closed
|
|
|
|
|
|
Cost of
|
|
|
Gross
|
|
|
Closed
|
|
|
|
|
|
Cost of
|
|
|
Gross
|
|
|
|
Units
|
|
|
Revenues
|
|
|
Sales
|
|
|
Profit
|
|
|
Units
|
|
|
Revenues
|
|
|
Sales
|
|
|
Profit
|
|
|
|
(Dollars in millions)
|
|
|
Northwest Florida:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Resort
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Single-family homes
|
|
|
2
|
|
|
$
|
1.0
|
|
|
$
|
0.9
|
|
|
$
|
0.1
|
|
|
|
23
|
|
|
$
|
10.8
|
|
|
$
|
10.4
|
|
|
$
|
0.4
|
|
Homesites
|
|
|
41
|
|
|
|
5.3
|
|
|
|
3.9
|
|
|
|
1.4
|
|
|
|
25
|
|
|
|
3.5
|
|
|
|
2.6
|
|
|
|
0.9
|
|
Primary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Single-family homes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homesites
|
|
|
40
|
|
|
|
2.1
|
|
|
|
1.4
|
|
|
|
0.7
|
|
|
|
12
|
|
|
|
1.0
|
|
|
|
0.3
|
|
|
|
0.7
|
|
Northeast Florida:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Single-family homes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
|
0.6
|
|
|
|
0.5
|
|
|
|
0.1
|
|
Homesites
|
|
|
2
|
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Central Florida:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Single-family homes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15
|
|
|
|
3.5
|
|
|
|
3.4
|
|
|
|
0.1
|
|
Multi-family homes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32
|
|
|
|
7.3
|
|
|
|
7.2
|
|
|
|
0.1
|
|
Townhomes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12
|
|
|
|
2.6
|
|
|
|
2.5
|
|
|
|
0.1
|
|
Homesites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43
|
|
|
|
2.0
|
|
|
|
1.7
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
85
|
|
|
$
|
8.5
|
|
|
$
|
6.3
|
|
|
$
|
2.2
|
|
|
|
164
|
|
|
$
|
31.3
|
|
|
$
|
28.6
|
|
|
$
|
2.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For additional information about our residential projects, see
the table entitled Summary of Land-Use
Entitlements Active St. Joe Residential and
Mixed-Use Projects in Item 1. Business above.
Our Northwest Florida resort and seasonal communities included
WaterColor, WaterSound Beach, WaterSound, WaterSound West Beach,
WindMark Beach, RiverCamps on Crooked Creek, SummerCamp Beach
and Wild Heron, while primary communities included Hawks Landing
and Southwood. Our Northeast Florida communities included
RiverTown and St. Johns Golf and Country Club, and our Central
Florida communities included Artisan Park and Victoria Park, all
of which were primary.
In addition to adverse market conditions, the following factors
also contributed to the results of operations shown above:
|
|
|
|
|
For our Northwest Florida resort and seasonal communities, home
closings and revenues decreased in 2010 as compared with 2009
primarily due to the reduction in inventory of homes as a result
of our exit from the homebuilding business. WaterSound West
Beach and SummerCamp Beach communities each had one home sale
during 2010.
|
|
|
|
In our Northwest Florida primary communities, homesite closings
and revenues increased in 2010 as compared to 2009 due to sales
to homebuilders some of which may generate additional revenues
and gross profits in future periods upon the sale to the
end-users.
|
|
|
|
In our Northeast Florida communities, no homes were available
for sale as we sold our last remaining home in St. Johns Golf
and Country Club in 2009.
|
|
|
|
In our Central Florida communities, the remaining available
product was sold at Artisan Park during 2009.
|
Resort and club revenues include revenue from the WaterColor
Inn, WaterColor, WaterSound Beach and WindMark Beach vacation
rental programs and other resort and golf, club and marina
operations. Resort and
40
club revenues were $29.4 million for the year ended
December 31, 2010, with $31.5 million in related costs
as compared to revenue totaling $29.7 million for the year
ended December 31, 2009, with $32.3 million in related
costs. Revenues decreased by $0.3 million as a result of
the oil spill from the Deep Horizon incident in the Gulf of
Mexico partially offset by increased golf club revenues
generated by opening certain courses to public play. Cost of
resort and club revenues decreased $0.8 million as a result
of more efficient operation of our resorts and clubs.
Other operating expenses include salaries and benefits,
marketing, project administration, support personnel, other
administrative expenses and litigation reserves. Other operating
expenses were $23.9 million for the year ended
December 31, 2010 as compared with $30.8 million for
the year ended December 31, 2009. The decrease of
$6.9 million in operating expenses was primarily due to
reductions in employee costs, marketing and homeowners
association funding costs, certain warranty and other costs and
real estate taxes. The decrease was partially offset by a
$4.9 million reserve for litigation involving a contract
dispute related to a 1997 purchase of land for our former
Victoria Park Community.
We recorded restructuring charges in our residential real estate
segment of $1.0 million and $0.9 million during 2010
and 2009, respectively, in connection with our corporate
headquarters relocation.
Other expense increased $6.7 million during 2010 as
compared to 2009 which was primarily due to interest expense of
$4.1 million related to the litigation reserve as discussed
above and to a lesser extent, interest expense related to
Community Development District notes (CDD) in our
Southwood and Rivertown communities which was capitalized in
2009, but not in 2010.
Year
Ended December 31, 2009 Compared to Year Ended
December 31, 2008
Real estate sales include sales of homes and homesites. Cost of
real estate sales includes direct costs (e.g., development and
construction costs), selling costs and other indirect costs
(e.g., construction overhead, capitalized interest, warranty and
project administration costs). Resort and club revenues and cost
of resort and club revenues include results of operations from
the WaterColor Inn, WaterColor and WaterSound vacation rental
programs and other resort, golf, club and marina operations.
Other revenues and cost of other revenues consist primarily of
brokerage fees and rental operations.
The following table sets forth the components of our real estate
sales and cost of real estate sales related to homes and
homesites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2009
|
|
|
Year Ended December 31, 2008
|
|
|
|
Homes
|
|
|
Homesites
|
|
|
Total
|
|
|
Homes
|
|
|
Homesites
|
|
|
Total
|
|
|
|
(Dollars in millions)
|
|
|
Sales
|
|
$
|
24.8
|
|
|
$
|
6.5
|
|
|
$
|
31.3
|
|
|
$
|
17.9
|
|
|
$
|
10.1
|
|
|
$
|
28.0
|
|
Cost of sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct costs
|
|
|
18.8
|
|
|
|
3.9
|
|
|
|
22.7
|
|
|
|
12.9
|
|
|
|
5.6
|
|
|
|
18.5
|
|
Selling costs
|
|
|
1.7
|
|
|
|
0.2
|
|
|
|
1.9
|
|
|
|
1.0
|
|
|
|
0.6
|
|
|
|
1.6
|
|
Other indirect costs
|
|
|
3.5
|
|
|
|
0.5
|
|
|
|
4.0
|
|
|
|
3.5
|
|
|
|
0.4
|
|
|
|
3.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of sales
|
|
|
24.0
|
|
|
|
4.6
|
|
|
|
28.6
|
|
|
|
17.4
|
|
|
|
6.6
|
|
|
|
24.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
$
|
0.8
|
|
|
$
|
1.9
|
|
|
$
|
2.7
|
|
|
$
|
0.5
|
|
|
$
|
3.5
|
|
|
$
|
4.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit margin
|
|
|
3
|
%
|
|
|
29
|
%
|
|
|
9
|
%
|
|
|
3
|
%
|
|
|
35
|
%
|
|
|
14
|
%
|
Units sold
|
|
|
84
|
|
|
|
80
|
|
|
|
164
|
|
|
|
33
|
|
|
|
89
|
|
|
|
122
|
|
Home sales and home closings increased during 2009 compared to
2008 primarily as a result of our exit of the Artisan Park
community through the auction of our remaining condominium
units. In addition, sales increases were achieved from
reductions in pricing in an effort to accelerate sales of
existing vertical inventory even though adverse market
conditions continued. Homesite sales and closings decreased in
2009 compared to 2008 due to a decrease in bulk sales to
national homebuilders and reduced demand. Gross profit margin
decreased in 2009 compared to 2008, primarily due to a decrease
in the average sales price and product location and mix.
41
Although not included in the homes and homesites tables, real
estate revenues and cost of sales also included land sales of
$26.1 million and $0.6 million and land cost of sales
of $26.1 million and $0.1 million for the years ended
December 31, 2009 and 2008, respectively. The 2009 real
estate revenues and cost of sales consisted primarily of
$12.5 million at SevenShores, $10.4 million at
Victoria Park (excluding $0.6 million of golf course
revenues and cost of sales, which are included in discontinued
operations) and $2.8 million of Saussy Burbank property.
The following table sets forth homes and homesite sales activity
by geographic region and property type:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2009
|
|
|
Year Ended December 31, 2008
|
|
|
|
Closed
|
|
|
|
|
|
Cost of
|
|
|
Gross
|
|
|
Closed
|
|
|
|
|
|
Cost of
|
|
|
Gross
|
|
|
|
Units
|
|
|
Revenues
|
|
|
Sales
|
|
|
Profit
|
|
|
Units
|
|
|
Revenues
|
|
|
Sales
|
|
|
Profit
|
|
|
|
(Dollars in millions)
|
|
|
Northwest Florida:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Resort
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Single-family homes
|
|
|
23
|
|
|
$
|
10.8
|
|
|
$
|
10.4
|
|
|
$
|
0.4
|
|
|
|
8
|
|
|
$
|
8.6
|
|
|
$
|
8.3
|
|
|
$
|
0.3
|
|
Homesites
|
|
|
25
|
|
|
|
3.5
|
|
|
|
2.6
|
|
|
|
0.9
|
|
|
|
21
|
|
|
|
6.7
|
|
|
|
3.5
|
|
|
|
3.2
|
|
Primary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Single-family homes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
0.3
|
|
|
|
0.3
|
|
|
|
|
|
Homesites
|
|
|
12
|
|
|
|
1.0
|
|
|
|
0.3
|
|
|
|
0.7
|
|
|
|
23
|
|
|
|
1.3
|
|
|
|
1.0
|
|
|
|
0.3
|
|
Northeast Florida:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Single-family homes
|
|
|
2
|
|
|
|
0.6
|
|
|
|
0.5
|
|
|
|
0.1
|
|
|
|
2
|
|
|
|
0.9
|
|
|
|
1.0
|
|
|
|
(0.1
|
)
|
Homesites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3
|
|
|
|
0.2
|
|
|
|
0.1
|
|
|
|
0.1
|
|
Central Florida:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Single-family homes
|
|
|
15
|
|
|
|
3.5
|
|
|
|
3.4
|
|
|
|
0.1
|
|
|
|
10
|
|
|
|
4.5
|
|
|
|
4.4
|
|
|
|
0.1
|
|
Multi-family homes
|
|
|
32
|
|
|
|
7.3
|
|
|
|
7.2
|
|
|
|
0.1
|
|
|
|
9
|
|
|
|
3.1
|
|
|
|
2.9
|
|
|
|
0.2
|
|
Townhomes
|
|
|
12
|
|
|
|
2.6
|
|
|
|
2.5
|
|
|
|
0.1
|
|
|
|
3
|
|
|
|
0.5
|
|
|
|
0.5
|
|
|
|
|
|
Homesites
|
|
|
43
|
|
|
|
2.0
|
|
|
|
1.7
|
|
|
|
0.3
|
|
|
|
42
|
|
|
|
1.9
|
|
|
|
2.0
|
|
|
|
(0.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
164
|
|
|
$
|
31.3
|
|
|
$
|
28.6
|
|
|
$
|
2.7
|
|
|
|
122
|
|
|
$
|
28.0
|
|
|
$
|
24.0
|
|
|
$
|
4.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For additional information about our residential projects, see
the table entitled Summary of Land-Use
Entitlements Active St. Joe Residential and
Mixed-Use Projects in Item 1. Business above.
Our Northwest Florida resort and seasonal communities included
WaterColor, WaterSound Beach, WaterSound, WaterSound West Beach,
WindMark Beach, RiverCamps on Crooked Creek, SummerCamp Beach
and Wild Heron, while primary communities included Hawks Landing
and Southwood. Our Northeast Florida communities included
RiverTown and St. Johns Golf and Country Club, and our Central
Florida communities included Artisan Park and Victoria Park, all
of which are primary.
In addition to adverse market conditions, the following factors
also contributed to the results of operations shown above:
|
|
|
|
|
For our Northwest Florida resort and seasonal communities, home
closings and revenues increased in 2009 as compared to 2008
primarily due to the sale of the 17 remaining homes in phase 4
of our WaterColor community. These sales were the result of
price reductions on the remaining homes. Included in 2008 was
the recognition of $0.9 million of deferred revenue on our
SummerCamp Beach community since the required infrastructure was
completed.
|
|
|
|
In our Northwest Florida primary communities, we closed on our
last remaining home in Palmetto Trace in 2008. Homesite closings
and revenues decreased in 2009 as compared to 2008 due to a
decrease in bulk sales to a national homebuilder in our
SouthWood community.
|
|
|
|
In our Northeast Florida communities, we sold our last remaining
home in St. Johns Golf and Country Club in 2009.
|
42
|
|
|
|
|
In our Central Florida communities, a successful home auction
was completed and the remaining available product was sold at
Artisan Park during 2009.
|
Resort and club revenues included revenues from the WaterColor
Inn, WaterColor, WaterSound Beach and WindMark Beach vacation
rental programs and other resort, golf, club and marina
operations. Resort and club revenues were $29.7 million in
2009 with $32.3 million in related costs, compared to
$32.7 million in 2008 with $38.6 million in related
costs. Resort and club revenues decreased $3.0 million due
to lower vacation rental occupancy and lower hotel and vacation
rental rates. Cost of resort and club revenues decreased
$6.3 million as a result of reduced staffing levels and
more efficient operation of our resort and clubs.
Other operating expenses included salaries and benefits,
marketing, project administration, support personnel and other
administrative expenses. Other operating expenses were
$30.8 million in 2009 compared to $43.0 million in
2008. The decrease of $12.2 million in operating expenses
was primarily due to reductions in employee costs, marketing and
homeowners association funding costs, certain warranty and other
project costs and real estate taxes. These decreases were
partially offset by costs related to overhead costs of our real
estate projects that were expensed in 2009 instead of
capitalized due to lack of active development activity.
We recorded restructuring charges in our residential real estate
segment of $0.9 million during 2009 and $1.2 million
in 2008 in connection with our headcount reductions.
Discontinued
Operations
In December 2009, we sold our remaining property at Victoria
Park, including the Victoria Hills Golf Club, and St. Johns Golf
and Country Club. We have classified the operating results
associated with these golf courses as discontinued operations as
the golf courses had identifiable cash flows and operating
results. Included in 2009 discontinued operations are
$6.9 million and $3.5 million (pre-tax) of impairment
charges to approximate fair value, less costs to sell, related
to the sales of the Victoria Hills Golf Club and St. Johns Golf
and Country Club, respectively.
The table below sets forth the operating results of our
discontinued operations for the periods shown.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
(In millions)
|
|
|
Victoria Hills Golf Club Residential Segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate revenues
|
|
$
|
|
|
|
$
|
2.5
|
|
|
$
|
2.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax (loss)
|
|
|
|
|
|
|
(7.6
|
)
|
|
|
(0.9
|
)
|
Income tax (benefit)
|
|
|
|
|
|
|
(3.0
|
)
|
|
|
(0.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) from discontinued operations
|
|
$
|
|
|
|
$
|
(4.6
|
)
|
|
$
|
(0.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
St. Johns Golf and Country Club Residential Segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate revenues
|
|
$
|
|
|
|
$
|
2.9
|
|
|
$
|
3.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax (loss)
|
|
|
|
|
|
|
(3.4
|
)
|
|
|
(0.1
|
)
|
Income tax (benefit)
|
|
|
|
|
|
|
(1.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) from discontinued operations
|
|
$
|
|
|
|
$
|
(2.1
|
)
|
|
$
|
(0.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total (loss) from discontinued operations
|
|
$
|
|
|
|
$
|
(6.7
|
)
|
|
$
|
(0.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
Real Estate
Our commercial real estate segment plans, develops and entitles
our land holdings for a broad range of retail, office, hotel,
industrial and multi-family uses. We sell or lease and develop
commercial land and provide development opportunities for
national and regional retailers and strategic partners in
Northwest Florida. We also offer land for commercial and light
industrial uses within large and small-scale commerce
43
parks, as well as for multi-family rental projects. Consistent
with residential real estate, the markets for commercial real
estate, particularly retail, remain weak.
The table below sets forth the results of the continuing
operations of our commercial real estate segment for the years
ended December 31, 2010, 2009 and 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
(In millions)
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate sales
|
|
$
|
4.4
|
|
|
$
|
7.0
|
|
|
$
|
3.9
|
|
Other revenues
|
|
|
0.2
|
|
|
|
0.5
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
4.6
|
|
|
|
7.5
|
|
|
|
4.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of real estate sales
|
|
|
1.0
|
|
|
|
4.3
|
|
|
|
2.8
|
|
Cost of other revenues
|
|
|
|
|
|
|
|
|
|
|
0.1
|
|
Other operating expenses
|
|
|
6.0
|
|
|
|
3.9
|
|
|
|
4.2
|
|
Depreciation and amortization
|
|
|
|
|
|
|
0.1
|
|
|
|
0.1
|
|
Restructuring charge
|
|
|
0.1
|
|
|
|
0.6
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
7.1
|
|
|
|
8.9
|
|
|
|
7.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
1.2
|
|
|
|
0.9
|
|
|
|
1.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax loss from continuing operations
|
|
$
|
(1.3
|
)
|
|
$
|
(0.5
|
)
|
|
$
|
(2.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Similar to the markets for residential real estate, the markets
for commercial real estate have experienced a significant
downturn. In addition to the negative effects of the prolonged
downturn in demand for residential real estate, commercial real
estate markets have also been negatively affected by the
prolonged weakness of the general economy.
Much of our commercial real estate activity is focused on the
opportunities presented by the new Northwest Florida Beaches
International Airport, which opened in May 2010 and is
surrounded by our properties in the West Bay Sector. We believe
these commercial opportunities will be significantly enhanced by
Southwest Airlines service to the new airport. We expect,
over time, that the new international airport will expand our
customer base as it connects Northwest Florida with the global
economy and helps reposition the area from a regional to a
national destination.
We initiated development activity in 2010 at our
VentureCrossings Enterprise Centre, an approximately
1,000 acre project adjacent to the new airport. The project
is being developed for office, retail, hotel and industrial
users. Site development has begun in anticipation of a new
office building and a 300-space long-term covered parking
facility at the entrance to the airport.
In December of 2010, we entered into a ground lease with Express
Lane, Inc. for approximately 2.1 acres of our land near the
new airport. Express Lane will construct a gas station,
convenience store and restaurant operation on the land and pay
rent to us for the land pursuant to the lease.
Real Estate Sales. Commercial land sales for
the years ended December 31, 2010, 2009 and 2008 included
the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Acres
|
|
|
Average Price
|
|
|
Gross
|
|
|
|
|
|
Gross Profit
|
|
Land
|
|
Sales
|
|
|
Sold
|
|
|
Per Acre
|
|
|
Proceeds
|
|
|
Revenue
|
|
|
on Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
|
(In millions)
|
|
|
(In millions)
|
|
|
Year Ended December 31, 2010
|
|
|
4
|
|
|
|
18
|
|
|
$
|
237,000
|
|
|
$
|
4.4
|
|
|
$
|
4.4
|
|
|
$
|
3.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2009
|
|
|
8
|
|
|
|
29
|
|
|
$
|
227,000
|
|
|
$
|
6.6
|
|
|
$
|
7.0
|
(a)
|
|
$
|
2.7
|
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2008
|
|
|
8
|
|
|
|
39
|
|
|
$
|
92,000
|
|
|
$
|
3.6
|
|
|
$
|
3.9
|
(b)
|
|
$
|
1.1
|
(b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44
|
|
|
(a)
|
|
Includes previously deferred
revenue and gain on sales, based on
percentage-of-completion
accounting, of $0.4 million and $0.1 million,
respectively.
|
|
(b)
|
|
Includes previously deferred
revenue and gain on sales, based on
percentage-of-completion
accounting, of $0.3 million and $0.1 million,
respectively.
|
The change in average
per-acre
prices reflected a change in the mix of commercial land sold in
each period, with varying compositions of retail, office, light
industrial, multi-family and other commercial uses.
Included in 2010 real estate sales is a 10 acre sale in
Walton County to Wal-Mart for $2.5 million. There were
three additional commercial sales in Northwest Florida for a
total of eight acres at an average price of $158,000 per acre.
We also entered into
build-to-suit
leases with CVS Pharmacy on a 1.7 acre site that we own in
Port St. Joe and with a Hardees franchisee on a
0.8 acre site in Panama City Beach. Upon completion of
construction, we will own both facilities and collect rents in
accordance with long-term leases.
Other revenues primarily relate to lease income associated with
a long-term lease with the Port Authority of Port St. Joe.
Other income during 2010, 2009 and 2008 includes approximately
$0.7 million of recognized gain previously deferred
associated with three buildings sold in 2007 which we have a
sale and leaseback arrangement with the buyer.
Rural
Land Sales
Our rural land sales segment markets and sells tracts of land of
varying sizes for rural recreational, conservation and
timberland uses. The land sales segment at times prepares land
for sale for these uses through harvesting, thinning and other
silviculture practices, and in some cases, limited
infrastructure development. While we have reduced our offerings
of rural land, like residential and commercial land, demand for
rural land has also declined as a result of the current
difficult market conditions.
The table below sets forth the results of operations of our
rural land sales segment for the three years ended
December 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
(In millions)
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate sales
|
|
$
|
25.9
|
|
|
$
|
14.3
|
|
|
$
|
162.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of real estate sales
|
|
|
1.0
|
|
|
|
1.5
|
|
|
|
26.2
|
|
Other operating expenses
|
|
|
2.7
|
|
|
|
3.3
|
|
|
|
4.4
|
|
Depreciation and amortization
|
|
|
|
|
|
|
0.1
|
|
|
|
0.1
|
|
Restructuring charge
|
|
|
0.8
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
4.5
|
|
|
|
5.0
|
|
|
|
30.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
0.8
|
|
|
|
0.7
|
|
|
|
1.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income from continuing operations
|
|
$
|
22.2
|
|
|
$
|
10.0
|
|
|
$
|
132.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rural land sales for the years ended December 31, 2010,
2009 and 2008 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
Number of
|
|
|
Average Price
|
|
|
Gross Sales
|
|
|
Gross
|
|
Period
|
|
of Sales
|
|
|
Acres
|
|
|
per Acre
|
|
|
Price
|
|
|
Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
|
(In millions)
|
|
|
2010
|
|
|
13
|
|
|
|
606
|
|
|
$
|
4,897
|
|
|
$
|
3.0
|
|
|
$
|
2.6
|
|
2009
|
|
|
13
|
|
|
|
6,967
|
|
|
$
|
2,054
|
|
|
$
|
14.3
|
|
|
$
|
12.8
|
|
2008
|
|
|
26
|
|
|
|
107,677
|
|
|
$
|
1,505
|
|
|
$
|
162.0
|
|
|
$
|
135.9
|
|
45
During 2010, we also conveyed 2,148 acres to the Florida
Department of Transportation (FDOT) as part of our
approximate 3,900 acre sale to FDOT in 2006. As a result,
we recognized $20.6 million of previously deferred revenue
and gain of $20.2 million on this transaction. There was an
additional $0.4 million of sales and gain recognized during
2010 from other deferred sales, as well as $0.4 million
from the granting of an easement. Also included in real estate
sales for 2010 was $1.4 million related to the sale of 21
mitigation bank credits at an average sales price of $68,333 per
credit. We own and manage two wetlands areas from which we sell
mitigation credits to developers, utility companies, and other
users when they need to impact other wetlands areas in the
course of their businesses. We began selling credits from our
wetlands mitigation banks in late 2009.
During 2009, we made a strategic decision to sell fewer acres of
rural land as we generated cash from other sources. We continued
this strategy during 2010 and expect to continue this strategy
in 2011. During 2008 we relied on rural land sales as a
significant source of revenues due to the continuing downturn in
our residential and commercial real estate markets. We consider
the land sold to be non-strategic as these parcels would require
a significant amount of time before realizing a higher and
better use than timberland. We may, however, rely on rural land
sales as a significant source of revenues and cash in the future.
Average sales prices per acre vary according to the
characteristics of each particular piece of land being sold and
its highest and best use. As a result, average prices will vary
from one period to another.
Forestry
Our forestry segment focuses on the management and harvesting of
our extensive timber holdings. We grow, harvest and sell
sawtimber, pulpwood and forest products and provide land
management services for conservation properties. On
February 27, 2009, we completed the sale of the inventory
and equipment assets of Sunshine State Cypress. The results of
operations for Sunshine State Cypress are set forth below as
discontinued operations.
The table below sets forth the results of our continuing
operations of our forestry segment for the years ended
December 31, 2010, 2009 and 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
(In millions)
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Timber sales
|
|
$
|
28.8
|
|
|
$
|
26.6
|
|
|
$
|
26.6
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of timber sales
|
|
|
20.2
|
|
|
|
19.1
|
|
|
|
19.8
|
|
Other operating expenses
|
|
|
2.0
|
|
|
|
2.0
|
|
|
|
1.9
|
|
Depreciation and amortization
|
|
|
2.1
|
|
|
|
2.3
|
|
|
|
2.5
|
|
Restructuring charge
|
|
|
0.2
|
|
|
|
0.1
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
24.5
|
|
|
|
23.5
|
|
|
|
24.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
2.0
|
|
|
|
1.7
|
|
|
|
1.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income from continuing operations
|
|
$
|
6.3
|
|
|
$
|
4.8
|
|
|
$
|
3.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Smurfit-Stone Container Corporation (Smurfit-Stone)
has a Panama City mill which is the largest consumer of pine
pulpwood logs within the immediate area in which most of our
timberlands are located. On November 18, 2010, we entered
into a new wood fiber supply agreement with Smurfit-Stone which
expires on December 31, 2017. The new agreement replaces
the existing wood fiber supply agreement that was scheduled to
expire on June 30, 2012. Sales under the wood fiber supply
agreements with Smurfit-Stone were $15.0 million (683,000
tons) in 2010 and $14.9 million (701,000 tons) in 2009.
During 2010, we delivered fewer tons to Smurfit-Stone under the
fiber agreements while the sales price per ton increased.
46
Open market sales totaled $12.8 million (500,000 tons) in
2010 as compared to $11.1 million (544,000 tons) in 2009.
The increase in revenue for open market sales of
$1.7 million or 15% was a result of improved log pricing
partially offset by a reduction in log sales volume. Net
stumpage prices for sawtimber and pulpwood increased
year-over-year
due to improved end-user markets and reduced availability of raw
materials.
Our 2010, 2009 and 2008 sales revenues included
$0.5 million, $0.6 million and $0.3 million,
respectively, related to land management services performed in
connection with certain conservation properties. We plan to seek
other customers for our conservation land management services.
Also, included in revenue for 2010 is $0.6 million related
to the Biomass Crop Assistance Program sponsored by the federal
government during the first four months of 2010. We are
continuing to explore alternative sources of revenue from our
extensive timberland and rural land holdings.
Gross margins as a percentage of revenue were 30% in 2010, 28%
in 2009 and 26% in 2008. The increase in margin from 2010 to
2009 was a result of an increase in sales price per ton
partially offset by an increase in cost of sales of
$1.1 million due primarily to expenditures made to collect
timber inventory data on our timberlands. The increase in margin
from 2008 to 2009 was primarily due to a decrease in certain
maintenance expenses included in cost of sales.
Other income consists primarily of income from hunting leases.
On February 27, 2009, we sold our remaining inventory and
equipment assets related to our Sunshine State Cypress mill and
mulch plant for $1.6 million. We received $1.3 million
in cash and a note receivable of $0.3 million, the balance
of which is $0.2 million as of December 31, 2010. The
sale agreement also included a long-term lease of a building
facility.
Discontinued operations related to the sale of Sunshine State
Cypress for the three years ended December 31, 2010 are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
(In millions)
|
|
|
Sunshine State Cypress Forestry Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate revenues
|
|
$
|
|
|
|
$
|
1.7
|
|
|
$
|
6.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax (loss)
|
|
|
|
|
|
|
(0.4
|
)
|
|
|
(1.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax gain on sale
|
|
|
|
|
|
|
0.1
|
|
|
|
|
|
Income tax (benefit)
|
|
|
|
|
|
|
(0.1
|
)
|
|
|
(0.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) from discontinued operations
|
|
$
|
|
|
|
$
|
(0.2
|
)
|
|
$
|
(1.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liquidity
and Capital Resources
We generated cash during 2010 from operations, tax refunds and
proceeds from the exercise of stock options. We used cash during
2010 for operations, real estate development and construction,
and payments of property taxes.
As of December 31, 2010, we had cash and cash equivalents
of $183.8 million, compared to $163.8 million as of
December 31, 2009. Our increase in cash and cash
equivalents in 2010 primarily relates to our operating
activities as described below.
We invest our excess cash primarily in government-only money
market mutual funds, short-term U.S. treasury investments
and overnight deposits, all of which are highly liquid, with the
intent to make such funds readily available for operating
expenses and strategic long-term investment purposes.
We have a $125 million revolving credit facility with
Branch Banking and Trust Company (BB&T)
and Deutsche Bank that expires on September 19, 2012. We
have the option to request an increase in the principal amount
available under the credit facility up to $200 million
through syndication on a best efforts basis.
47
The Credit Agreement provides for swing advances of up to
$5.0 million and the issuance of letters of credit of up to
$30.0 million. No funds have been drawn on the credit
facility as of December 31, 2010. The proceeds of any
future borrowings under the credit facility may be used for
general corporate purposes. We have pledged 100% of the
membership interests in our largest subsidiary, St. Joe
Timberland Company of Delaware, LLC, as security for the credit
facility. We have also agreed that upon the occurrence of an
event of default, St. Joe Timberland Company of Delaware, LLC
will grant to the lenders a first priority pledge of
and/or a
lien on substantially all of its assets.
As more fully described in Note 13, Debt in our
Consolidated Financial Statements, the credit facility contains
covenants relating to leverage, unencumbered asset value, net
worth, liquidity and additional debt. The credit facility does
not contain a fixed charge coverage covenant. The credit
facility also contains various restrictive covenants pertaining
to acquisitions, investments, capital expenditures, dividends,
share repurchases, asset dispositions and liens. The amendment
also limits the amount of our investments not otherwise
permitted by the credit facility to $175.0 million and the
amount of our additional debt not otherwise permitted by the
credit facility to $175.0 million. We were in compliance
with our debt covenants at December 31, 2010.
On October 21, 2009, we entered into a strategic alliance
agreement with Southwest Airlines to facilitate the commencement
of low-fare air service to the new Northwest Florida Beaches
International Airport. Service at the new airport consists of
two daily non-stop flights from Northwest Florida to each of
four destinations for a total of eight daily non-stop flights.
We have agreed to reimburse Southwest Airlines if it incurs
losses on its service at the new airport during the first three
years of service. The agreement also provides that
Southwests profits from the air service during the term of
the agreement will be shared with us up to the maximum amount of
our break-even payments. These cash payments and reimbursements
could have a significant effect on our cash flows and results of
operations depending on the results of Southwests
operations of the air service. There were no reimbursements to
Southwest Airlines during 2010; no losses were incurred per the
agreed upon services.
The term of the agreement extends for a period of three years
ending May 23, 2013. Although the agreement does not
provide for maximum payments, the agreement may be terminated by
us if the payments to Southwest exceed $14 million in the
first year of air service and $12 million in the second
year of air service. Southwest may terminate the agreement if
its actual annual revenues attributable to the air service at
the new airport are less than certain minimum annual amounts
established in the agreement. In order to mitigate potential
losses that may arise from changes in Southwest Airlines
jet fuel costs, we have entered into a short-term premium
neutral collar arrangement with respect to the underlying cost
of jet fuel for a portion of Southwest Airlines estimated
fuel volumes.
In November 2010, we entered into a new fiber supply agreement
with Smurfit-Stone Container Corporation that requires us to
deliver and sell a total of 3.9 million tons of pine
pulpwood through December, 2017. Pricing under the agreement
approximates market, using a formula based on published regional
prices for pine pulpwood. The agreement is assignable by us, in
whole or in part, to purchasers of our properties, or any
interest therein, and does not contain a lien, encumbrance, or
use restriction on any of our properties.
We believe that our current cash position, our undrawn
$125.0 million revolving credit facility and the cash we
anticipate generating from operating activities will provide us
with sufficient liquidity to satisfy our near-term working
capital needs and capital expenditures and provide us with the
financial flexibility to withstand the current market downturn.
Cash
Flows from Operating Activities
Cash flows related to assets ultimately planned to be sold,
including residential real estate development and related
amenities, sales of undeveloped and developed land by the rural
land sales segment, our timberland operations and land developed
by the commercial real estate segment, are included in operating
activities on the statement of cash flows.
Net cash provided by operations was $16.3 million during
2010 as compared with $50.7 million during 2009, and
$48.5 million during 2008. Total capital expenditures for
our residential real estate segment in 2010,
48
2009 and 2008 were $7.0 million, $13.4 million and
$27.1 million, respectively. The 2008 expenditures were net
of an $11.6 million reimbursement received from a community
development district (CDD) bond issue at one of our
residential communities. Additional capital expenditures in
2010, 2009 and 2008 totaled $7.8 million, $2.4 million
and $5.3 million, respectively, and primarily related to
commercial real estate development.
The expenditures relating to our residential real estate and
commercial real estate segments were primarily for site
infrastructure development, general amenity construction,
construction of single-family homes, construction of
multi-family buildings and commercial land development. Prior to
2009, we devoted significant resources to the development of
several new large-scale residential communities, including
WindMark Beach, RiverTown and WaterSound. Because of adverse
market conditions and the substantial progress on these
large-scale developments, we have significantly reduced our
capital expenditures over the past three years. We expect our
2011 capital expenditures to increase compared with 2010 levels
as the development of our land progresses, including
construction of our corporate headquarters in VentureCrossings
Enterprise Centre. We anticipate that future capital commitments
will be funded through our cash balances, operations and credit
facility.
During 2010, we received $67.7 million in tax refunds due
to the tax planning strategy we implemented in 2009 in order to
take advantage of certain tax loss carrybacks which expired in
2009. In 2009, we received $32.3 in tax refunds for loss
carryforwards associated with our 2006 through 2008 tax years.
We had no income tax receivable at December 31, 2010.
During 2009, we received $11.0 million from the sale of our
Victoria Park community which consisted of homes, homesites,
undeveloped land, notes receivable and a golf course and
$3.0 million from the sale of our St. Johns Golf and
Country Club golf course. In addition, we received approximately
$7.0 million in cash proceeds in connection with the sale
of our SevenShores condominium and marina development project
during 2009. The cash flows associated with our discontinued
golf course operations were not material to our operating cash
flows.
On June 18, 2009, as plan sponsor, we signed a commitment
for the pension plan to purchase a group annuity contract from
Massachusetts Mutual Life Insurance Company for the benefit of
the retired participants and certain other former employee
participants in our pension plan. The purchase price of the
group annuity contract was approximately $101 million,
which was funded from the assets of the pension plan on
June 25, 2009. As a result of this transaction, we
significantly increased the funding status ratio of our pension
plan and reduced the potential for future funding requirements.
During 2008, we increased our operating cash flows as a result
of large tract rural land sales. During 2008, we sold a total of
79,031 acres of timberland in three separate transactions
in exchange for
15-year
installment notes receivable in the aggregate amount of
$108.4 million, which installment notes are fully backed by
irrevocable letters of credit issued by Wachovia Bank, N.A. (now
a subsidiary of Wells Fargo & Company). We received
$96.1 million in net cash proceeds from the monetization of
these installment notes. We did not enter into any installment
note sales during 2009 or 2010.
Cash
Flows from Investing Activities
Net cash (used in) provided by investing activities was
$(0.5) million in 2010, as compared with $0.2 million
in 2009 and $(1.4) million in 2008. Cash flows from
investing activities include the purchase of property, plant and
equipment, sale of other assets not held for sale, distributions
of capital and investment in unconsolidated affiliates.
Cash
Flows from Financing Activities
Net cash provided by (used in) financing activities was
$4.2 million in 2010, $(2.6) million in 2009 and
$44.2 million in 2008. Cash provided by financing
activities in 2010 resulted primarily from proceeds from the
exercise of stock options.
49
On March 3, 2008, we sold 17,145,000 shares of our
common stock, at a price of $35.00 per share. We received net
proceeds of $580.1 million in connection with the public
offering which were used to prepay in full (i) a
$100 million term loan, (ii) the entire outstanding
balance (approximately $160 million) of our previous
$500 million senior revolving credit facility and
(iii) senior notes with an outstanding principal amount of
$240.0 million together with a make-whole amount of
approximately $29.7 million.
As previously discussed, we monetized notes receivable from
rural land installment sales in 2008. Proceeds from these
transactions were used to reduce debt.
CDD bonds financed the construction of infrastructure
improvements at several of our projects. The principal and
interest payments on the bonds are paid by assessments on, or
from sales proceeds of, the properties benefited by the
improvements financed by the bonds. We have recorded a liability
for CDD debt that is associated with platted property, which is
the point at which the assessments become fixed or determinable.
Additionally, we have recorded a liability for the balance of
the CDD debt that is associated with unplatted property if it is
probable and reasonably estimable that we will ultimately be
responsible for repaying either as the property is sold by us or
when assessed to us by the CDD. Accordingly, we have recorded
debt of $29.4 million and $29.9 million related to CDD
debt as of December 31, 2010 and December 31, 2009,
respectively. Total outstanding CDD debt was $57.7 million
and $58.5 million at December 31, 2010 and 2009,
respectively. We retired approximately $30.0 million of CDD
debt with the proceeds of our common stock offering during 2008.
Executives have surrendered a total of 2,472,017 shares of
our stock since 1998 in payment of strike prices and taxes due
on exercised stock options and vested restricted stock. For
2010, 2009 and 2008, 42,762, shares worth $1.3 million,
40,281 shares worth $1.1 million and
70,077 shares worth $2.8 million, respectively, were
surrendered by executives for the cash payment of taxes due on
exercised stock options and vested restricted stock.
Cash flows from discontinued operations are reported in the
consolidated statement of cash flows as operating, investing and
financing along with our continuing operations for 2009 and 2008.
Off-Balance
Sheet Arrangements
During 2008 and 2007, we sold 79,031 acres and
53,024 acres, respectively, of timberland in exchange for
15-year
installment notes receivable in the aggregate amount of
$108.4 million and $74.9 million, respectively. The
installment notes are fully backed by irrevocable letters of
credit issued by Wachovia Bank, N.A. (now a subsidiary of Wells
Fargo & Company). We contributed the installment notes
to bankruptcy remote qualified special purpose entities. The
entities financial position and results are not
consolidated in our financial statements.
During 2008 and 2007, the entities monetized $108.4 million
and $74.9 million, respectively, of installment notes by
issuing debt securities to third party investors equal to
approximately 90% of the value of the installment notes.
Approximately $96.1 million and $66.9 million in net
proceeds were distributed to us during 2008 and 2007,
respectively. The debt securities are payable solely out of the
assets of the entities and proceeds from the letters of credit.
The investors in the entities have no recourse against us for
payment of the debt securities or related interest expense. We
have recorded a retained interest with respect to all entities
of $10.3 million for all installment notes monetized
through December 31, 2010, which value is an estimate based
on the present value of future cash flows to be received over
the life of the installment notes, using managements best
estimates of underlying assumptions, including credit risk and
interest rates. In accordance with ASC 325,
Investments Other, Subtopic 40
Beneficial Interests in Securitized Financial Assets, fair
value is adjusted at each reporting date when, based on
managements assessment of current information and events,
there is a favorable or adverse change in estimated cash flows
from cash flows previously projected. We did not record any
impairment adjustments as a result of changes in previously
projected cash flows during 2010, 2009 and 2008. We deferred
approximately $97.1 million and $63.4 million of gain
for income tax purposes through this installment sale structure
during 2008 and 2007, respectively.
50
Contractual
Obligations and Commercial Commitments at December 31,
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due by Period
|
|
|
|
|
|
|
Less Than
|
|
|
|
|
|
|
|
|
More Than
|
|
Contractual Cash Obligations(1)
|
|
Total
|
|
|
1 Year
|
|
|
1-3 Years
|
|
|
3-5 Years
|
|
|
5 Years
|
|
|
|
(In millions)
|
|
|
Debt(2)(3)
|
|
$
|
54.7
|
|
|
$
|
2.0
|
|
|
$
|
3.6
|
|
|
$
|
19.7
|
|
|
$
|
29.4
|
|
Interest related to community development district debt
|
|
|
14.3
|
|
|
|
0.9
|
|
|
|
1.8
|
|
|
|
1.8
|
|
|
|
9.8
|
|
Purchase obligations(4)
|
|
|
9.2
|
|
|
|
8.2
|
|
|
|
1.0
|
|
|
|
|
|
|
|
|
|
Operating leases
|
|
|
2.3
|
|
|
|
2.1
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Contractual Cash Obligations
|
|
$
|
80.5
|
|
|
$
|
13.2
|
|
|
$
|
6.6
|
|
|
$
|
21.5
|
|
|
$
|
39.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Excludes standby guarantee
liability of $0.8 million and FIN 48 tax liability of
$1.4 million due to uncertainty of payment periods.
|
|
(2)
|
|
Includes debt defeased in
connection with the sale of our office building portfolio in the
amount of $25.3 million, which will be paid by pledged
treasury securities.
|
|
(3)
|
|
Community Development District
(CDD) debt maturities are presented in the year of
contractual maturity; however, earlier payments may be required
when the properties benefited by the CDD are sold. This includes
amounts that may be transferred to the buyer when projects are
sold.
|
|
(4)
|
|
These aggregate amounts include
individual contracts in excess of $0.1 million.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Commitment Expirations per Period
|
|
|
|
Total Amounts
|
|
|
Less Than
|
|
|
|
|
|
|
|
|
More Than
|
|
Other Commercial Commitments
|
|
Committed
|
|
|
1 Year
|
|
|
1-3 Years
|
|
|
3-5 Years
|
|
|
5 Years
|
|
|
|
(In millions)
|
|
|
Surety bonds
|
|
$
|
27.9
|
|
|
$
|
24.4
|
|
|
$
|
3.5
|
|
|
$
|
|
|
|
$
|
|
|
Standby letters of credit
|
|
|
0.8
|
|
|
|
0.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Commercial Commitments
|
|
$
|
28.7
|
|
|
$
|
25.2
|
|
|
$
|
3.5
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Item 7A.
|
Quantitative
and Qualitative Disclosures about Market Risk
|
Our primary market risk exposure is interest rate risk related
to our $125 million credit facility. As of
December 31, 2010, we had no amounts drawn under our credit
facility. The interest on borrowings under the credit facility
is based on either LIBOR rates or certain base rates established
by the credit facility. The applicable interest rate for LIBOR
rate loans is based on the higher of (a) an adjusted LIBOR
rate plus the applicable interest margin (ranging from 2.00% to
2.75%), determined based on the ratio of our total indebtedness
to total asset value, or (b) 4.00%. The applicable interest
rate for base rate loans is based on the higher of (a) the
prime rate or (b) the federal funds rate plus 0.5%, plus
the applicable interest margin (ranging from 1.00% to 1.75%).
The credit facility also has an unused commitment fee payable
quarterly at an annual rate of 0.50%.
The table below presents principal amounts and related weighted
average interest rates by year of maturity for our long-term
debt. The weighted average interest rates for our fixed-rate
long-term debt are based on the actual rates as of
December 31, 2010.
Expected
Contractual Maturities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
|
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
2015
|
|
|
Thereafter
|
|
|
Total
|
|
|
Value
|
|
|
|
($ in millions)
|
|
|
Long-term Debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed Rate(1)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
29.4
|
|
|
$
|
29.4
|
|
|
$
|
29.4
|
|
Wtd. Avg. Interest Rate
|
|
|
6.9
|
%
|
|
|
6.9
|
%
|
|
|
6.9
|
%
|
|
|
6.9
|
%
|
|
|
6.9
|
%
|
|
|
6.9
|
%
|
|
|
6.9
|
%
|
|
|
|
|
We estimate the fair value of long-term debt based on current
rates available to us for loans of the same remaining
maturities. As the table incorporates only those exposures that
exist as of December 31, 2010, it does not consider
exposures or positions that could arise after that date. As a
result, our ultimate realized gain or loss will depend on future
changes in interest rates and market values.
|
|
|
(1)
|
|
Excludes $25.3 million of
defeased debt as the Company bears no market risk.
|
51
|
|
Item 8.
|
Financial
Statements and Supplementary Data
|
The Financial Statements and related notes on pages F-2 to F-45
and the Report of Independent Registered Public Accounting Firm
on
page F-1
are filed as part of this Report and incorporated by reference.
|
|
Item 9.
|
Changes
in and Disagreements with Accountants on Accounting and
Financial Disclosure
|
None.
|
|
Item 9A.
|
Controls
and Procedures
|
(a) Evaluation of Disclosure Controls and
Procedures. Our Chief Executive Officer and Chief
Financial Officer have evaluated the effectiveness of the
Companys disclosure controls and procedures (as such term
is defined in
Rules 13a-15(e)
and
15d-15(e)
under the Securities Exchange Act of 1934, as amended (the
Exchange Act), as of the end of the period covered
by this report. Based on this evaluation, our Chief Executive
Officer and Chief Financial Officer have concluded that, as of
the end of the period covered by this report, our disclosure
controls and procedures are effective in bringing to their
attention on a timely basis material information relating to the
Company (including its consolidated subsidiaries) required to be
included in the Companys periodic filings under the
Exchange Act.
(b) Changes in Internal Control Over Financial
Reporting. During the quarter ended
December 31, 2010 there were no changes in our internal
controls over financial reporting that have materially affected,
or are reasonably likely to materially affect, our internal
controls over financial reporting.
(c) Managements Annual Report on Internal Control
Over Financial Reporting.
Management of the Company is responsible for establishing and
maintaining adequate internal control over financial reporting
as defined in
Rules 13a-15(f)
and
15d-15(f)
under the Exchange Act. The Companys internal control over
financial reporting is designed to provide reasonable assurance
regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. The
Companys internal control over financial reporting
includes those policies and procedures that:
(i) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the Company;
(ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the Company
are being made only in accordance with authorizations of
management and directors of the Company; and
(iii) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use or disposition
of the Companys assets that could have a material effect
on the financial statements.
Management assessed the effectiveness of the Companys
internal control over financial reporting as of
December 31, 2010. In making this assessment, management
used the criteria described in Internal Control
Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).
Based on our assessment and those criteria, management concluded
that our internal control over financial reporting was effective
as of December 31, 2010. Management reviewed the results of
their assessment with our Audit Committee. The effectiveness of
our internal control over financial reporting as of
December 31, 2010 has been audited by KPMG LLP, an
independent registered public accounting firm, as stated in
their attestation report which is included below.
(d) Attestation Report of Independent Registered Public
Accounting Firm.
52
The Board of Directors and Stockholders
The St. Joe Company:
We have audited The St. Joe Companys internal control over
financial reporting as of December 31, 2010, based on
criteria established in Internal Control Integrated
Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission (COSO). The St. Joe Companys
management is responsible for maintaining effective internal
control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting,
included in the accompanying Managements Annual Report on
Internal Control Over Financial Reporting. Our responsibility is
to express an opinion on the Companys internal control
over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control
over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of
internal control over financial reporting, assessing the risk
that a material weakness exists, and testing and evaluating the
design and operating effectiveness of internal control based on
the assessed risk. Our audit also included performing such other
procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our
opinion.
A companys internal control over financial reporting is a
process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles. A companys
internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of
management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the
companys assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
In our opinion, The St. Joe Company maintained, in all material
respects, effective internal control over financial reporting as
of December 31, 2010, based on criteria established in
Internal Control Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission
(COSO).
We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
consolidated balance sheets of The St. Joe Company and
subsidiaries as of December 31, 2010 and 2009, and the
related consolidated statements of operations, changes in
equity, and cash flow for each of the years in the three-year
period ended December 31, 2010 and the related financial
statement schedule, and our report dated March 2, 2011,
expressed an unqualified opinion on those consolidated financial
statements and the related financial statement schedule.
/s/ KPMG LLP
Certified Public Accountants
Jacksonville, Florida
March 2, 2011
53
|
|
Item 9B.
|
Other
Information.
|
None.
PART III
|
|
Item 10.
|
Directors,
Executive Officers and Corporate Governance
|
Information concerning our directors, nominees for director,
executive officers and certain corporate governance matters is
described in our proxy statement relating to our 2011 annual
meeting of shareholders to be held on May 17, 2011 (the
proxy statement). This information is set forth in
the proxy statement under the captions
Proposal No. 1 Election of
Directors, Executive Officers, and
Corporate Governance and Related Matters. This
information is incorporated by reference in this Part III.
|
|
Item 11.
|
Executive
Compensation
|
Information concerning compensation of our executive officers
and directors for the year ended December 31, 2010 is
presented under the caption Executive Compensation and
Other Information in our proxy statement. This information
is incorporated by reference in this Part III.
|
|
Item 12.
|
Security
Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
|
Information concerning the security ownership of certain
beneficial owners and of management is set forth under the
caption Security Ownership of Certain Beneficial Owners,
Directors and Executive Officers in our proxy statement
and is incorporated by reference in this Part III.
Equity
Compensation Plan Information
Our shareholders have approved all of our equity compensation
plans. These plans are designed to further align our
directors and managements interests with our
long-term performance and the long-term interests of our
shareholders.
The following table summarizes the number of shares of our
common stock that may be issued under our equity compensation
plans as of December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
Number of Securities
|
|
|
|
|
|
Remaining Available for
|
|
|
|
to be Issued
|
|
|
Weighted-Average
|
|
|
Future Issuance Under
|
|
|
|
Upon Exercise of
|
|
|
Exercise Price of
|
|
|
Equity Compensation Plans
|
|
|
|
Outstanding Options,
|
|
|
Outstanding Options,
|
|
|
(Excluding Securities Reflected
|
|
Plan Category
|
|
Warrants and Rights
|
|
|
Warrants and Rights
|
|
|
in the First Column)
|
|
|
Equity compensation plans approved by security holders
|
|
|
364,281
|
|
|
$
|
39.62
|
|
|
|
1,693,972
|
|
Equity compensation plans not approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
364,281
|
|
|
$
|
39.62
|
|
|
|
1,693,972
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For additional information regarding our equity compensation
plans, see Note 2, Basis of Presentation and Significant
Accounting Policies to the Consolidated Financial Statements
under the heading, Stock-Based Compensation.
|
|
Item 13.
|
Certain
Relationships and Related Transactions and Director
Independence
|
Information concerning certain relationships and related
transactions during 2010, if any, and director independence is
set forth under the captions Certain Relationships and
Related Transactions and Director Independence
in our proxy statement. This information is incorporated by
reference in this Part III.
54
|
|
Item 14.
|
Principal
Accountant Fees and Services
|
Information concerning our independent registered public
accounting firm is presented under the caption Audit and
Finance Committee Information in our proxy statement and
is incorporated by reference in this Part III.
PART IV
|
|
Item 15.
|
Exhibits
and Financial Statement Schedule
|
(a)(1) Financial Statements
The financial statements listed in the accompanying Index to
Financial Statements and Financial Statement Schedule and Report
of Independent Registered Public Accounting Firm are filed as
part of this Report.
(2) Financial Statement Schedule
The financial statement schedule listed in the accompanying
Index to Financial Statements and Financial Statement Schedule
is filed as part of this Report.
(3) Exhibits
The exhibits listed on the accompanying Index to Exhibits are
filed or incorporated by reference as part of this Report.
55
INDEX TO
EXHIBITS
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
3.1
|
|
Restated and Amended Articles of Incorporation of the
registrant, as amended (incorporated by reference to
Exhibit 3.1 of the registrants Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2010).
|
3.2
|
|
Amended and Restated Bylaws of the registrant effective
February 8, 2011 (incorporated by reference to
Exhibit 3.1 to the registrants Current Report on
Form 8-K
filed on February 9, 2011).
|
4.1
|
|
Shareholder Protection Rights Agreement dated February 15,
2011 by and between the registrant and American Stock Transfer
& Trust Company, LLC, including the Form of Right
Certificate attached as Exhibit A thereto (incorporated by
reference to Exhibit 4.1 of the registrants Current
Report on Form 8-K filed on February 17, 2011).
|
10.1
|
|
Credit Agreement dated September 19, 2008 by and among the
registrant, Branch Banking and Trust Company, as agent and
lender, Deutsche Bank Trust Company Americas, as lender and
BB&T Capital Markets, as lead arranger ($125 million
credit facility), including all exhibits and schedules thereto,
as amended by the First Amendment dated October 30, 2008,
Second Amendment dated February 20, 2009, Third Amendment
dated May 1, 2009, Fourth Amendment dated October 15,
2009 and Fifth Amendment dated December 23, 2009
(incorporated by reference to Exhibit 10.1 to the
registrants Quarterly Report on
Form 10-Q
for the quarter ended September 30, 2010).
|
10.2
|
|
Sixth Amendment to Credit Agreement dated January 12, 2011
by and among the registrant, Branch Banking and
Trust Company, as agent and lender, and Deutsche Bank
Trust Company Americas, as lender (incorporated by
reference to Exhibit 10.1 to the registrants Current
Report on
Form 8-K
filed on January 12, 2011).
|
10.3
|
|
Strategic Alliance Agreement for Air Service dated
October 21, 2009 by and between the registrant and
Southwest Airlines Co. (incorporated by reference to
Exhibit 10.7 of the registrants Annual Report on
Form 10-K
for the year ended December 31, 2009).
|
10.4
|
|
Master Airport Access Agreement dated November 22, 2010 by
and between the registrant and the Panama City-Bay County
Airport and Industrial District (the Airport
District) (including as attachments the Land Donation
Agreement dated August 22, 2006, by and between the
registrant and the Airport District, and the Special Warranty
Deed dated November 29, 2007, granted by St. Joe Timberland
Company of Delaware, LLC to the Airport District) (incorporated
by reference to Exhibit 10.1 to the registrants
Current Report on
Form 8-K
filed on November 30, 2010).
|
10.5*
|
|
Pulpwood Supply Agreement dated November 1, 2010 by and
between St. Joe Timberland Company of Delaware, L.L.C. and
Smurfit-Stone Container Corporation.
|
10.6
|
|
Letter Agreement dated April 6, 2009 by and among the
registrant, Fairholme Funds, Inc. and Fairholme Capital
Management, L.L.C. (incorporated by reference to
Exhibit 10.1 to the registrants Current Report on
Form 8-K
filed on April 7, 2009).
|
10.7
|
|
Termination Letter dated January 12, 2011 by and among the
registrant, Fairholme Funds, Inc. and Fairholme Capital
Management, L.L.C. (incorporated by reference to
Exhibit 10.2 to the registrants Current Report on
Form 8-K
filed on January 12, 2011).
|
10.8
|
|
Form of Executive Employment Agreement (incorporated by
reference to Exhibit 10.4 to the registrants Current
Report on
Form 8-K
filed on July 31, 2006).
|
10.9
|
|
Form of First Amendment to Executive Employment Agreement
(regarding Section 409A compliance incorporated by
reference to Exhibit 10.17 to the registrants Annual
Report on
Form 10-K
for the year ended December 31, 2007).
|
10.10
|
|
Second Amendment to Employment Agreement of Wm. Britton Greene
dated February 15, 2008 (incorporated by reference to
Exhibit 10.1 to the registrants Current Report on
Form 8-K
filed on February 19, 2008).
|
10.11
|
|
Form of Amendment to Executive Employment Agreement (regarding
additional Section 409A compliance matters) (incorporated
by reference to Exhibit 10.12 to the registrants
Annual Report on Form 10-K for the year ended
December 31, 2009).
|
56
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
10.12
|
|
Letter Agreement regarding relocation benefits dated
March 16, 2010 by and between the registrant and Wm.
Britton Greene (incorporated by reference to Exhibit 10.1
to the registrants Current Report on
Form 8-K
filed on March 17, 2010).
|
10.13
|
|
Letter Agreement regarding relocation benefits dated
June 14, 2010 by and between the registrant and Rusty
Bozman.
|
10.14
|
|
Directors Deferred Compensation Plan, dated
December 28, 2001 (incorporated by reference to
Exhibit 10.10 to the registrants Registration
Statement on
Form S-1
(File
333-89146)).
|
10.15
|
|
Deferred Capital Accumulation Plan, as amended and restated
effective December 31, 2008 (incorporated by reference to
Exhibit 10.15 to the registrants Annual Report on
Form 10-K
for the year ended December 31, 2008).
|
10.16
|
|
Supplemental Executive Retirement Plan, as amended and restated
effective December 31, 2008 (incorporated by reference to
Exhibit 10.16 to the registrants Annual Report on
Form 10-K
for the year ended December 31, 2008).
|
10.17
|
|
2009 Employee Stock Purchase Plan (incorporated by reference to
Exhibit 99.1 to the registrants Registration
Statement on
Form S-8
(File
333-160916)).
|
10.18
|
|
1997 Stock Incentive Plan (incorporated by reference to
Exhibit 10.21 to the registrants Registration
Statement on
Form S-1
(File
333-89146)).
|
10.19
|
|
1998 Stock Incentive Plan (incorporated by reference to
Exhibit 10.22 to the registrants Registration
Statement on
Form S-1
(File
333-89146)).
|
10.20
|
|
1999 Stock Incentive Plan (incorporated by reference to
Exhibit 10.23 to the registrants Registration
Statement on
Form S-1
(File
333-89146)).
|
10.21
|
|
2001 Stock Incentive Plan (incorporated by reference to
Exhibit 10.24 to the registrants Registration
Statement on
Form S-1
(File
333-89146)).
|
10.22
|
|
2009 Equity Incentive Plan (incorporated by reference to
Appendix A to the registrants Proxy Statement on
Schedule 14A filed on March 31, 2009).
|
10.23
|
|
Form of Stock Option Agreement (for awards prior to
July 27, 2006) (incorporated by reference to
Exhibit 10.23 to the registrants Annual Report on
Form 10-K
for the year ended December 31, 2003).
|
10.24
|
|
Form of Stock Option Agreement (for awards from July 27,
2006 through May 12, 2009 incorporated by reference to
Exhibit 10.6 to the registrants Current Report on
Form 8-K
filed on July 31, 2006).
|
10.25
|
|
Form of Restricted Stock Agreement (for awards with time-based
vesting conditions from July 27, 2006 through May 12,
2009 incorporated by reference to Exhibit 10.5 to the
registrants Current Report on
Form 8-K
filed on July 31, 2006).
|
10.26
|
|
Form of Restricted Stock Agreement under 2001 Stock Incentive
Plan (for awards with performance-based vesting conditions
incorporated by reference to Exhibit 10.2 to the
registrants Current Report on
Form 8-K
filed on February 19, 2008).
|
10.27
|
|
Form of First Amendment to Restricted Stock Agreement under 2001
Stock Incentive Plan (for awards with performance-based vesting
conditions incorporated by reference to Exhibit 10.33 to
the registrants Annual Report on
Form 10-K
for the year ended December 31, 2008).
|
10.28
|
|
Form of Restricted Stock Agreement under 2009 Equity Incentive
Plan (for awards with performance-based vesting conditions prior
to February 7, 2011 incorporated by reference to
Exhibit 10.2 to the registrants Current Report on
Form 8-K
filed on February 12, 2010).
|
10.29
|
|
Form of Restricted Stock Agreement under 2009 Equity Incentive
Plan (for awards with time-based vesting conditions incorporated
by reference to Exhibit 10.3 to the registrants
Current Report on
Form 8-K
filed on February 12, 2010).
|
10.30
|
|
Form of Restricted Stock Agreement under 2009 Equity Incentive
Plan (for awards with performance-based vesting conditions from
February 7, 2011).
|
10.31
|
|
Form of Director Election Form describing director compensation
(updated May 2009 incorporated by reference to Exhibit 10.1
to the registrants Quarterly Report on
Form 10-Q
for the period ended June 30, 2009).
|
10.32
|
|
2010 Short-Term Incentive Plan (incorporated by reference to
Exhibit 10.1 to the registrants Current Report on
Form 8-K
filed on February 12, 2010).
|
57
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
10.33
|
|
2011 Short-Term Incentive Plan (incorporated by reference to
Exhibit 10.1 to the registrants Current Report on
Form 8-K filed on February 9, 2011).
|
10.34
|
|
Form of Indemnification Agreement for Directors and Officers
(incorporated by reference to Exhibit 10.1 to the
registrants Current Report on
Form 8-K
filed on February 13, 2009).
|
10.35
|
|
Form of Amendment to Indemnification Agreement for Certain
Directors and Officers. (incorporated by reference to
Exhibit 10.3 to the registrants Current Report on
Form 8-K
filed on March 1, 2011).
|
10.36
|
|
Separation Agreement dated February 25, 2011 by and between the
registrant and Wm. Britton Greene (incorporated by reference to
Exhibit 10.1 to the registrants Current Report on
Form 8-K
filed on March 1, 2011).
|
10.37
|
|
The St. Joe Company Trust Under Separation Agreement F.B.O. Wm.
Britton Greene, dated February 25, 2011, by and between the
registrant and SunTrust Banks, Inc. (incorporated by reference
to Exhibit 10.2 to the registrants Current Report on Form
8-K filed on March 1, 2011).
|
10.38
|
|
Letter Agreement dated February 25, 2011 (incorporated by
reference to Exhibit 10.4 to the registrants Current
Report on Form 8-K filed on March 1, 2011).
|
14.1
|
|
Code of Business Conduct and Ethics (revised February 7,
2011).
|
21.1
|
|
Subsidiaries of The St. Joe Company.
|
23.1
|
|
Consent of KPMG LLP, independent registered public accounting
firm for the registrant.
|
31.1
|
|
Certification by Chief Executive Officer.
|
31.2
|
|
Certification by Chief Financial Officer.
|
32.1
|
|
Certification by Chief Executive Officer.
|
32.2
|
|
Certification by Chief Financial Officer.
|
99.1
|
|
Supplemental information regarding sales activity and other
quarterly and year end information.
|
100**
|
|
The following information from the registrants Annual
Report on
Form 10-K
for the year ended December 31,2010, formatted in XBRL
(eXtensible Business Reporting Language): (i) the
Consolidated Balance Sheets, (ii) the Consolidated
Statement of Operations, (iii) the Consolidated Statement
of Changes in Equity, (iv) the Consolidated Statement of
Cash Flow and (v) Notes to the Consolidated Financial
Statements, tagged as blocks of text.
|
|
|
|
*
|
|
Application has been made to the
Securities and Exchange Commission to seek confidential
treatment of certain provisions of the agreement. Omitted
material for which confidential treatment has been requested has
been filed separately with the Securities and Exchange
Commission.
|
|
**
|
|
In accordance with
Regulation S-T,
the XBRL-related information in Exhibit 100 to this Annual
Report on
Form 10-K
shall be deemed to be furnished and not
filed.
|
58
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned
representative thereunto duly authorized.
The St. Joe Company
|
|
|
|
By:
|
/s/ Wm.
Britton Greene
|
Wm. Britton Greene
President and Chief Executive Officer
Dated: March 2, 2011
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities indicated as
of March 2, 2011.
|
|
|
|
|
Signature
|
|
Title
|
|
|
|
|
/s/ Wm.
Britton Greene
Wm.
Britton Greene
|
|
President and Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
/s/ William
S. McCalmont
William
S. McCalmont
|
|
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|
|
|
/s/ Janna
L. Connolly
Janna
L. Connolly
|
|
Senior Vice President and Chief Accounting Officer
(Principal Accounting Officer)
|
|
|
|
/s/ Michael
L. Ainslie
Michael
L. Ainslie
|
|
Director
|
|
|
|
/s/ Hugh
M. Durden
Hugh
M. Durden
|
|
Director and Chairman of the Board
|
|
|
|
/s/ Thomas
A. Fanning
Thomas
A. Fanning
|
|
Director
|
|
|
|
/s/ Delores
M. Kesler
Delores
M. Kesler
|
|
Director
|
|
|
|
/s/ John
S. Lord
John
S. Lord
|
|
Director
|
|
|
|
/s/ Walter
L. Revell
Walter
L. Revell
|
|
Director
|
59
INDEX TO
FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
|
|
|
|
|
|
|
|
F-1
|
|
|
|
|
F-2
|
|
|
|
|
F-3
|
|
|
|
|
F-4
|
|
|
|
|
F-5
|
|
|
|
|
F-7
|
|
|
|
|
S-1
|
|
60
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders
The St. Joe Company:
We have audited the accompanying consolidated balance sheets of
The St. Joe Company and subsidiaries as of December 31,
2010 and 2009, and the related consolidated statements of
operations, changes in equity, and cash flow for each of the
years in the three-year period ended December 31, 2010. In
connection with our audits of the consolidated financial
statements, we also have audited financial statement
Schedule III Consolidated Real Estate and
Accumulated Depreciation. These consolidated financial
statements and financial statement schedule are the
responsibility of the Companys management. Our
responsibility is to express an opinion on these consolidated
financial statements and financial statement schedule based on
our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial
position of The St. Joe Company and subsidiaries as of
December 31, 2010 and 2009, and the results of their
operations and their cash flows for each of the years in the
three-year period ended December 31, 2010, in conformity
with U.S. generally accepted accounting principles. Also in
our opinion, the related financial statement schedule, when
considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.
We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), The
St. Joe Companys internal control over financial reporting
as of December 31, 2010, based on criteria established in
Internal Control - Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission
(COSO), and our report dated March 2, 2011, expressed an
unqualified opinion on the effectiveness of the Companys
internal control over financial reporting.
/s/ KPMG LLP
Certified Public Accountants
Jacksonville, Florida
March 2, 2011
F-1
THE ST.
JOE COMPANY
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(Dollars in thousands)
|
|
|
ASSETS
|
Investment in real estate
|
|
$
|
755,392
|
|
|
$
|
767,006
|
|
Cash and cash equivalents
|
|
|
183,827
|
|
|
|
163,807
|
|
Notes receivable
|
|
|
5,731
|
|
|
|
11,503
|
|
Pledged treasury securities
|
|
|
25,281
|
|
|
|
27,105
|
|
Prepaid pension asset
|
|
|
40,992
|
|
|
|
42,274
|
|
Property, plant and equipment, net
|
|
|
13,014
|
|
|
|
15,269
|
|
Income taxes receivable
|
|
|
|
|
|
|
63,690
|
|
Other assets
|
|
|
27,458
|
|
|
|
26,290
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,051,695
|
|
|
$
|
1,116,944
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
LIABILITIES:
|
|
|
|
|
|
|
|
|
Debt
|
|
$
|
54,651
|
|
|
$
|
57,014
|
|
Accounts payable and other
|
|
|
14,977
|
|
|
|
13,781
|
|
Accrued liabilities and deferred credits
|
|
|
73,233
|
|
|
|
92,548
|
|
Income tax payable
|
|
|
1,772
|
|
|
|
|
|
Deferred income taxes
|
|
|
34,625
|
|
|
|
57,281
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
179,258
|
|
|
|
220,624
|
|
EQUITY:
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|
|
|
|
|
|
|
|
Common stock, no par value; 180,000,000 shares authorized;
122,923,913 and 122,557,167 issued at December 31, 2010 and
2009, respectively
|
|
|
935,603
|
|
|
|
924,267
|
|
Retained earnings
|
|
|
878,498
|
|
|
|
914,362
|
|
Accumulated other comprehensive (loss)
|
|
|
(10,546
|
)
|
|
|
(12,558
|
)
|
Treasury stock at cost, 30,318,478 and 30,275,716 shares
held at December 31, 2010 and 2009, respectively
|
|
|
(931,431
|
)
|
|
|
(930,124
|
)
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
872,124
|
|
|
|
895,947
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interest
|
|
|
313
|
|
|
|
373
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
872,437
|
|
|
|
896,320
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
1,051,695
|
|
|
$
|
1,116,944
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
consolidated financial statements.
F-2
THE ST.
JOE COMPANY
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Years Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
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|
|
|
(Dollars in thousands except per share amounts)
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|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate sales
|
|
$
|
38,923
|
|
|
$
|
78,758
|
|
|
$
|
194,545
|
|
Resort and club revenues
|
|
|
29,429
|
|
|
|
29,402
|
|
|
|
32,745
|
|
Timber sales
|
|
|
28,841
|
|
|
|
26,584
|
|
|
|
26,638
|
|
Other revenues
|
|
|
2,347
|
|
|
|
3,513
|
|
|
|
4,230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
99,540
|
|
|
|
138,257
|
|
|
|
258,158
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
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|
|
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|