View:
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) October 21, 2003
---------------------
The St. Joe Company
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Florida
- --------------------------------------------------------------------------------
(State or Other Jurisdiction of Incorporation)
1-10466 59-0432511
- --------------------------------------------------------------------------------
(Commission File Number) (IRS Employer Identification No.)
245 Riverside Avenue, Suite 500, Jacksonville, FL 32202
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(904) 301-4200
- --------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
N/A
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
ITEM 9. REGULATION FD DISCLOSURE
-----------------------
The following information is being furnished pursuant to Item 12, "Results of
Operations and Financial Condition," in accordance with SEC Release No. 33-8216.
The Company issued a Press Release dated October 21, 2003, announcing the
Company's financial results for the third quarter 2003. A copy is furnished with
this Form 8-K as Exhibit 99.1 and is incorporated by reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE ST. JOE COMPANY
Dated: October 21, 2003 By: /s/ Michael N. Regan
------------------------------
Name: Michael N. Regan
Title: Senior Vice President
Exhibit 99.1
The St. Joe Company Reports Third Quarter Earnings Per Share of
$0.30 Before Cumulative Effect of a Change in Accounting Principle
Business Editors/Real Estate Writers
JACKSONVILLE, Fla.--(BUSINESS WIRE)--xx--The St. Joe Company
(NYSE:JOE):
-- Raising Expectations for Full Year 2003
-- Residential Pipeline Continues to Increase
-- Company Paid Third Quarter Dividend of $0.12 per Share
-- duPont Trust Sold 11.0 Million Shares Reducing Holdings
to 31.8 Percent
-- Early Indications Point to RiverCamps Success
The St. Joe Company (NYSE:JOE) today announced that net income for
the third quarter of 2003 was $12.9 million, or $0.17 per diluted
share, compared with $11.7 million, or $0.15 per diluted share, in the
third quarter of 2002. Third quarter 2003 net income and net income
per share included a pretax gain from conservation land sales of $3.9
million, or $0.05 per share, compared to $0.1 million in the third
quarter of 2002. Third quarter 2003 net income and net income per
share also included a $10.1 million, or $0.13 per share, charge to
earnings for the cumulative effect of a change in accounting for
certain financial instruments with characteristics of liabilities and
equity. This was required as a result of St. Joe's adoption of
Statement of Financial Accounting Standards No. 150 (FAS 150). For
additional information on FAS 150, see Table 16.
"Sales velocity and pricing at our key Northwest Florida
developments continue to be strong," said Peter S. Rummell, chairman
and CEO of St. Joe. "Units at WaterColor and WaterSound Beach are
selling very quickly. With demand high, we are carefully managing
inventories to build long-term value."
"St. Joe Commercial land sales are also performing ahead of last
year's pace," said Rummell. "Commercial is building an excellent
pipeline of business on strong market interest in Northwest Florida's
retail, office, multi-family and other mixed-use product. Meanwhile,
St. Joe Land Company turned in its best quarter of the year, began
sales at its first RiverCamp and launched a new product line for rural
land buyers."
"During the third quarter, we continued to make excellent progress
on several strategic fronts," said Rummell. "The number of Florida
residential units entitled or in the entitlement process now
approaches 25,000. We are working hard to create value that can be
harvested in the future. With Florida's demographic advantage and
JOE's concentrated, high-quality, low-basis land and place-making
expertise, we are well-positioned for the future."
"RiverCamps on Crooked Creek in Bay County and SummerCamp in
Franklin County are each gearing up for sales," said Rummell. "We are
pleased with the market's strong interest in both of these new
projects. Currently, the release of the first 23 RiverCamp home sites
is oversubscribed, and a lottery process is being planned to choose
buyers. Closings are expected to begin in the fourth quarter."
"SummerCamp sales are expected to get underway in the first
quarter of 2004," said Rummell. "We expect infrastructure construction
at the site to start in the same time period."
Earnings before interest, taxes, depreciation and amortization
(EBITDA) was $33.5 million, or $0.43 per diluted share, for the third
quarter of 2003, compared with $31.3 million, or $0.39 per diluted
share, for the same quarter in 2002. EBITDA included gains from
conservation land sales of $3.9 million, or $0.05 per share, in the
third quarter of 2003, compared with $0.1 million for the same quarter
in 2002. Third quarter 2003 EBITDA and EBITDA per share also included
the charge to earnings of the pretax cumulative effect of a change in
accounting principle of $16.1 million, or $0.21 per share, pursuant to
the requirements of the newly issued FAS 150.
Table 13 below provides a reconciliation of EBITDA to net income.
The Financial Accounting Standards Board's FAS 150 requires
companies having consolidated entities with specified termination
dates, such as St. Joe/Arvida Company L.P., to treat the minority
owner's interests in such entities as liabilities in an amount based
on the fair value of the entities. St. Joe's $16.1 million pretax
charge relating to the adoption of FAS 150 relates principally to the
St. Joe/Arvida Company, L.P. St. Joe subsequently acquired the
minority interest in St. Joe/Arvida Company, L.P. on July 2, 2003.
Dividend Increase
As previously announced, the board of directors declared a
quarterly cash dividend for the third quarter of 2003 of $0.12 per
share on St. Joe common stock, paid on September 30, 2003 to
shareholders of record at the close of business on September 16, 2003.
The company had previously paid an annual dividend of $0.08 per share
in each of the last four years.
Outlook
Full Year 2003 Expectations Raised
"Based on good year-to-date results and a strong pipeline of
business, we remain very optimistic about the performance JOE will
turn in for the entire year 2003," said Kevin M. Twomey, president,
COO and CFO of St. Joe.
"In February, we made comparisons to 2002 excluding three large
items in that year: conservation land sales ($30.1 million pretax;
$18.5 million net income), a gain on the sale of Arvida Realty
Services (ARS) ($33.7 million pretax; $20.7 million net income), and a
gain on the forward sale of equity securities ($132.0 million pretax;
$86.4 million net income)," said Twomey. "Excluding those three items,
St. Joe's 2002 earnings per share were $0.60. At that time, we stated
that we expected the full year 2003 per share net income, before
conservation land sales, to increase by 5 to 15 percent over that
adjusted 2002 total." (See Table 1 below.)
Table 1
Guidance Baseline
2002
2002 2002
(in Per
millions) Share
----------------
Reported net income $174.4 $2.14
Less
Conservation gains (18.5) (0.23)
ARS gain (20.7) (0.25)
Gain on forward sale of equity securities (86.4) (1.06)
-------- -------
2002 Baseline $48.8 $0.60
======== =======
"In July we stated that we expected full year 2003 per share net
income, before conservation land gains and the non-cash goodwill
impairment of $14.1 million on Advantis Real Estate Services
(Advantis) recorded in the second quarter of 2003, to exceed the top
of the 5- to 15-percent range over the adjusted 2002 total," said
Twomey. Advantis is the company's commercial real estate services
unit.
"We now believe that full year 2003 per share net income, before
conservation land gains, the non-cash Advantis goodwill impairment
charge and the cumulative effect of the recent FAS 150 accounting
change, will exceed the 2002 baseline total by 25 to 35 percent," said
Twomey.
"During the fourth quarter this year, we expect continued strong
sales at our resort communities, WaterColor and WaterSound, as well as
in our other residential communities," said Twomey. "We also expect
two large St. Joe Commercial and one St. Joe Land Company sales to
close in the fourth quarter. There is always risk of delay of closing
times and any slippage could materially affect fourth quarter
results."
Sale of Shares by duPont Trust
On September 16, 2003, the Alfred I. duPont Testamentary Trust
(the Trust), the company's largest shareholder, announced that it had
completed a public offering of 9.0 million shares of St. Joe common
stock at $31.50 per share. Subsequently, the underwriters exercised
their over-allotment option to purchase an additional 1.35 million
shares.
On September 29, 2003, the Trust sold an additional 650,000 shares
to Third Avenue Funds at $31.75 per share.
St. Joe did not receive any proceeds from the sales of these
shares. As a result of these transactions, the Trust and its
beneficiary, the Nemours Foundation (the Foundation), currently own
31.8 percent of the company's outstanding common stock.
Stock Repurchase Program
During the third quarter of 2003, the company acquired 413,810 of
its shares at a cost of $13.3 million, or an average price of $32.16
per share. Of these amounts, 215,900 shares were acquired through open
market purchases for $7.0 million (an average of $32.16 per share) and
197,910 shares were purchased from the Trust and the Foundation for
$6.3 million (an average of $32.15 per share).
"Repurchase activity in the third quarter was lower than the
previous two quarters primarily because of the time we were out of the
market due to the planning and execution of the Trust's offering,"
said Twomey. "We intend to continue with our stock repurchase program,
although the new dividend increase will absorb some of the funds that
would otherwise have gone toward that program. Consistent with this
view and the strong performance of our business, our current goal is
to distribute capital to our shareholders through both the new
quarterly dividend and the repurchase program, consistent with prudent
capital management."
Table 2
Stock Repurchase Activity
Through June 30, 2003
Shares
--------------------------------------------
Purchased Purchased Total Average
Year From From Surrendered(a) Total Cost Price
Public Trust (in Per
millions) Share
- ----------------------------------------------------------------------
1998 2,574,200 -- 11,890 2,586,090 $55.5 $21.41
1999 2,843,200 -- 11,890 2,855,090 69.5 24.31
2000 3,101,566 415,500 -- 3,517,066 80.2 22.78
2001 3,485,400 3,585,900 58,550 7,129,850 176.0 24.67
2002 2,583,700 2,586,206 256,729 5,426,635 157.6 29.03
2003
(1st Qtr.) 494,000 266,220 43,184 803,404 22.3 27.78
2003
(2nd Qtr.) 430,400 412,740 298,700 1,141,840 33.4 29.20
2003
(3rd Qtr) 215,900 197,910 -- 413,810 13.3 32.16
----------- --------- ---------- ---------- --------- -------
Total/
Weighted
Average 15,728,366 7,464,476 680,943 23,873,785 $607.9 $25.44
=========== ========= ========== ========== =================
(a) Represents shares surrendered by company executives as payment
for the strike price and taxes due on exercised stock options or
vested restricted stock.
Since January 1, 1998, 23,873,785 shares have been acquired
through the repurchase program and the surrender of shares for an
aggregate cost of $607.9 million.
At September 30, 2003, the company had 76,078,763 shares
outstanding. The number of weighted-average diluted shares in the
third quarter of 2003 was 77,894,096. At September 30, 2003, $61.4
million remained of the company's current stock repurchase
authorization of $150 million.
Northwest Florida Infrastructure
"JOE continues to make significant progress in its efforts to help
Northwest Florida improve its regional infrastructure," said Rummell.
"Working with local communities to improve roads, air service, health
care, affordable housing, education and economic development, our
combined efforts will benefit both JOE shareholders and the people who
call Northwest Florida home."
West Bay Area Plan and Bay County Airport
On July 10, 2003, the Bay County Commission voted to seek state
review of a land-use plan for commercial, industrial, residential and
conservation uses on approximately 16,000 acres of St. Joe land near
the proposed site for the Panama City - Bay County International
Airport. The county commission had previously voted to seek state
review for a land-use plan on 4,000 acres for the proposed relocated
airport.
The two land-use plans, known as Detailed Specific Area Plans
(DSAPs), would help implement the West Bay Sector Plan, a blueprint
for the future development and conservation of approximately 75,000
acres in northwestern Bay County.
The State of Florida issued its Objections, Recommendations and
Comments Report for the DSAPs on October 4, 2003. An adoption hearing
at the Bay County Board of County Commissioners is pending.
While the decision to relocate the airport ultimately rests with
the Federal Aviation Administration (FAA), a community debate
regarding the airport is underway in Bay County. A broad-based
coalition of community leaders, business and environmental groups,
that includes St. Joe, are supporting the relocation, while a small,
but vocal, number of citizens and no-growth groups are opposing it.
The airport authority and the FAA continue to work on an
Environmental Impact Statement for the proposed new airport. Numerous
steps remain before a decision regarding the relocation of the airport
will be made.
St. Joe Land's New Ranch Product:
Another Example of the Value Creation Process
"We continue our efforts to create additional real estate products
to transform what were once timberlands to higher and better uses,"
said Rummell. "For example, JOE is launching a ranch product for
consumers who wish to own from 20 to 250 acres, while seeking controls
on how the property around them is used. This product is initially
being offered in rural settings in Leon, Wakulla and Gadsden Counties,
benefiting from a proximity to Tallahassee and the agricultural and
recreational nature of adjoining properties."
"Over time, we expect to expand these offerings to other parts of
JOE's holdings in Northwest Florida," said Rummell. "This product
represents a pipeline of future value. Marketing plans are being
developed to bring this product to a broad regional customer base."
The first example of this new product is a 2,165-acre project in
Gadsden County consisting of 17 ranches with 58 to 206 acres. The
private, gated ranches average 127 acres, some with frontage on the
Ochlockonee River. Project improvements include clearing, fencing,
road stabilization and entry features. Each ranch is to be sold with
common restrictions designed to promote a sense of community as each
owner finishes their property. Additional land management services
will be available to ranch owners on a separate fee basis. Prices of
individual tracts are expected to vary depending on the physical
attributes of each site including timber stands, topography and
proximity to the river. Sales at this initial project are expected to
begin in early 2004 and continue for two to three years.
Entitlements
St. Joe is delivering a wide variety of residential, resort,
RiverCamps and rural residential products (residential projects) in
Northwest Florida and other high-growth regions of the state. The
tables below summarize the entitlements status at various St. Joe
residential projects as of September 30, 2003.
Table 3
Summary of Entitled St. Joe Residential Projects
September 30, 2003
Total Total Units
Project County Project Project Sold/Under
Acres Units(b) Contract
Thru
09/30/03
- ----------------------------------------------------------------------
Artisan Park - Celebration Osceola 160 616 18
Hammocks Bay 143 463 214
Hampton Park Duval 150 158 112
James Island Duval 194 365 353
Palmetto Trace Bay 138 523 174
Pier Park (Residential) Bay 10 125 0
RiverCamps on Crooked Creek
(Release One) Bay 95 27 0
Ranches Gadsden 2,165 17 0
SouthWood Leon 3,770 4,770 545
St. Johns Golf & County Club St.
Johns 820 799 469
Victoria Park Volusia 1,859 4,000+ 325
Walton Corners Leon 60 33 0
WaterColor Walton 499 1,140 627
WaterSound Beach Walton 256 499 288
WindMark Beach Gulf 80 110 100
------- ------- -----------
Total 10,399 13,645+ 3,225
======= ======= ===========
(b) Total project units represent the number of units entitled. The
actual number of units to be constructed at full build-out may be
lower than the number entitled.
St. Joe's pipeline of residential projects extends well into the
future with 14,502 units at various stages in the entitlement process.
Table 4
Summary of St. Joe Residential Projects in the
Entitlements Process(c)
September 30, 2003
Project County Total Project Approx.
Acres Units
- ----------------------------------------------------------------------
East Lake Powell Bay 181 360
Jones Homestead Gulf 94 90
RiverCamps on Crooked Creek Bay
(Future phases) 1,395 423
RiverTown St. Johns 4,200 4,500
SummerCamp Franklin 782 499
Tarpon Sound Franklin 300 90
WaterSound - Next Phase Walton 1,443 1,060
WaveCrest Bay 6 88
WindMark Beach - Future Phase Gulf 2,000 1,550
------ -------
Subtotal 10,401 8,660
West Bay DSAP (d) Bay 6,789 5,842
------ -------
Total 17,190 14,502
====== =======
(c) All developments listed have entitlement steps remaining that
could affect timing, scale and viability.
(d) West Bay DSAP (Detailed Specific Area Plan) filed as a component
of the West Bay Sector Plan Overlay. Development timing of the DSAP
has not been determined.
The number of units in Florida residential projects entitled or in
the entitlement process now approaches 25,000 units on approximately
25,600 acres.
Table 5
Summary of Residential Projects Pipeline
September 30, 2003
Total Total
Acres Units
----------------
Entitled residential projects 10,399 13,645
Less acres and units sold (1,969) (3,225)
Residential projects in entitlements process 17,190 14,502
------ ---------
Total residential projects pipeline 25,620 24,922
====== =========
Segment Results
Residential Community Development
Arvida Community Development's pretax income from continuing
operations for the third quarter of 2003 was $31.9 million, compared
with $21.4 million in last year's third quarter.
"In the third quarter, our developments in Florida continued to
show real strength," said Rummell. "Our buyers have diverse
demographic profiles and are coming from a broad range of feeder
markets. Florida's housing market continues to benefit from relatively
low interest rates and continued state-to-state in-migration."
Table 6
Arvida Community Development
($ in millions)
Units Closed
For the Three Months
Ended September 30
2003 2002
------------------- -------------------
Units Revenue Gross Units Revenue Gross
Profit Profit
---- ------ ------- ---- ------ --------
Home Sites 215 $52.5 $32.1 128 $29.9 $20.0
Homes 313 $80.6 $11.8 300 $70.2 $9.8
---- ------ ------- ---- ------ --------
Total 528 $133.1 $43.9 428 $100.1 $29.8
==== ====== ======= === ====== ========
Units Placed Under Contract
in the 3rd Quarter
Percentage
2003 2002 Change
----------------------
Home Sites 204 125 63%
Homes 383 340 13%
---- ------ ----------
Total 587 465 26%
==== ====== ==========
Unit Backlog(e)
At September 30
($ in millions)
2003 2002
---------------------------------
Units Sales Units Sales
Price Price
----- -------- ------- ----------
Home Sites 83 $21.5 94 $18.3
Homes 769 $258.1 552 $157.8
----- -------- ------- ----------
Total 852(f) $279.6 646 $176.1
===== ======== ======= ==========
(e) Backlog represents units under contract but not yet closed.
(f) Includes 80 WaterSound multifamily units at an average price of
$1.1 million scheduled to close in the fourth quarter of 2003 and the
first quarter of 2004.
Northwest Florida
WaterColor
In the third quarter of 2003, 115 home sites and 13 housing units
closed at WaterColor. During the quarter, contracts were accepted for
134 home sites and 8 housing units at average prices of $276,000 and
$807,000, respectively.
"With high consumer interest and strong demand, WaterColor's phase
three established strong sales momentum in the third quarter," said
Rummell. "We are pleased with how values from the WaterColor
neighborhoods closer to the beach are being transferred to this new
neighborhood of the community. This is due in part to the unique
community master plan that links phase three to key amenities in phase
one."
Infrastructure construction in phase three continued during the
quarter, including the completion of the pedestrian bridge that spans
Western Lake, connecting phase three of the community to the BoatHouse
and BaitHouse area. The phase three master plan also features a third
community pool along with a large garden park that can be used for a
variety of functions. Phase three is planned for 232 home sites. At
September 30, 2003, 112 homes and home sites have been released in
phase three and 110 were sold, under contract or reserved at average
prices of $291,000 for 109 home sites and $780,000 for one home.
In phase two, Camp WaterColor opened in the third quarter as the
site for the resort's children and adult programming. Camp WaterColor
offers an array of day and evening activities, including scavenger
hunts, nature walks, sailing, swimming, tennis, snorkeling, scuba
diving, canoeing, kayaking, boogie boarding and arts and crafts.
As of September 30, 2003, all 268 home sites in phase two had been
released, with 47 home sites and 13 homes remaining for sale. At the
end of the quarter, the average sales price for home sites in phase
two was $220,000 for 203 home sites, while the average sales price for
homes was $805,000 for 5 homes.
"The WaterColor Inn's high visibility across the region is also
helping drive demand for resort real estate product," said Rummell.
"We believe the Inn is a key marketing force for our real estate
products not just at WaterColor but throughout Northwest Florida."
From WaterColor's inception through September 30, 2003, contracts
pending or closed totaled 627 units. WaterColor is expected to have
1,140 units at full build-out.
Private Residence Club at WaterColor
During the third quarter, sales began at Arvida's Private
Residence Club (PRC) at WaterColor. As of September 30, 2003,
reservations were received for 28 ownership interests in the PRC. The
WaterColor PRC consists of 88 ownership interests in 11 two-bedroom,
two-bath fully furnished luxury vacation multi-family units. Arvida
started construction of the PRC building adjacent to the WaterColor
Inn and BeachClub in October.
"Marketing efforts, thus far, has been focused on the local area,"
said Rummell. "Late in the third quarter, we completed our marketing
registration process for this new product in five Southeastern states,
and we are pursuing registration in two additional states. We are now
positioned to start marketing to a broader region, but we are pleased
to have had such a strong response even before the kickoff of the
regional marketing campaign."
Each owner receives a deed to 1/8 interest in a specific residence
for approximately $200,000. Each PRC owner is entitled to a minimum of
five weeks a year in the PRC, plus additional time throughout the year
based on availability. Arvida expects sales to continue into 2004.
"Initial indications suggest the PRC at WaterColor will be
substantially more profitable than the construction of traditional
multi-family product," said Rummell. "Based on this experience at
WaterColor, we are planning a PRC at WaterSound Beach and other future
resorts as well."
WaterSound Beach
In the third quarter of 2003, 46 home sites closed at WaterSound
Beach. During the quarter, contracts were accepted for 37 home sites
at an average price of $363,000 and one multi-family unit at a price
of $1,225,000.
WaterSound Beach, a gated beachfront community south of County
Road 30A in south Walton County, is planned to include single family
homes, home sites and multi-family units. It is expected to have 499
residential units at full build-out.
Of the 81 beachfront units of The Crossing at WaterSound Beach
designed by Graham Gund, 80 are under contract and expected to close
in the fourth quarter of this year and the first quarter of 2004.
Prices for these residences ranged from $895,000 to $1.5 million, with
an average over $1.1 million. The remaining unit will be retained as a
model for the next phase of multi-family units.
During the third quarter, reservations were accepted for all six
apartments above the multi-family garages at prices ranging from
$225,000 to $425,000. These apartments range in size from 307 to 725
square feet and are deed restricted so that they can only be held by
an owner of a unit at The Crossings at WaterSound Beach.
Based on the rapid sale of the initial 80 multi-family units,
additional phases of multi-family units are being planned. In the
fourth quarter, Arvida expects to begin taking reservations for the
next 25 multi-family units at WaterSound Beach with prices averaging
approximately $1.1 million per unit. Construction and sales are slated
to begin in early 2004 on the 25 units released for reservations in
2003 plus an additional 24 units, followed by a 43 units planned for
later years.
From WaterSound Beach's inception through September 30, 2003,
contracts pending or closed totaled 288 units.
Private Residence Club at WaterSound Beach
During the third quarter, design and predevelopment work began on
a PRC at WaterSound Beach. The WaterSound Beach PRC is being planned
for 168 ownership interests in 21 two-bedroom, two-bath fully
furnished luxury vacation multi-family units.
Sales are expected to begin in 2005.
WaterSound, Next Phase
On October 7, 2003, the Walton County Commission voted to approve
land use entitlements for 478 of the 1,060 units, along with 35,000
square feet of commercial space, planned in this future phase of
WaterSound. Pending receipt of final environmental permits,
infrastructure construction is planned to begin in the first quarter
of 2004.
This future phase of WaterSound is located on 1,443 acres of
timberland between U.S. 98 and the Intracoastal Waterway. Work
continues on a Development of Regional Impact (DRI) for the project in
a process that is expected to continue for 12 to 15 months.
"The master plan for the future development of the next phase of
WaterSound calls for a full package of amenities including golf,
tennis and access to Lake Powell plus opportunity to purchase
memberships in the beach club at WaterSound Beach and the Camp Creek
Golf Club," said Rummell. "In order to achieve higher value, we don't
intend to begin sales until the spring of 2005 after key amenities are
in place."
East Lake Powell
Predevelopment planning continued on East Lake Powell, a 360-unit
community with 30,000 square feet of commercial space on 181 acres in
Bay County. With 4,300 feet of frontage on Lake Powell, a rare coastal
dune lake, Arvida is planning this community for the pre-retirement
market. Although a development agreement was approved in the first
quarter of 2003, a number of regulatory steps remain. "We intend to
begin development activity on this community when it is strategically
advantageous," said Rummell.
Palmetto Trace and The Hammocks
In the third quarter of 2003, contracts closed for one home site
and 35 homes at Palmetto Trace and The Hammocks in Bay County at
average prices of $29,000 and $150,000, respectively. During the
quarter, contracts were accepted for 66 homes at an average price of
$152,000. Palmetto Trace is planned for 523 units on 138 acres. The
Hammocks is planned for 459 units on 143 acres.
"Sales at these two primary home communities in Bay County were
strong in the third quarter," said Rummell. "Phase two of Palmetto
Trace in Panama City Beach sold out in the third quarter. The last
remaining home site in phase two of The Hammocks in Lynn Haven was
sold in early October. As infrastructure construction continues,
reservations are being accepted for product in the third phases of
both communities."
From the inception of Palmetto Trace and The Hammocks through
September 30, 2003, Arvida accepted or closed contracts for 66 home
sites and 322 homes at average prices of $31,000 and $147,000,
respectively.
WaveCrest
During the third quarter, Bay County approved a development
agreement for WaveCrest, a beachfront development along Front Beach
Road in Panama City Beach. WaveCrest is being planned for up to 88
residential units on the north side of the road, and a beach amenity
on the Gulf of Mexico side for RiverCamps on Crooked Creek and Arvida
designated communities. Additional regulatory steps remain before
development can begin.
WindMark Beach
In the third quarter of 2003, 7 home sites closed at Windmark
Beach at an average price of $536,000. During the quarter, contracts
were accepted for two home sites at an average price of $588,000. To
date, all home sites that have been released have been either
contracted or sold. This phase of this community includes 110 home
sites, a pool club and several community docks, as well as an
extensive conservation area accessible by boardwalks and trails.
"Pricing and sales velocity for this first phase of WindMark Beach
has been a real success," said Rummell. "Since we believe values will
continue to increase at WindMark Beach, we are carefully managing the
release of additional home sites there. St. Joe has 4 remaining
beachfront home sites not released for sale."
From WindMark Beach's inception through September 30, 2003, Arvida
accepted or closed contracts for 100 home sites at an average price of
$334,000.
WindMark Beach, Future Phases
Arvida has started predevelopment planning for future phases of
WindMark Beach with 1,550 units on approximately 2,000 acres of
timberland along 15,000 feet of beachfront owned by St. Joe. A DRI for
these future phases has been filed and is expected to be completed in
mid-2004.
"Under the proposed master plan, WindMark Beach embraces, restores
and protects a beautiful beach and makes it accessible to the public
with activities that center on family fun," said Rummell. "Together
with the Gulf County community, we are planning WindMark Beach so that
it respects the local culture, landscape, architecture and the
environmentally special lands nearby."
Plans for the future phases of WindMark Beach provide that once
the relocation of a portion of U.S. 98 is completed, the existing
roadbed, through St. Joe's land, would be restored to create a
beachfront trail system. No residential development is planned seaward
of the beachfront trail, and St. Joe will provide public beach parking
areas and multiple access points for the public.
Sales at these future phases of WindMark Beach are expected to
begin in the first half of 2005.
SouthWood
In the third quarter of 2003, 20 home sites and 45 homes closed at
SouthWood at average prices of $91,000 and $194,000, respectively.
During the quarter, contracts were accepted for 13 home sites and 36
housing units at SouthWood at average prices of $94,000 and $227,000,
respectively.
"Sales traffic at SouthWood remained steady in the third quarter
and conversion rates remained high," said Rummell. "SouthWood
continues to generate a 25 percent market share. We continue to
introduce new single and multi-family product lines at SouthWood to
extend our reach to a greater cross section of this population."
"The Southern Living 2003 Idea House at SouthWood was featured in
the magazine's August issue," said Rummell. "More than 10,000 people
have toured the home and several other Southern Living publications
contained extensive coverage."
During the third quarter, the SouthWood Golf Clubhouse opened
along with a community center featuring tennis facilities and three
new swimming pools.
From SouthWood's inception through September 30, 2003, Arvida
closed or accepted contracts on 545 units. SouthWood is entitled for
4,770 residential units plus a variety of retail shops, restaurants,
community facilities, light industrial sites and professional offices.
SummerCamp
During the third quarter, final land-use approvals were received
for SummerCamp, a new beachfront vacation and second-home community in
southeastern Franklin County. With 3.9 miles of waterfront, SummerCamp
is planned for 499 units on 782 acres of St. Joe timberland. Although
certain regulatory steps, including environmental permit applications
submitted on October 6, 2003, remain to be approved, infrastructure
construction is expected to begin in the first quarter of 2004.
The sales process for SummerCamp is expected to get underway next
month. A sales preview center is scheduled to open in Tallahassee in
November plus an onsite sales center, general store and outfitter late
in early 2005. Current plans call for a beach club with cabanas,
observation piers, a small community dock and miles of interconnected
nature trails.
Home prices are expected to range initially from the high
$300,000s to over $900,000, and home sites are expected to start in
the mid-$100,000 range to over $1 million.
"SummerCamp is the first development of its kind in this part of
Northwest Florida," said Rummell. "Our team has developed a SummerCamp
architectural style from the roots of historic and well recognized
communities like St. Teresa and Apalachicola, evoking the traditional
communities of Old Florida. Early indicators of demand are excellent
with a sizable pool of prospects already identified throughout the
Southeastern United States."
St. James Island
St. James Island, located at the eastern end of Franklin County,
represents an area of approximately 49,000 acres, 36,000 of which are
owned by St. Joe. It includes the area bounded by the city of
Carrabelle on the west and Bald Point State Park on the east along the
Gulf of Mexico. SummerCamp is being developed on a parcel in St. James
Island.
The St. James Island public visioning process for St. Joe's future
development plans commenced in early October with good participation
from the community. The process is expected to continue into the first
quarter of 2004. The St. James Island Visioning Plan and the
to-be-revised Franklin County Comprehensive Plan are expected to be
ready for presentation to the Franklin County Board of County
Commissioners in early 2004.
Northeast Florida
St. Johns Golf & Country Club
In the third quarter of 2003, contracts were closed on 36 homes
and 8 home sites at St. Johns Golf & Country Club. During the quarter,
contracts were accepted for 27 homes at an average price of $325,000.
"Although sales center traffic moderated during the quarter, the
conversion rate from prospect to contract closing was the highest it
has been all year, and third quarter results remain well ahead of
original projections," said Rummell. "Infrastructure construction
continues on future phases."
From inception through September 30, 2003, Arvida closed or
accepted contracts for 469 units at this 799-unit residential
development south of Jacksonville in St. Johns County.
James Island
In the third quarter of 2003, contracts closed on 12 homes at
James Island in Jacksonville. During the quarter, contracts were
accepted for 4 units with home prices averaging $291,000. The 12 units
remaining, including three models, in the 365-unit development are
expected to be sold by the end of the first quarter of 2004.
RiverTown
The Comprehensive Plan Amendment for RiverTown was sent to the
state for its review after a positive vote of the St. Johns County
Planning Board on August 21, 2003 and the St. Johns County Commission
on September 9, 2003. The approval process for the amendment and the
companion DRI is expected to continue another 9 to 12 months.
RiverTown is located on approximately 4,200 acres and is being planned
for approximately 4,500 units with 3.5 miles of frontage on the St.
Johns River.
"We believe JOE's ability to provide high-value community
developments can provide a product not found elsewhere in this
market," said Rummell. "This is one of the last stretches of
riverfront in Northeast Florida suitable for large-scale residential
development within easy commuting distance to Jacksonville. With
significant public access, we plan to make the river a focal point of
the community."
Sales are expected to begin in the first half of 2005.
Central Florida
Victoria Park
During the third quarter of 2003, contracts closed on 28 homes and
13 home sites at Victoria Park. During the quarter, contracts were
accepted for 43 homes and 13 home sites at average prices of $222,000
and $70,000, respectively.
"We are very pleased with the progress at Victoria Park," said
Rummell. "In the third quarter, the improved sales pace continued.
With more of the amenities completed, this community is in an
excellent position to perform well going forward."
Victoria Park, located between Orlando and Daytona Beach, is set
on 1,859 acres in the historic college town of DeLand. This mixed-used
community is planned for approximately 4,000 residences built among
parks, lakes and conservation areas.
"Victoria Park's diversity of product, ranging from
family-oriented neighborhoods to a golf community to age-restricted
sections, is being well-matched with a diversity of buyers in terms of
price, product and lifestyle choices," said Rummell. "Victoria Park
has a strong local base with half of its buyers coming from the nearby
area. The other half of the customer base is relocating from a wide
variety of markets, with a quarter coming from other parts of Florida
and another quarter from outside the state. We believe that our
marketing efforts are working to produce this excellent diversity in
sales."
From Victoria Park's inception through September 30, 2003,
contracts pending or closed totaled 325 units.
Celebration, Artisan Park
Sales commenced in the third quarter of 2003 for housing units in
Artisan Park, a 160-acre village in the town of Celebration near
Orlando. St. Joe owns 74 percent of the joint venture that is
developing Artisan Park. Infrastructure construction for phase one
concluded in the third quarter. Contracts were accepted for 5 home
sites and 13 homes at average prices of $122,000 and $439,000,
respectively.
"This is the last residential product to be developed in
Celebration," said Rummell. "We want to take advantage of
Celebration's excellent reputation as a great place to live. Early
indications point to strong demand. Current plans call for some home
sites to be sold to approved builders only. JOE will maintain strict
architectural control of the project."
Plans for the neighborhood feature approximately 314 single-family
homes plus 302 condominium homes, along with parks, trails, an outdoor
performance area and community clubhouse with a fitness center, pool
and educational and recreational programs.
"This new product for the Orlando market is being positioned to
accommodate a rapidly growing segment of Florida homebuyers - Baby
Boomers," said Rummell. "While oriented towards adults, it will not
have any age restrictions for purchasing or living in the community."
Saussy Burbank
In the third quarter of 2003, Saussy Burbank, St. Joe's
homebuilder based in Charlotte, N.C., closed the sale of 131 homes
compared to 130 homes in the third quarter of 2002. During the
quarter, contracts were accepted for the purchase of 165 homes at an
average price of $201,000.
Commercial Real Estate
St. Joe's Commercial Segment consists of St. Joe Commercial, the
company's commercial real estate development unit, and Advantis, the
company's commercial real estate services unit. Pretax income from
continuing operations from the Commercial segment was $0.3 million for
the third quarter of 2003, compared with a loss of $1.0 million in the
same quarter of 2002.
St. Joe Commercial
For the third quarter of 2003, the St. Joe Commercial division had
pretax income of $0.9 million, compared to $4.6 million in the second
quarter of this year and a pretax loss of $0.9 million in the third
quarter a year ago.
During the third quarter of 2003, St. Joe Commercial sold nine
land parcels, totaling 24 acres at an average price of approximately
$39,000 per acre.
"St. Joe Commercial continued to build its pipeline for future
sales," said Twomey. "We previously reported that we did not expect
major commercial land transactions in the third quarter. Our prospects
look strong for the remainder of 2003 with the pipeline of sales
slated for the fourth quarter expected to make a meaningful
contribution to quarterly results. But as we have often said, we
expect earnings from these sales to be 'lumpy.' The timing of
transactions is very difficult to predict."
"The value for land suitable for retail use continues to increase
in Northwest Florida, moving closer to comparable prices for such land
in other parts of the state. We believe there is room for additional
growth," said Twomey. "Many retail users are not yet familiar with
this part of Florida. We are working to harvest the untapped potential
for additional value and velocity."
Table 7
St. Joe Commercial
Florida Land Sales
Quarter-Ended September 30, 2003
Number Gross Sales Average
Land of Acres Price Price/Acre
Sales Sold (in (in
Thousands) Thousands)
- ----------------------------------------------------------------------
Unimproved 4 9 $171 $19
Improved 5 15 755 51
-- ------- --------- --------------
Total/Average 9 24 $926 $39
== ======= ========= ==============
Progress on various St. Joe Commercial projects is summarized
below.
Northwest Florida
WaterColor Crossings
In the third quarter of 2003, St. Joe Commercial continued
development of WaterColor Crossings, a commercial center in
WaterColor, anchored by a new full-service 28,800-square-foot Publix
Super Market. The new Publix is scheduled to open in early December.
The center has an additional 14,400 square feet of retail space
and three out-parcels for retail operations. A contract has been
accepted on a one-acre retail parcel for approximately $786,000.
"WaterColor Crossings is designed to be a second town center and
will help make WaterColor a true community where people live and build
family connections," said Twomey. "It will provide the kind of
convenience and service that mark a permanent neighborhood."
SouthWood Village
In the third quarter, a new Publix Super Market opened at
SouthWood Village, a retail development within SouthWood. SouthWood
Village has an additional 18,000 square feet of retail space and 11
out-parcels for retail operations. In addition, Gate Petroleum opened
a new facility and sales and leasing discussions are underway with a
local bank, a national pharmacy chain and several local merchants.
"The new Publix Super Market is an important component of turning
the SouthWood vision into reality," said Twomey. "It adds convenient
shopping to the many other amenities at SouthWood, including easy
access to outstanding schools, recreational opportunities and
employment."
SouthWood One
At the end of the third quarter, 58 percent of the space had been
leased in the 88,000-square-foot SouthWood One office building. If all
pending leases are executed, the lease percentage of net rentable
space at SouthWood One is expected to reach approximately 73 percent
by year-end 2003.
Beckrich Office Park
During the third quarter, we completed Beckrich Two, the second
35,000-square-foot office building in Beckrich Office Park in Panama
City Beach. Leasing activity is underway.
"Beckrich Two is intended to help attract new jobs to Bay County
as well as provide a good return on our investment," said Twomey.
"Economic development is one of the primary objectives of our office
product development in Northwest Florida. Businesses want to know that
they will have suitable facilities before they commit to a new
location."
Highland Commons
During the third quarter, St. Joe Commercial began predevelopment
planning on Highland Commons, a retail project in Panama City Beach
being designed for retail users of various sizes. "We are pleased that
Beckrich Office Park has stimulated interest in this 120-acre site
that JOE owns directly across US 98 from Beckrich," said Twomey.
"During the third quarter, we accepted a contract from Home Depot
for a 14-acre site to be used for a 140,000-square-foot store in
Highland Commons," said Twomey. "Construction is expected to get
underway in the first quarter of 2004. Additional 'big box' retailers
have also expressed interest in Highland Commons."
Pier Park
Horizontal infrastructure construction continues at Pier Park, a
mixed-use project in Panama City Beach. Pier Park is a public/private
venture between St. Joe and the City of Panama City Beach with plans
featuring retail, dining and family entertainment venues. Adjacent to
six acres of white-sand beach, the project has 50 acres of land
available for retail, dining and entertainment facilities near the
beach, plus hotel and timeshare sites and 70 acres of highway-oriented
commercial land.
Site work is now underway for the construction of a 200,000-square
foot retail shopping center for Quality Centers, fronting on US 98. It
is scheduled to open in the summer of 2004. Earlier this year, St. Joe
Commercial sold 24 acres in Pier Park to Quality Centers at $181,000
per acre.
St. Joe Commerce Parks
St. Joe Commercial has commerce parks operating or under
development in six Northwest Florida counties. With master plans that
were created to transfer value from the frontage of major highways
inland, St. Joe Commercial is adding value to interior timberlands,
and at the same time improving traffic flows. Table 8 summarizes the
status of St. Joe commerce parks throughout Northwest Florida.
Table 8
St. Joe Commercial - Commerce Parks
September 30, 2003
Net Acres Current Asking
Commerce Parks County Saleable Sold/ Price Per Acre
Acres Under
Contract
- ----------------------------------------------------------------------
Existing
Beach Commerce Bay 161 67 $60,000 - $435,000
Port St. Joe Gulf 57 39 $30,000 - 35,000
Airport Commerce Leon 40 -- $75,000 - 260,000
Predevelopment
South Walton County Walton 42 -- $100,000 - 435,000
Beach Commerce II Bay 140 -- $65,000 - 80,000
Nautilus Business Park Bay 12 -- $300,000 - 375,000
Cedar Grove Bay 150 -- $35,000 - 45,000
Port St. Joe II Gulf 45 -- $35,000 - 45,000
Apalachicola Commerce Franklin
Center 50 -- $30,000 - 35,000
Hammock Creek Gadsden 114 24 $40,000 - 150,000
---- ---
Total 811 130
==== ===
Beach Commerce Center
Since 2000, St. Joe Commercial has sold 66 acres for a total of
$3.7 million at Beach Commerce Center in Panama City Beach at an
average sales price of $57,000 per acre. In the third quarter of 2003,
St. Joe Commercial accepted one additional contract on approximately
one acre for $75,000.
There are a total of 94 net saleable acres remaining for light
industrial and warehouse users at prices from $60,000 to $100,000 per
acre for interior lots and up to $435,000 per acre for lots fronting
on US 98. Interior lot pricing originally started at $45,000 per acre
when the park opened in 2001.
Because of strong demand, a second phase of the Beach Commerce
Center, with 140 net saleable acres, is in predevelopment with prices
of $65,000 to $80,000 per acre.
Port St. Joe Commerce Center
In the fourth quarter of 2002, St. Joe Commercial broke ground on
Port St. Joe Commerce Center. By the end of the third quarter of 2003,
approximately 69 percent of the acreage in the park, representing 39
acres on 13 parcels, was either sold or under contract for sale at an
average price per acre of $26,000. The park, designed for small- and
mid-sized businesses, has 57 net saleable acres. Horizontal
construction was completed in the second quarter of this year.
"This new commerce center is a part of JOE's long-standing efforts
to support economic development in Gulf County and stimulate the
creation of a more diverse employment base," said Twomey. "We are very
pleased with the value that is being created at this commerce park for
shareholders, as well as for the Port St. Joe community."
Demand at Port St. Joe Commerce Center has been strong. A second
phase is being planned.
Airport Commerce Center
Construction is completed on the Airport Commerce Center in
Tallahassee with approximately 26 parcels and approximately 40 net
saleable acres. Prices start at $75,000 per acre. The park is well
located on Tallahassee's Capital Circle near the airport in one of the
city's premier industrial districts.
South Walton Commerce Center
Planning and entitlement efforts continue for the South Walton
Commerce Center. The park is located in a high growth area of south
Walton County, with approximately 42 net saleable acres.
Nautilus Business Park
In the third quarter of 2003, St. Joe Commercial broke ground on
the Nautilus Business Park fronting on US 98 in Bay County. When
completed in the first quarter of 2004, the park will have 12 net
saleable acres divided into seven different parcels. The Nautilus
Business Park represents a new commerce product that is being marketed
to small business users that need some highway frontage for showrooms
with the ability to build a warehouse/distribution facility to the
rear of the property. Initially, the parcels will be priced between
$300,000 and $375,000 per acre.
Hammock Creek Commerce Center
Planning and entitlement efforts continued in the third quarter on
Hammock Creek Commerce Center in Gadsden County just west of
Tallahassee. A contract was executed on a 24-acre site in the new park
at approximately $33,000 per acre. Hammock Creek is well positioned
for distribution users with its proximity to I-10.
Hammock Creek is being planned for 17 parcels with approximately
114 net saleable acres. Remaining parcels are expected to be priced at
$40,000 to $150,000 per acre.
Cedar Grove Commerce Center
Planning and entitlements work continue for the Cedar Grove
Commerce Center in east Bay County near Tyndall Air Force Base. Plans
call for 150 net saleable acres. The commerce center is well located
for use by contractors supporting U.S. Air Force operations in the
region. Sales are expected to commence in early 2005.
Future Commerce Centers
"We are constantly seeking locations for additional commerce
parks, which are intended to stimulate economic development activities
with a focus on local business needs," said Twomey. "In addition,
these projects provide a higher and better use of JOE timberlands."
Investment Property Portfolio
St. Joe continues to redeploy the proceeds of land sales in a
tax-deferred manner through the acquisition of commercial office
buildings in select markets within the southeastern United States. In
the third quarter of 2003, St. Joe acquired a 158,000 square-foot
office building in Charlotte, North Carolina, which is 100 percent
leased.
St. Joe's portfolio of commercial office buildings, acquired
through the capital redeployment program, now totals more than 1.8
million square feet and represents an aggregate investment of more
than $250 million, compared to 1.6 million square feet and an
aggregate investment of $229 million at the end of the second quarter
of 2003. Assuming the execution of leases now pending, the lease
percentage of net rentable space is expected to reach 85 percent by
year-end 2003.
Table 9
Investment Property Portfolio
September 30, 2003
Location Number of Net Leased
Properties Rentable Percentage
Square Feet
- ----------------------------------------------------------------------
Florida
Tampa 5 477,000 82%
Orlando 2 313,000 75%
Other 3 222,000 70%
Atlanta 2 401,000 83%
Washington, D.C. 2 271,000 92%
Charlotte 1 158,000 100%
-- --------- ----
Total/Average 15 1,842,000 83%
== ========= ====
Advantis
Advantis had a pretax loss from continuing operations of $0.6
million, compared to a pretax loss of $15.5 million in the second
quarter of this year and a $0.1 million pretax loss in last year's
third quarter. The results for the second quarter of 2003 included the
$14.1 million pretax non-cash goodwill impairment charge. These
results also excluded profits relating to inter-company transactions
of $0.4 million in the third quarter of 2003, $0.3 million in the
second quarter of 2003 and $0.3 million in the third quarter of 2002.
"We are pleased and encouraged by the meaningful improvement
achieved by Advantis in the third quarter," said Twomey. "Advantis has
had great success in recruiting top talent in brokerage, management
and construction services which contribute to the company's depth of
expertise and long-term stability. While Advantis' financial
performance has lagged as a result of a slow economic recovery in
several of its key markets, it has in place both strong leadership and
a well-defined business plan. Advantis has a strong pipeline of
business, giving us optimism that it will achieve more progress in the
final quarter of this year. We believe Advantis has laid the
groundwork for good profitability and look forward to future
performance improvements."
St. Joe Land Company
St. Joe Land Company's pretax income from continuing operations
was $10.9 million in the third quarter of 2003, compared with pretax
income of $8.5 million in the third quarter of 2002. One sale of 1,794
acres for $3.0 million, scheduled for the second quarter, closed in
the third quarter.
"St. Joe Land had an excellent third quarter with a broad base of
sales," said Twomey. "The size, range and variety of product being
sold continue to expand. Our marketing efforts continue to mature with
emphasis on product line expansion."
Table 10
St. Joe Land Company
Quarter-Ended September 30
Number Number Average Gross Gross
Period of of Price Sales Price Profit
Sales Acres Per Acre (in millions) (in millions)
- ----------------------------------------------------------------------
2003 43 9,051 $1,667 $15.1 $12.7
2002 43 8,133 $1,439 $11.7 $9.7
St. Joe Land
In the third quarter, work continued on product diversification,
additional entitlements and zoning improvements throughout St. Joe's
holdings to facilitate alternative uses and increase yields per acre.
St. Joe's new ranch product was described earlier. Other products,
such as Walton Corners, are being developed for families who seek a
rural lifestyle but on smaller parcels.
Walton Corners
Walton Corners, a good example of new product being developed by
St. Joe Land, is a residential home site program designed for those
who enjoy a rural lifestyle. Located 25 minutes from Tallahassee in
southeast Leon County, St. Joe Land Company is planning 33 home sites,
consisting of 17 half-acre and 16 three-acre parcels.
The finished home sites are being sold to a local builder on a
periodic take-down schedule. Gross revenue per acre is expected to be
approximately $20,000 and current plans call for completion of the
project in 2005.
RiverCamps
During the third quarter, RiverCamps opened its sales center for
these planned settlements in rustic settings - each designed to
respond to the land's unique character.
RiverCamps are a real estate product that will provide easy access
to the beautiful rivers, bays and waterways of Northwest Florida by
offering a personal retreat in a private, woodland preserve, with the
services and activities which will allow buyers to enjoy the property
to its fullest. Each RiverCamp is a home site that will be sold
fee-simple, with a common area preserved for conservation. Many home
sites are one-acre or larger. Planning is underway on several
potential RiverCamps sites throughout Northwest Florida.
RiverCamps on Crooked Creek
On October 6, 2003, the sales process began for the first release
at RiverCamps on Crooked Creek. The home sites in this release are
priced from $84,000 to $249,000. St. Joe Land is accepting
reservations with deposits of $7,500 for the 23 available home sites
until noon on October 24, 2003. A lottery process is being planned to
choose buyers, and closings are expected to get underway later in the
fourth quarter.
"On September 2, 2003, RiverCamps opened a Preview Center in
Panama City Beach on US Highway 98 directly across from Pier Park,"
said Rummell. "We are pleased with the high level of interest in this
new product."
Infrastructure construction for phase one of RiverCamps on Crooked
Creek got underway at the end of the third quarter. Construction of
three RiverCamps proto-type homes is expected to start in the fourth
quarter.
"We are very excited as we start the sales launch of our
RiverCamps product," said Rummell. "Our marketing activities have
created substantial interest in RiverCamps. We believe the marketplace
is responding quite favorably to this new idea in real estate
development."
With water on three sides and planned for 450 home sites on
approximately 1,500 acres of former timberland, RiverCamps on Crooked
Creek features views of West Bay, the Intracoastal Waterway and
Crooked Creek. A variety of RiverCamp floor plans, typically from
1,500 to 2,400 square feet, are available.
"This first RiverCamps site is located near one of Northwest
Florida's most beautiful bay systems," said Rummell. "The site
provides boating and fishing with water access to St. Andrews Bay and
its creeks, the Intracoastal Waterway and the Gulf of Mexico. Plans
call for the sale of home sites and homes. A full menu of owner
services, with emphasis on outdoor recreation, is now being
developed."
Conservation Land
In the third quarter of 2003, 2,734 acres of conservation land
sold for a gross sales price of $3.9 million, or $1,414 per acre.
Table 11
Conservation Land Sales
Nine Months Ended September 30, 2003
Gross
Sales
Quarter Price Price
Sold Project Buyer Location Acreage (in Per
Millions) Acre
- ----------------------------------------------------------------------
1st Wacissa River State of Jefferson
West Florida County 13,917 $14.9 $1,071
2nd Wacissa River State of Jefferson
East Florida County 4,693 5.7 1,215
3rd Apalachicola City of Franklin
Parcel Apalachicola County 98 .3 3,134
3rd St. Marks Nature Wakulla
Conservancy County 2,636 3.6 1,351
-------------------------
Total/Average 21,344 $24.5 $1,148
=========================
Conservation Land's pretax income from continuing operations for
the third quarter of 2003 was $3.9 million compared with $0.1 million
during the third quarter of 2002.
On September 29, 2003, St. Joe closed the sale of 2,636 acres of
conservation land in Leon County to The Nature Conservancy for $1,351
per acre. The land will be used to expand the St. Marks National
Wildlife Refuge. The Nature Conservancy plans to eventually sell the
land to the U.S. Fish and Wildlife Service, operator of the
67,000-acre refuge.
In the third quarter, 98 acres in Franklin County were sold to the
City of Apalachicola under the auspices of the Florida Community Trust
to address critical open space and waste-water treatment issues. The
land is just outside the city limits of Apalachicola.
"JOE's conservation land program creates value in many ways for
Northwest Florida and for JOE," said Twomey. "Obviously the sales add
to our bottom line, but more importantly, the sale to the City of
Apalachicola is an example of conservation land used to solve a
chronic waste- water treatment problem. We know that conserving the
best of Northwest Florida and making sure it works for all the
citizens of the region adds value to our other land holdings. Our
long-term business interests are served well by ensuring the
protection of Northwest Florida's special places and quality of life.
We are working to make additional significant conservation land sales
in the fourth quarter of 2003 and over the next several years."
From the conservation land program's inception through September
30, 2003, approximately 150,000 acres have been permanently preserved.
Activity is currently underway to sell three additional parcels in
2003, totaling approximately 56,600 acres of conservation land, to
state and private conservation interests. "A large conservation land
sale of approximately 43,000 acres originally expected to close near
the end of the fourth quarter will now probably move into next year,"
said Twomey.
Additionally, 17 tracts totaling more than 118,000 acres are being
considered for sale in years 2004 to 2006. The timing, sequence and
viability of these transactions are uncertain and some transactions
could be delayed.
St. Joe Timberland Company
Pretax income from continuing operations for the forestry segment
totaled $1.7 million for the third quarter of 2003, compared with $1.7
million in the comparable 2002 period. "Pricing of hardwood pulpwood
was stronger this quarter," said Twomey. "The third quarter also saw
continued improvement in pine pulpwood prices."
Other Income (Expense)
Other income (expense), which includes dividend and interest
income, gains (losses) on sales of investments and non-operating
assets and miscellaneous income, and interest expense, was an expense
of $2.4 million in the third quarter of 2003, compared to an expense
of $2.9 million in the comparable 2002 period.
Table 12
Other Income (Expense)
(in millions)
Quarter- Quarter-
Ended Ended
September September
30, 2003 30, 2002
--------------------
Dividend and interest income $0.2 $1.1
Interest expense (3.1) (4.3)
Loss on valuation of derivatives -- (0.7)
Other 0.5 1.0
---------- --------
Total $(2.4) $(2.9)
========== ========
Table 13
Reconciliation of Net Income to EBITDA(g)
(in millions)
Quarter- Quarter-
Ended Ended
September September
30 , 2003 30, 2002
----------------------
Net Income $12.9 $11.7
Plus:
Income tax expense 7.7 7.5
Depreciation and amortization 7.3 6.0
Interest expense 5.6 6.1
---------- ----------
EBITDA(g) $33.5 $31.3
========== ==========
EBITDA per diluted share $0.43 $0.39
========== ==========
Weighted average diluted shares outstanding 77,894,096 79,973,354
(g) We use Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA) as a supplemental performance measure, along
with net income, to report our operating results. EBITDA is not a
measure of operating results or cash flows from operating activities
as defined by generally accepted accounting principles. Additionally,
EBITDA is not necessarily indicative of cash available to fund cash
needs and should not be considered as an alternative to cash flows as
a measure of liquidity. However, we believe that EBITDA provides
relevant information about our operations and, along with net income,
is useful in understanding our operating results.
Prior-year EBITDA has been changed to conform to the SEC's current
guidance on non-GAAP financial measures. The third quarter of 2002
includes a $0.7 million loss on valuation of forward sale contracts
and $0.7 million other charges, each of which we previously excluded
from EBITDA. EBITDA includes conservation land EBITDA of $3.9 million
and $0.1 million in the third quarters of 2003 and 2002, respectively.
Table 14
Summary Balance Sheet
(in millions)
Sept. 30, Sept. 30,
2003 2002
------------------
Assets
Investment in real estate $862.9 $810.8
Cash and investments 64.1 117.5
Prepaid pension asset 93.9 92.7
Property, plant and equipment 37.2 44.3
Other assets 188.9 122.0
-------- ---------
Total assets $1,247.0 $1,187.3
======== =========
Liabilities and Stockholders' Equity
Debt 369.0 367.0
Accounts payable, accrued liabilities and minority
interest 186.4 143.5
Deferred income taxes 221.2 198.9
-------- ---------
Total liabilities 776.6 709.4
-------- ---------
Total stockholders' equity 470.4 477.9
-------- ---------
Total liabilities and stockholders' equity $1,247.0 $1,187.3
======== =========
Table 15
Debt Schedule
(in millions)
Sept. Sept.
30, 30,
2003 2002
------ -------
Revolving debt facility $30.0 $--
Medium term notes 175.0 175.0
Acquisition and other debt 4.0 4.5
Minimum liability on forward-sale of equity securities -- 38.2
Other collateralized/specific asset related debt 160.0 149.3
------ -------
Total Debt $369.0 $367.0
====== =======
Table 16
Consolidated Quarterly Comparisons
($ in millions except per-share amounts)
Quarter- Quarter-
Ended Ended
Sept. 30, Sept. 30,
2003 2002
---------- -----------
Total revenues $200.8 $152.5
Operating expenses 144.4 117.0
Depreciation and amortization 7.3 6.1
Corporate expenses 10.0 7.0
---------- -----------
Operating profit 39.1 22.4
Other income (expense) (2.4) (2.9)
---------- -----------
Income from continuing operations before taxes
and minority interest 36.7 19.5
Income tax expense (13.7) (7.5)
Minority interest -- (0.4)
Discontinued operations, net of income taxes -- 0.1
---------- -----------
Income before cumulative effect of a change in
accounting principle(h) $23.0 $11.7
Cumulative effect of a change in accounting
principle (10.1) --
---------- -----------
Net Income $12.9 $11.7
========== ===========
Earnings per diluted share:
Income before cumulative effect of a change
in accounting principle 0.30 0.15
Cumulative effect of a change in accounting
principle (0.13) --
---------- -----------
Net earnings per diluted share $0.17 $0.15
========== ===========
EBITDA (i) $33.5 $31.3
======================
EBITDA per diluted share (i) $0.43 $0.39
======================
Weighted average diluted shares outstanding 77,894,096 79,973,354
(h) Effective July 1, 2003 the company is required to implement
FAS 150, Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity.
Several entities in which we hold majority controlling interest
are consolidated into our financial statements, the largest of which
was St. Joe/Arvida Company L.P. as of July 1, 2003. Under FAS 150, the
interest held by third parties (minority interest) in these entities
is considered a financial instrument and under certain circumstances
may be considered mandatorily redeemable in accordance with FAS 150.
As a result of adopting FAS 150, such interests in entities that
require termination at a specified date meet the definition of
mandatorily redeemable instruments and must be classified as
liabilities in our financial statements. In addition, FAS 150 requires
mandatorily redeemable financial instruments to be adjusted to fair
value at each reporting period, if the amount required to ultimately
settle these instruments varies.
The transition guidance of FAS 150 requires us to record such
instruments at fair value as of July 1, 2003. The initial
implementation of FAS 150 is reflected as a cumulative effect of a
change in accounting principle, with all future changes in fair value
to be recorded as an increase or decrease in interest expense. The
Company has valued such instruments, including the 26% minority
interest in St. Joe/Arvida Company L.P., at their determined fair
values and has recorded an expense for the cumulative effect of change
in accounting principle of $16.1 million ($10.1 million, net of tax)
for the difference between such fair values and carrying values at
July 1, 2003. We subsequently acquired the minority interest in St.
Joe/Arvida Company L.P. and no future charges under FAS 150 are
expected relating to this entity.
(i) See Table 13 above for a reconciliation of net income to EBITDA.
Table 17
Quarterly Operating Revenues
By Segment
(in millions)
Quarter- Quarter-
Ended Ended
September September
30, 30,
2003 2002
-------- -----------
Community residential development $144.0 $107.7
Commercial real estate 29.3 23.0
St. Joe Land 19.0 11.9
Forestry 8.5 9.5
Corporate and other -- 0.4
-------- -----------
Operating revenues $200.8 $152.5
======== ===========
Table 18
Quarterly Segment Income Before
Taxes and Minority Interest
(in millions)
Sept June March Dec Sept June March Dec Sept
30, 30, 31, 31, 30, 30, 31, 31, 30,
2003 2003 2003 2002 2002 2002 2002 2001 2001
--------------------------------------------------------
Community
residential
development $31.9 $22.8 $8.5 $19.7 $21.4 $22.2 $9.4 $16.8 $14.1
Commercial
real estate 0.3 (10.9) 3.5 4.5 (1.1) (0.6) (0.9) 3.3 ( 0.9)
St. Joe Land 14.8 12.8 17.6 30.7 8.6 10.5 18.4 12.5 15.8
Forestry 1.7 2.2 1.9 2.0 1.7 2.3 1.9 1.3 1.6
Corporate and
other (12.0)(10.7) (8.1) 28.4 (11.1)(13.7) 87.8 (7.9)(11.0)
--------------------------------------------------------
Income before
income
taxes and
minority
interest $36.7 $16.2 $23.4 $85.3 $19.5 $20.7 $116.6 $26.0 $19.6
========================================================
Conference Call Information
St. Joe will host an interactive conference call to review the
company's results for the third quarter ended September 30, 2003 and
to discuss its outlook for the remainder of 2003 on Tuesday, October
21, 2003, at 10:00 AM, Eastern Daylight Time.
To participate in the call, please phone 888.428.4474 (for
domestic calls from the United States) or 651.291.0561 (for
international calls) approximately ten minutes before the scheduled
start time. Approximately three hours following the call, you may
access a replay of the call by phoning 800.475.6701 (domestic) or
320.365.3844 (international) using access code 700134.
St. Joe will also webcast the conference call live over the
Internet in a listen-only format by visiting the company's web site at
http://www.joe.com. Access will be available 15 minutes prior to the
scheduled start time. A replay of the conference call will be posted
to the St. Joe web site approximately three hours following the call.
About St. Joe
The St. Joe Company, a publicly held company based in
Jacksonville, is one of Florida's largest real estate operating
companies. It is engaged in community, commercial, industrial and
resort development, along with commercial real estate services. The
company also has significant interests in timber.
More information about St. Joe can be found online at
http://www.joe.com
Forward-Looking Statements
We have made forward-looking statements in this earnings release,
particularly in the Outlook section. The Private Securities Litigation
Reform Act of 1995 provides a safe-harbor for forward-looking
information to encourage companies to provide prospective information
about themselves without fear of litigation so long as that
information is identified as forward-looking and is accompanied by
meaningful cautionary statements identifying important factors that
could cause actual results to differ, possibly materially, from those
in the information. Any statements 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" or similar expressions in this
release. In particular, forward-looking statements include, among
others, statements about the following:
-- the size and number of commercial buildings and residential
units;
-- the expected development timetables, development approvals and
the ability to obtain approvals;
-- the anticipated price ranges of developments;
-- the number of units that can be supported upon full build out
of a development;
-- the number, price and timing of anticipated land sales;
-- estimated land holdings for a particular use within a specific
time frame;
-- absorption rates and expected gains on land sales;
-- future operating performance, cash flows, and short and
long-term revenue and earnings growth rates;
-- comparisons to historical projects; and
-- the number of shares of company stock which may be purchased
under the terms of the company's existing or future
share-repurchase program.
Forward-looking statements are not guarantees of performance. You
are cautioned not to place undue reliance on any of these
forward-looking statements. These statements are made as of the date
hereof based on current expectations, and we undertake no obligation
to update the information contained in this release.
Forward-looking statements are subject to numerous assumptions,
risks and uncertainties. Factors that could cause actual results to
differ materially from those contemplated by a forward-looking
statement include, among others, the following:
-- economic conditions, particularly in Florida and key southeast
United States areas that serve as feeder markets to the
company's Northwest Florida operations;
-- acts of war, terrorism or other geopolitical events;
-- local conditions such as an oversupply of homes and home sites
and residential or resort properties, or a reduction in the
demand for real estate in an area;
-- timing and costs associated with property developments and
rentals;
-- competition from other real estate developers;
-- whether potential residents or tenants consider our properties
attractive;
-- increases in operating costs, including increases in real
estate taxes;
-- changes in the amount or timing of federal and state income
tax liabilities resulting from either a change in our
application of tax laws, an adverse determination by a taxing
authority or court, or legislative changes to existing laws;
-- how well we manage our properties;
-- changes in interest rates and the performance of the financial
markets;
-- decreases in market rental rates for our commercial and resort
properties;
-- decreases in the prices of wood products;
-- the pace of development of public infrastructure, particularly
in Northwest Florida;
-- adverse changes in laws or regulations affecting the
development of real estate;
-- the availability of funding from governmental agencies and
others to purchase conservation lands; and
-- adverse weather conditions or natural disasters.
The foregoing list is not exhaustive and should be read in
conjunction with other cautionary statements contained in our periodic
filings with the Securities and Exchange Commission, including our
Form 10-K dated December 31, 2002, and in our registration statement
on Form S-3, as amended, filed September 16, 2003.
Copyright 2003, The St. Joe Company. "Advantis," "WindMark,"
"SouthWood," "WaterColor," "WaterSound," "RiverCamps" and the "taking
flight" logo are service marks of The St. Joe Company.
Arvida is a registered trademark.
CONTACT: The St. Joe Company, Jacksonville
Media:
Jerry M. Ray, 904/301-4430
jray@joe.com
Investors:
Steve Swartz, 904/301-4347
sswartz@joe.com