e10vq
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
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þ |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2011
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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 |
For the transition period from to .
Commission file number 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) |
(850) 231-6482
(Registrants telephone number, including area code)
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 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 | |
Accelerated filer o | |
Non-accelerated filer o | |
Smaller reporting company o |
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(Do not check if a smaller reporting company) |
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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
As of July 27, 2011, there were 122,773,187 shares of common stock, no par value, issued
and 92,282,372 outstanding, with 30,490,815 shares of treasury stock.
THE ST. JOE COMPANY
INDEX
1
PART I FINANCIAL INFORMATION
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Item 1. |
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Financial Statements |
THE ST. JOE COMPANY
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
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June 30, |
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December 31, |
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2011 |
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2010 |
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(Unaudited) |
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ASSETS |
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Investment in real estate |
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$ |
754,805 |
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$ |
755,392 |
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Cash and cash equivalents |
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199,829 |
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183,827 |
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Notes receivable |
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4,922 |
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5,731 |
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Pledged treasury securities |
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24,300 |
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25,281 |
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Prepaid pension asset |
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37,243 |
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40,992 |
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Property, plant and equipment, net |
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16,097 |
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13,014 |
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Other assets |
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29,349 |
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27,458 |
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$ |
1,066,545 |
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$ |
1,051,695 |
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LIABILITIES AND EQUITY |
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LIABILITIES: |
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Debt |
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$ |
53,146 |
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$ |
54,651 |
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Accounts payable |
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19,634 |
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14,977 |
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Accrued liabilities and deferred credits |
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73,285 |
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73,233 |
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Income taxes payable |
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67 |
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1,772 |
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Deferred income taxes, net |
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40,289 |
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34,625 |
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Total liabilities |
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186,421 |
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179,258 |
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EQUITY: |
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Common stock, no par value; 180,000,000
shares authorized; 122,772,281 and
122,923,913 issued at June 30, 2011 and
December 31, 2010, respectively |
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942,568 |
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935,603 |
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Retained earnings |
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879,261 |
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878,498 |
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Accumulated other comprehensive (loss) |
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(5,854 |
) |
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(10,546 |
) |
Treasury stock at cost, 30,490,815 and
30,318,478 shares held at June 30, 2011
and December 31, 2010, respectively |
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(936,139 |
) |
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(931,431 |
) |
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Total stockholders equity |
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879,836 |
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872,124 |
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Noncontrolling interest |
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288 |
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313 |
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Total equity |
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880,124 |
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872,437 |
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Total liabilities and equity |
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$ |
1,066,545 |
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$ |
1,051,695 |
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2
THE ST. JOE COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands except per share amounts)
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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2011 |
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2010 |
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2011 |
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2010 |
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Revenues: |
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Real estate sales |
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$ |
3,482 |
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$ |
2,836 |
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$ |
8,694 |
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$ |
4,670 |
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Resort and club revenues |
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12,974 |
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10,797 |
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18,086 |
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15,389 |
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Timber sales |
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8,166 |
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7,804 |
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70,790 |
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14,219 |
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Other revenues |
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662 |
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598 |
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1,150 |
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1,057 |
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Total revenues |
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25,284 |
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22,035 |
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98,720 |
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35,335 |
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Expenses: |
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Cost of real estate sales |
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2,765 |
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1,140 |
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4,545 |
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1,731 |
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Cost of resort and club revenues |
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10,996 |
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9,631 |
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17,570 |
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16,134 |
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Cost of timber sales |
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5,956 |
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5,091 |
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12,196 |
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9,521 |
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Cost of other revenues |
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537 |
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621 |
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1,030 |
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1,082 |
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Other operating expenses |
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6,259 |
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7,565 |
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13,269 |
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15,538 |
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Corporate expense, net |
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8,278 |
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8,109 |
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26,525 |
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13,466 |
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Depreciation and amortization |
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3,446 |
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3,457 |
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9,950 |
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6,939 |
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Impairment losses |
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1,697 |
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502 |
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2,479 |
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555 |
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Restructuring charges |
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5,926 |
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1,158 |
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10,402 |
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2,698 |
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Total expenses |
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45,860 |
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37,274 |
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97,966 |
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67,664 |
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Operating (loss) income |
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(20,576 |
) |
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(15,239 |
) |
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754 |
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(32,329 |
) |
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Other income (expense): |
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Investment income, net |
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165 |
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452 |
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372 |
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835 |
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Interest expense |
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(985 |
) |
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(1,136 |
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(1,982 |
) |
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(2,230 |
) |
Other, net |
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1,123 |
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1,204 |
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2,250 |
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1,369 |
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Total other income (expense) |
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303 |
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520 |
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640 |
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(26 |
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(Loss) income from continuing operations before
equity in (loss) income of unconsolidated affiliates
and income taxes |
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(20,273 |
) |
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(14,719 |
) |
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1,394 |
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(32,355 |
) |
Equity in (loss) income of unconsolidated affiliates |
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(16 |
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(51 |
) |
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(40 |
) |
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(429 |
) |
Income tax (benefit) expense |
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(6,946 |
) |
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(6,140 |
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607 |
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(12,729 |
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Net (loss) income |
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(13,343 |
) |
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(8,630 |
) |
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747 |
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(20,055 |
) |
Less: Net loss attributable to noncontrolling interest |
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(7 |
) |
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(8 |
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(16 |
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(20 |
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Net (loss) income attributable to the Company |
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$ |
(13,336 |
) |
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$ |
(8,622 |
) |
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$ |
763 |
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$ |
(20,035 |
) |
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(LOSS) INCOME PER SHARE |
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Basic |
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Net (loss) income attributable to the Company |
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$ |
(0.14 |
) |
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$ |
(0.09 |
) |
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$ |
0.01 |
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$ |
(0.22 |
) |
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Diluted |
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Net (loss) income attributable to the Company |
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$ |
(0.14 |
) |
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$ |
(0.09 |
) |
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$ |
0.01 |
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$ |
(0.22 |
) |
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3
THE ST. JOE COMPANY
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Unaudited)
(Dollars in thousands)
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Accumulated |
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Common Stock |
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Other |
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Outstanding |
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Retained |
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Comprehensive |
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Treasury |
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Noncontrolling |
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Shares |
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Amount |
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Earnings |
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Income (Loss) |
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Stock |
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Interest |
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Total |
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Balance at December 31,
2010 |
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92,605,435 |
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$ |
935,603 |
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$ |
878,498 |
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$ |
(10,546 |
) |
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$ |
(931,431 |
) |
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$ |
313 |
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$ |
872,437 |
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Comprehensive income (loss): |
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Net income (loss) |
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763 |
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(16 |
) |
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|
747 |
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Amortization of pension and
reduction in accumulated
postretirement benefit
obligation, net |
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4,692 |
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4,692 |
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Total comprehensive income
(loss) |
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5,439 |
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Distributions |
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(9 |
) |
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(9 |
) |
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Issuances of restricted stock |
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261,214 |
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Forfeitures of restricted stock |
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(416,846 |
) |
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Issuance of common stock |
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4,000 |
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|
100 |
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|
100 |
|
Excess (reduction in) tax
benefit on options exercised
and vested restricted stock |
|
|
|
|
|
|
(725 |
) |
|
|
|
|
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|
|
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|
(725 |
) |
Amortization of stock-based
compensation |
|
|
|
|
|
|
7,590 |
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|
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|
7,590 |
|
Purchases of treasury shares |
|
|
(172,337 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
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(4,708 |
) |
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|
|
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|
(4,708 |
) |
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|
|
|
|
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|
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|
Balance at June 30, 2011 |
|
|
92,281,466 |
|
|
$ |
942,568 |
|
|
$ |
879,261 |
|
|
$ |
(5,854 |
) |
|
$ |
(936,139 |
) |
|
$ |
288 |
|
|
$ |
880,124 |
|
|
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|
|
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|
4
THE ST. JOE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
|
2011 |
|
|
2010 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
747 |
|
|
$ |
(20,055 |
) |
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
9,950 |
|
|
|
6,939 |
|
Stock-based compensation |
|
|
8,383 |
|
|
|
3,845 |
|
Equity in loss of unconsolidated joint ventures |
|
|
40 |
|
|
|
429 |
|
Deferred income tax (benefit) |
|
|
2,658 |
|
|
|
(11,265 |
) |
Impairment losses |
|
|
2,479 |
|
|
|
555 |
|
Pension charges |
|
|
1,713 |
|
|
|
|
|
Cost of operating properties sold |
|
|
4,287 |
|
|
|
1,693 |
|
Expenditures for operating properties |
|
|
(9,906 |
) |
|
|
(5,698 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Notes receivable |
|
|
1,174 |
|
|
|
628 |
|
Other assets |
|
|
(767 |
) |
|
|
(1,642 |
) |
Accounts payable and accrued liabilities |
|
|
8,448 |
|
|
|
531 |
|
Income taxes payable |
|
|
(2,484 |
) |
|
|
(5,399 |
) |
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities |
|
|
26,722 |
|
|
|
(29,439 |
) |
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment |
|
|
(1,556 |
) |
|
|
(287 |
) |
Proceeds from the disposition of assets |
|
|
|
|
|
|
42 |
|
Contribution of capital to unconsolidated affiliates |
|
|
(4,434 |
) |
|
|
|
|
Distributions from unconsolidated affiliates |
|
|
|
|
|
|
391 |
|
|
|
|
|
|
|
|
Net cash (used in) provided by investing activities |
|
|
(5,990 |
) |
|
|
146 |
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Proceeds from exercises of stock options |
|
|
100 |
|
|
|
5,083 |
|
Repayments of other long term debt |
|
|
(166 |
) |
|
|
|
|
Distributions to minority interest partner |
|
|
(9 |
) |
|
|
|
|
Excess tax benefits from stock-based compensation |
|
|
53 |
|
|
|
60 |
|
Taxes paid on behalf of employees related to stock-based compensation |
|
|
(4,708 |
) |
|
|
(795 |
) |
|
|
|
|
|
|
|
Net cash (used in) provided by financing activities |
|
|
(4,730 |
) |
|
|
4,348 |
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents |
|
|
16,002 |
|
|
|
(24,945 |
) |
Cash and cash equivalents at beginning of period |
|
|
183,827 |
|
|
|
163,807 |
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
$ |
199,829 |
|
|
$ |
138,862 |
|
|
|
|
|
|
|
|
5
THE ST. JOE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, unless otherwise stated)
(Unaudited)
1. Description of Business and Basis of Presentation
Description of Business
The St. Joe Company (the Company) is a Florida-based real estate developer and manager. The
Company owns approximately 574,000 acres of land concentrated primarily in Northwest Florida and
has significant residential and commercial land-use entitlements in hand or in process. The
majority of land not under development is used for the growing and selling of timber or is
available for sale. The Company also owns various resort and club properties.
Basis of Presentation
The accompanying unaudited interim financial statements have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission for reporting on Form 10-Q.
Accordingly, certain information and footnotes required by U.S. generally accepted accounting
principles for complete financial statements are not included herein. The consolidated interim
financial statements include the accounts of the Company and all of its majority-owned and
controlled subsidiaries. All significant intercompany accounts and transactions have been
eliminated in consolidation. The December 31, 2010 balance sheet amounts have been derived from the
Companys December 31, 2010 audited financial statements.
The statements reflect all normal recurring adjustments that, in the opinion of management,
are necessary for fair presentation of the information contained herein. The consolidated interim
statements should be read in conjunction with the financial statements and notes thereto included
in the Companys Annual Report on Form 10-K for the year ended December 31, 2010. The Company
adheres to the same accounting policies in preparation of its interim financial statements. As
permitted under generally accepted accounting principles, interim accounting for certain expenses,
including income taxes, are based on full year assumptions. For interim financial reporting
purposes, income taxes are recorded based upon estimated annual income tax rates.
Certain prior period amounts have been reclassified to conform to the current periods
presentation.
Long-Lived Assets and Discontinued Operations
The Company reviews its long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be recoverable. Long-lived
assets include the Companys investments in operating, development and investment property. Some of
the events or changes in circumstances that are considered by the Company as indicators of
potential impairment include:
|
|
|
a prolonged decrease in the market price or demand for the Companys properties; |
|
|
|
|
a change in the expected use or development plans for the Companys properties; |
|
|
|
|
a current period operating or cash flow loss for an operating property; and, |
|
|
|
|
an accumulation of costs in a development property that significantly exceeds its
historically low basis in property held long-term. |
Homes and homesites substantially completed and ready for sale are measured at the lower of
carrying value or fair value less costs to sell. Homes and homesites ready for sale include
properties that are actively marketed with an intent to sell such properties in the near term.
Management identifies properties as being ready for sale when the
6
intent is to sell such assets in the near term and under current market conditions. Other
properties for which management does not intend to sell in the near term under current market
conditions are evaluated for impairment based on managements best estimate of the long-term use
and eventual disposition of such property.
For projects under development, an estimate of future cash flows on an undiscounted basis is
performed using estimated future expenditures necessary to develop and 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 range from 0% to 7% annually; |
|
|
|
|
the amount and trajectory of price appreciation over the estimated selling period; |
|
|
|
|
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 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. |
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 and any resulting impairment charges could be material.
7
Excluding any properties that have been written down to fair value, at December 31, 2010 the
Company had one development property with a carrying value of approximately $23 million whose
current undiscounted cash flow is approximately 110% of its carrying value.
In the event that projected future undiscounted cash flows are not adequate to recover the
carrying value of a property, impairment is indicated and the Company 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.
The Company classifies the assets and liabilities of a long-lived asset as held-for-sale when
management approves and commits to a formal plan of sale and it is probable that a sale will be
completed. The carrying value of the assets held-for-sale are then recorded at the lower of their
carrying value or fair market value less costs to sell. The operations and gains on sales reported
in discontinued operations include operating properties sold during the year and assets classified
as held-for-sale for which operations and cash flows can be clearly distinguished and for which the
Company will not have continuing involvement or significant cash flows after disposition. The
operations from these assets have been eliminated from ongoing operations. Prior periods have been
reclassified to reflect the operations of these assets as discontinued operations. The operations
and gains on sales of operating assets for which the Company has continuing involvement or
significant cash flows are reported as income from continuing operations.
Timber Deed
Timber deed sales are agreements in which the buyer agrees to purchase and harvest specified
timber (i.e. mature pulpwood and/or sawlogs) on a tract of land over the term of the contract.
Unlike a pay-as-cut sales contract, risk of loss and title to the trees transfer to the buyer when
the contract is signed. The buyer pays the full purchase price when the contract is signed and the
Company does not have any additional performance obligations. Under a timber deed, the buyer or
some other third party is responsible for all logging and hauling costs, if any, and the timing of
such activity. Revenue from a timber deed sale is recognized when the contract is signed because
the earnings process is complete.
On March 31, 2011, the Company entered into a $55.9 million agreement with an investment fund
for the sale of a timber deed which gives the investment fund the right to harvest timber on
specific tracts of land (encompassing 40,975 acres) over a maximum term of 20 years. As part of the
agreement, the Company also entered into a Thinnings Supply Agreement, pursuant to which we agreed,
to the extent that the buyer decided to conduct First Thinnings to purchase 85% of such first
thinnings at fair market value. During the second quarter of 2011, we purchased approximately $0.6
million of first thinnings. During the first six months of 2011, the Company recognized revenue of
$54.5 million related to the timber deed and an additional $1.4 million was recorded as an imputed
land lease to be recognized over the life of the timber deed.
New Accounting Standards
In January 2010, the FASB issued ASU No. 2010-06, Fair Value Measurements and Disclosures
(Topic 820): Improving Disclosures about Fair Value Measurements (ASU 2010-06). ASU 2010-06
requires some new disclosures and clarifies some existing disclosure requirements about fair value
measurement as set forth in Codification Subtopic 820-10. ASU 2010-06 amends Codification Subtopic
820-10 to now require (1) a reporting entity to disclose separately the amounts of significant
transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for
the transfers; (2) in the reconciliation for fair value measurements using significant unobservable
inputs, a reporting entity should present separately information about purchases, sales, issuances,
and settlements; and (3) a reporting entity should provide disclosures about the valuation
techniques and inputs used to measure fair value for both recurring and nonrecurring fair value
measurements. ASU 2010-06 is effective for interim and annual reporting periods beginning after
December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in
the roll forward of activity in Level 3 fair value measurements.
8
Those disclosures are effective for fiscal years beginning after December 15, 2010, and for
interim periods within those fiscal years. The adoption of ASU No. 2010-06 did not have a material
impact on the Companys financial position or results of operations.
2. Stock-Based Compensation and Earnings Per Share
On May 12, 2009, the Company adopted The St. Joe Company 2009 Equity Incentive Plan whereby
options, stock appreciation rights, restricted stock, restricted stock units and performance awards
may be granted to directors and employees. The 2009 Equity Incentive Plan provides for the issuance
of a maximum of 2.0 million shares of the Companys common stock.
Stock-Based Compensation
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. Stock-based compensation cost may be recognized over a shorter
requisite service period if an employee meets retirement eligibility requirements. Upon exercise of
stock options, the Company will issue new common stock.
Additionally, the 15% discount at which employees purchased the Companys common stock through
payroll deductions was being recognized as compensation expense. The Company discontinued the
employee stock purchase plan as of July 1, 2011.
The changes to the composition of the Companys board of directors which occurred during the
first quarter of 2011 constituted a change in control event under the terms of certain of our
incentive plans. As a result, during March 2011, the Company accelerated the vesting of
approximately 300,000 shares of restricted stock resulting in $6.2 million in accelerated stock
compensation expense.
Service-Based Grants
A summary of service-based non-vested restricted stock activity as of June 30, 2011 and
changes during the six month period are presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average |
|
|
|
Number of |
|
|
Grant Date Fair |
|
Service-Based Non-Vested Restricted Stock |
|
Shares |
|
|
Value |
|
Balance at December 31, 2010 |
|
|
266,659 |
|
|
$ |
30.91 |
|
Granted |
|
|
106,790 |
|
|
|
28.09 |
|
Vested |
|
|
(288,363 |
) |
|
|
30.33 |
|
Forfeited |
|
|
(20,900 |
) |
|
|
28.55 |
|
|
|
|
|
|
|
|
Balance at June 30, 2011 |
|
|
64,186 |
|
|
$ |
29.59 |
|
|
|
|
|
|
|
|
As of June 30, 2011 there was $0.2 million of unrecognized compensation cost, adjusted for
estimated forfeitures, related to non-vested restricted stock and stock option compensation
arrangements which will be recognized over a weighted average period of four years.
Market Condition Grants
The Company has granted to select executives and other key employees non-vested restricted
stock whose vesting is based upon the achievement of certain market conditions which are defined as
the Companys total shareholder return as compared to the total shareholder return of certain peer
groups during a three year performance period.
The Company used a Monte Carlo simulation pricing model to determine the fair value of its
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 included expected stock price volatility over the requisite performance term of the
awards, the relative performance of the Companys stock price and shareholder returns to those
companies in its 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.
9
A summary of the activity for market condition non-vested restricted stock during the six
months ended June 30, 2011 is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average |
|
|
|
Number of |
|
|
Grant Date Fair |
|
Market Condition Non-Vested Restricted Stock |
|
Shares |
|
|
Value |
|
Balance at December 31, 2010 |
|
|
562,531 |
|
|
$ |
23.17 |
|
Granted |
|
|
154,424 |
|
|
|
21.10 |
|
Vested |
|
|
(291,304 |
) |
|
|
19.12 |
|
Forfeited |
|
|
(395,946 |
) |
|
|
23.38 |
|
|
|
|
|
|
|
|
Balance at June 30, 2011 |
|
|
29,705 |
|
|
$ |
15.69 |
|
|
|
|
|
|
|
|
As of June 30, 2011, there was $0.2 million of unrecognized compensation cost, adjusted for
estimated forfeitures, related to market condition non-vested restricted shares which will be
recognized over a weighted average period of three years.
Total stock-based compensation recognized in the consolidated statements of operations was as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2011 |
|
2010 |
|
2011 |
|
2010 |
Stock-based compensation expense |
|
$ |
(87 |
) |
|
$ |
2,314 |
|
|
$ |
8,383 |
|
|
$ |
3,845 |
|
The Company is evaluating alternatives to its existing stock-based compensation programs.
Earnings (Loss) Per Share
Basic earnings (loss) per share is calculated by dividing net income (loss) by the average
number of common shares outstanding for the period. Diluted earnings (loss) per share is calculated
by dividing net income (loss) by the weighted average number of common shares outstanding for the
period, including all potentially dilutive shares issuable under outstanding stock options and
service-based non-vested restricted stock. Stock options and non-vested restricted stock are not
considered in any diluted earnings per share calculations when the Company has a loss from
continuing operations. Non-vested restricted stock subject to vesting based on the achievement of
market conditions are treated as contingently issuable shares and are considered outstanding only
upon the satisfaction of the market conditions.
The following table presents a reconciliation of average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2011 |
|
2010 |
|
2011 |
|
2010 |
Basic average shares outstanding |
|
|
92,207,304 |
|
|
|
91,727,508 |
|
|
|
92,401,380 |
|
|
|
91,594,812 |
|
Net effect of stock options assumed to be exercised |
|
|
|
|
|
|
|
|
|
|
7,004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted average shares outstanding |
|
|
92,207,304 |
|
|
|
91,727,508 |
|
|
|
92,408,384 |
|
|
|
91,594,812 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 0.1 million shares were excluded from the computation of diluted earnings (loss) per
share during the three months and six months ended June 30, 2011 and 2010, respectively, as the effect would have been
anti-dilutive.
3. Fair value measurements
The Company follows the provisions of ASC 820 for its 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
10
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;
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, which require the
reporting entity to develop its own assumptions.
Assets and liabilities measured at fair value on a recurring basis are as follows:
Fair value as of June 30, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted Prices in |
|
|
Significant Other |
|
|
Significant |
|
|
|
Fair Value |
|
|
Active Markets for |
|
|
Observable |
|
|
Unobservable |
|
|
|
June 30, |
|
|
Identical Assets |
|
|
Inputs |
|
|
Inputs |
|
|
|
2011 |
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
Recurring: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments in money market
and short term treasury
instruments |
|
$ |
186,873 |
|
|
$ |
186,873 |
|
|
$ |
|
|
|
$ |
|
|
Retained interest in entities |
|
|
10,490 |
|
|
|
|
|
|
|
|
|
|
|
10,490 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total, net |
|
$ |
197,363 |
|
|
$ |
186,873 |
|
|
$ |
|
|
|
$ |
10,490 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value as of December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted Prices in |
|
|
Significant Other |
|
|
Significant |
|
|
|
Fair Value |
|
|
Active Markets for |
|
|
Observable |
|
|
Unobservable |
|
|
|
December 31, |
|
|
Identical Assets |
|
|
Inputs |
|
|
Inputs |
|
|
|
2010 |
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
Recurring: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments in money market |
|
$ |
177,816 |
|
|
$ |
177,816 |
|
|
$ |
|
|
|
$ |
|
|
Retained interest in entities |
|
|
10,283 |
|
|
|
|
|
|
|
|
|
|
|
10,283 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total, net |
|
$ |
188,099 |
|
|
$ |
177,816 |
|
|
$ |
|
|
|
$ |
10,283 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company has recorded a retained interest with respect to the monetization of certain
installment notes 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. The
Companys continuing involvement with the entities is in the form of receipts of net interest
payments, which are recorded as interest income and approximated $0.3 million for each of the six
months ended June 30, 2011 and 2010, respectively. In addition, the Company will receive the
payment of the remaining principal on the installment notes during 2022 and 2023.
In accordance with ASC 325, Investments Other, Subtopic 40 Beneficial Interests in
Securitized Financial Assets, the Company recognizes interest income over the life of the retained
interest using the effective yield method. 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. The Company did not make adjustments as a result of changes in previously
projected cash flows during the first six months of 2011 or 2010.
11
The following is a reconciliation of the Companys retained interest:
|
|
|
|
|
|
|
2011 |
|
Balance January 1 |
|
$ |
10,283 |
|
Additions |
|
|
|
|
Accretion of interest income |
|
|
207 |
|
|
|
|
|
Balance June 30 |
|
$ |
10,490 |
|
|
|
|
|
In the event of a failure and liquidation of the financial institution involved in our
installment sales, the Company could be required to write-off the remaining retained interest
recorded on its balance sheet in connection with the installment sale monetization transactions,
which would have an adverse effect on the Companys results of operations and financial position.
On October 21, 2009, the Company entered into a strategic alliance agreement with Southwest
Airlines to facilitate the commencement of low-fare air service in May 2010 to the Northwest
Florida Beaches International Airport. The Company has agreed to reimburse Southwest Airlines if it
incurs losses on its service at the airport during the first three years of service by making
specified break-even payments. There was no reimbursement required in 2010 or the first six months
of 2011. The agreement also provides that Southwests profits from the air service during the term
of the agreement will be shared with the Company up to the maximum amount of our break-even
payments. Profits from any calendar year, however, do not carryover from year to year.
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 the Company
if the break-even payments to Southwest exceed $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 airport are less than certain minimum annual amounts established in the agreement. As of
June 30, 2011 actual revenues have exceeded these minimum amounts.
At inception, the Company measured the associated standby guarantee liability at fair value
based upon a discounted cash flow analysis based on managements best estimates of future cash
flows to be paid by the Company pursuant to the strategic alliance agreement. These cash flows are
estimated using numerous estimates including future fuel costs, passenger load factors, air fares,
and seasonality. Subsequently, the guarantee is measured at the greater of the fair value of the
guarantee liability at inception or the payment amount that is probable and reasonably estimable of
occurring, if any. The Company carried a standby guarantee liability of $0.8 million at June 30,
2011 and December 31, 2010 related to this strategic alliance agreement. The Company has made no
payments under the standby guarantee.
In order to mitigate potential losses that may arise from changes in Southwest Airlines jet
fuel costs, we entered into a premium neutral collar arrangement with respect to the underlying
cost of jet fuel for a portion of Southwest Airlines estimated fuel volumes. The collar
arrangement expired in May 2011 and the Company received payments of $0.4 million during the term
of the arrangement.
The Company did not extend the term of, or enter into a new arrangement because the Company
concluded that (i) the cost of jet fuel is a small proportion of the total costs the Company may be
obligated to reimburse Southwest Airlines if it incurs losses on its service at the new airport
during the first three years of service and (ii) the Company believes that the greatest likelihood of
payments to Southwest Airlines pursuant to the strategic alliance agreement occurred during the
first year of operations.
The Company reviews its 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 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 (level 2 inputs) or estimates of selling prices based on
current market data (level 3 inputs). Other properties for which management does not intend to sell
in the near term under current market conditions, including development and operating properties,
are evaluated for impairment based on
12
managements best estimate of the long-term use and eventual disposition of the property. If
determined to be impaired, the fair value of these properties is determined based on the net
present value of discounted cash flows using estimated future expenditures necessary to maintain
and complete the existing project and managements best estimates about future sales prices, sales
volumes, sales velocity and holding periods (level 3 inputs). 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 the Companys 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. For the six months ended
June 30, 2011, the total impairment losses were $2.5 million. The assets measured at fair value on
a nonrecurring basis during the six months ended June 30, 2011 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted Prices in |
|
Significant Other |
|
Significant |
|
|
|
|
|
|
Active Markets for |
|
Observable |
|
Unobservable |
|
Fair Value |
|
|
|
|
Identical Assets |
|
Inputs |
|
Inputs |
|
June 30, |
|
Total Impairment |
|
|
(Level 1) |
|
(Level 2) |
|
(Level 3) |
|
2011 |
|
Losses |
Non-financial assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in real estate |
|
$ |
|
|
|
$ |
1,224 |
|
|
$ |
1,701 |
|
|
$ |
2,925 |
|
|
$ |
1,697 |
|
During the second quarter of 2011,
management made the decision to dispose of four homes to avoid the
ongoing maintenance and other holding costs. One of these homes included a 53 acre parcel which the Company had initially developed
as a rural retreat community. The remainder of the homes
and condos owned by the Company are currently being used as rental property. As a result, long-lived assets sold or held for sale with a carrying amount of $4.6 million were written
down to their fair value of $2.9 million, resulting in a loss of $1.7 million, which was included
in impairment losses for the six months ending June 30, 2011. In addition, the Company impaired
$0.8 million of predevelopment costs related to the construction of the Companys proposed new
headquarters in Northwest Florida, which has been indefinitely delayed.
4. Investment in Real Estate
Real estate by segment includes the following:
|
|
|
|
|
|
|
|
|
|
|
June 30, 2011 |
|
|
December 31, 2010 |
|
Operating property: |
|
|
|
|
|
|
|
|
Residential real estate |
|
$ |
179,337 |
|
|
$ |
178,417 |
|
Commercial real estate |
|
|
1,982 |
|
|
|
|
|
Rural land sales |
|
|
139 |
|
|
|
139 |
|
Forestry |
|
|
57,479 |
|
|
|
60,339 |
|
Other |
|
|
510 |
|
|
|
510 |
|
|
|
|
|
|
|
|
Total operating property |
|
|
239,447 |
|
|
|
239,405 |
|
|
|
|
|
|
|
|
Development property: |
|
|
|
|
|
|
|
|
Residential real estate |
|
|
473,170 |
|
|
|
478,278 |
|
Commercial real estate |
|
|
67,896 |
|
|
|
65,465 |
|
Rural land sales |
|
|
7,396 |
|
|
|
7,446 |
|
Other |
|
|
306 |
|
|
|
306 |
|
|
|
|
|
|
|
|
Total development property |
|
|
548,768 |
|
|
|
551,495 |
|
|
|
|
|
|
|
|
Investment property: |
|
|
|
|
|
|
|
|
Commercial real estate |
|
|
1,753 |
|
|
|
1,753 |
|
Rural land sales |
|
|
|
|
|
|
|
|
Forestry |
|
|
952 |
|
|
|
952 |
|
Other |
|
|
5,901 |
|
|
|
5,901 |
|
|
|
|
|
|
|
|
Total investment property |
|
|
8,606 |
|
|
|
8,606 |
|
|
|
|
|
|
|
|
Investment in unconsolidated affiliates: |
|
|
|
|
|
|
|
|
Residential real estate |
|
|
2,272 |
|
|
|
(2,122 |
) |
|
|
|
|
|
|
|
Total real estate investments |
|
|
799,093 |
|
|
|
797,384 |
|
Less: Accumulated depreciation |
|
|
44,288 |
|
|
|
41,992 |
|
|
|
|
|
|
|
|
Investment in real estate |
|
$ |
754,805 |
|
|
$ |
755,392 |
|
|
|
|
|
|
|
|
13
Included in operating property are Company-owned amenities related to residential real estate,
the Companys timberlands, and land and buildings developed by the Company and used for commercial
rental purposes. Development property consists of residential real estate land and inventory
currently under development to be sold. Investment property primarily includes the Companys land
held for future use.
5. Notes Receivable
Notes receivable consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
June 30, 2011 |
|
|
December 31, 2010 |
|
Various builders |
|
$ |
1,724 |
|
|
$ |
2,358 |
|
Pier Park Community Development District |
|
|
2,765 |
|
|
|
2,762 |
|
Various mortgages and other |
|
|
433 |
|
|
|
611 |
|
|
|
|
|
|
|
|
Total notes receivable |
|
$ |
4,922 |
|
|
$ |
5,731 |
|
|
|
|
|
|
|
|
6. Restructuring
On February 25, 2011, the Company entered into a Separation Agreement with Wm. Britton Greene
in connection with his resignation as President, Chief Executive Officer and director of the
Company. In the first quarter of 2011, the Company expensed $4.2 million under the terms of this
agreement. On April 11, 2011, the Company entered into separation agreements with four additional
members of senior management, including William S. McCalmont, Executive Vice President and Chief
Financial Officer, Roderick T. Wilson, President-West Bay Sector, Rusty Bozman, Senior Vice
President-Corporate Development and Reece B. Alford, Senior Vice President, General Counsel and
Secretary. Additionally, certain other employees were terminated pursuant to the Companys 2011
restructuring program. In connection with these terminations, the Company expensed $5.9 million
during the second quarter of 2011.
The charges associated with the Companys 2011 restructuring program by segment are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential Real |
|
|
Commercial Real |
|
|
Rural Land |
|
|
|
|
|
|
|
|
|
|
|
|
Estate |
|
|
Estate |
|
|
Sales |
|
|
Forestry |
|
|
Other |
|
|
Total |
|
Three months ended June 30, 2011: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-time termination benefits to
employees |
|
$ |
164 |
|
|
$ |
1,657 |
|
|
$ |
199 |
|
|
$ |
|
|
|
$ |
3,853 |
|
|
$ |
5,873 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative restructuring
charges, January 1, 2011 through
June 30, 2011 |
|
$ |
164 |
|
|
$ |
1,657 |
|
|
$ |
199 |
|
|
$ |
|
|
|
$ |
8,060 |
|
|
$ |
10,080 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remaining one-time termination
benefits to employees to be
incurred during 2011 |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During 2010 the Company relocated its corporate headquarters from Jacksonville, Florida to
WaterSound, Florida. The Company also consolidated other existing offices from Tallahassee, Port
St. Joe and Walton County into the WaterSound location.
The charges associated with the Companys 2010 restructuring and relocation program by segment
are as follows:
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential Real |
|
|
Commercial Real |
|
|
Rural Land |
|
|
|
|
|
|
|
|
|
|
|
|
Estate |
|
|
Estate |
|
|
Sales |
|
|
Forestry |
|
|
Other |
|
|
Total |
|
Three months ended June 30, 2011: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-time termination and
relocation benefits to employees |
|
$ |
9 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
34 |
|
|
$ |
43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative restructuring
charges, January 1, 2010 through
June 30, 2011 |
|
$ |
1,013 |
|
|
$ |
43 |
|
|
$ |
793 |
|
|
$ |
193 |
|
|
$ |
3,521 |
|
|
$ |
5,563 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remaining one-time termination
and relocation benefits to
employees to be incurred
during 2011(a) |
|
$ |
235 |
|
|
$ |
|
|
|
$ |
173 |
|
|
$ |
292 |
|
|
$ |
991 |
|
|
$ |
1,691 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Represents costs to be incurred from July 1, 2011 through December 31, 2011. |
Termination benefits are comprised of severance-related payments for all employees terminated
in connection with the restructurings. At June 30, 2011, the remaining accrued liability associated
with restructurings and reorganization programs consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at |
|
|
|
|
|
|
|
|
|
|
Balance at |
|
|
|
|
|
|
December 31, |
|
|
Costs |
|
|
|
|
|
|
June 30, |
|
|
Due within |
|
|
|
2010 |
|
|
Accrued |
|
|
Payments |
|
|
2011 |
|
|
12 months |
|
One-time
termination
benefits to
employees 2010
restructuring and
relocation program |
|
$ |
870 |
|
|
$ |
312 |
|
|
$ |
972 |
|
|
$ |
210 |
|
|
$ |
210 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-time
termination
benefits to
employees 2011
restructuring
program |
|
$ |
|
|
|
$ |
10,080 |
|
|
$ |
4,831 |
|
|
$ |
5,249 |
|
|
$ |
5,249 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7. Debt
Debt consists of the following:
|
|
|
|
|
|
|
|
|
|
|
June 30, 2011 |
|
|
December 31, 2010 |
|
Non-recourse defeased debt |
|
|
24,300 |
|
|
|
25,281 |
|
Community Development District debt |
|
|
28,846 |
|
|
|
29,370 |
|
|
|
|
|
|
|
|
Total debt |
|
$ |
53,146 |
|
|
$ |
54,651 |
|
|
|
|
|
|
|
|
The aggregate scheduled maturities of debt subsequent to June 30, 2011 are as follows (a)(b):
|
|
|
|
|
2011 |
|
$ |
1,001 |
|
2012 |
|
|
2,018 |
|
2013 |
|
|
1,586 |
|
2014 |
|
|
1,507 |
|
2015 |
|
|
18,188 |
|
Thereafter |
|
|
28,846 |
|
|
|
|
|
Total |
|
$ |
53,146 |
|
|
|
|
|
|
|
|
(a) |
|
Includes debt defeased in connection with the sale of the Companys
office portfolio in the amount of $24.3 million which matures in years
2011-2015. |
|
(b) |
|
Community Development District 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. |
The Company had a $125 million revolving Credit Agreement (the Credit Agreement) with Branch
Banking and Trust Company. The Credit Agreement contained covenants relating to leverage,
unencumbered asset value, net worth, liquidity and additional debt. The Credit Agreement also
contained various restrictive covenants pertaining to acquisitions, investments, capital
expenditures, dividends, share repurchases, asset dispositions and liens. The following includes a
summary of the Companys more significant financial covenants:
15
|
|
|
|
|
|
|
|
|
|
|
Covenant |
|
June 30, 2011 |
Minimum consolidated tangible net worth |
|
$ |
800,000 |
|
|
$ |
879,382 |
|
Ratio of total indebtedness to total asset value |
|
|
50.0 |
% |
|
|
3.83 |
% |
Unencumbered leverage ratio |
|
|
2.0 |
x |
|
|
71.38 |
x |
Minimum liquidity |
|
$ |
20,000 |
|
|
$ |
324,054 |
|
The Company was in compliance with its debt covenants at June 30, 2011.
On June 28, 2011, the Company notified Branch Banking and Trust Company that it was exercising
its right to early terminate the Credit Agreement which was scheduled to mature on September 19,
2012. The termination was effective on July 1, 2011. The description of the material terms of the
Credit Agreement is set forth in the Companys Form 10-K for the year ended December 31, 2010. The
Company did not incur any prepayment penalties in connection with the early termination of the
Credit Agreement.
8. Employee Benefit Plans
A summary of the net periodic benefit expense follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2011 |
|
|
2010 |
|
|
2011 |
|
|
2010 |
|
Service cost |
|
$ |
999 |
|
|
$ |
486 |
|
|
$ |
3,013 |
|
|
$ |
811 |
|
Interest cost |
|
|
307 |
|
|
|
436 |
|
|
|
651 |
|
|
|
811 |
|
Expected return on assets |
|
|
(787 |
) |
|
|
(1,518 |
) |
|
|
(1,628 |
) |
|
|
(2,943 |
) |
Prior service costs |
|
|
173 |
|
|
|
200 |
|
|
|
351 |
|
|
|
375 |
|
Settlement loss |
|
|
|
|
|
|
1,592 |
|
|
|
|
|
|
|
1,592 |
|
Curtailment charges |
|
|
1,713 |
|
|
|
1,347 |
|
|
|
1,713 |
|
|
|
1,347 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit expense |
|
$ |
2,405 |
|
|
$ |
2,543 |
|
|
$ |
4,100 |
|
|
$ |
1,993 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company remeasures its plan assets and benefit obligation at each December 31. The Company
remeasured the plan assets and benefit obligations as of June 30, 2011 due to curtailment
accounting.
During the second quarter of 2011, the Company implemented a Health Reimbursement Arrangement
whereby the Company will make a discretionary contribution every year on behalf of each retiree,
beneficiary and surviving spouse. As a result the retiree medical liability has been reduced by
$7.0 million with a corresponding reduction in accumulated other comprehensive income
(loss). This change in accumulated other comprehensive income will be amortized into income
over the future life expectancy of the participants (approximately 9 years).
9. Income Taxes
The Company had approximately $1.7 million and $1.4 million of total unrecognized tax benefits
as of June 30, 2011 and December 31, 2010, respectively. The Company recognizes interest and/or
penalties related to income tax matters in income tax expense. The Company had accrued interest of
zero and $(0.2) million (net of tax benefit) at June 30, 2011 and December 31, 2010, respectively,
related to uncertain tax positions.
10. Segment Information
The Companys reportable operating segments are residential real estate, commercial real
estate, rural land sales and forestry. The residential real estate segment primarily develops and
sells homesites to builders. This segment also includes the Companys resort and club operations,
the purpose of which is to enhance the desirability of the Companys residential real estate. The
commercial real estate segment sells and leases developed and undeveloped lands. The rural land
sales segment primarily sells parcels of land included in the Companys timberland holdings. The
forestry segment produces and sells pine wood fiber, sawtimber and other forest products.
16
The Company uses income (loss) from continuing operations before equity in income (loss) of
unconsolidated affiliates, income taxes and noncontrolling interest for purposes of making
decisions about allocating resources to each segment and assessing each segments performance,
which the Company believes represents current performance measures.
The accounting policies of the segments are the same as those described above in the summary
of significant accounting policies herein and in our Form 10-K. Total revenues represent sales to
unaffiliated customers, as reported in the Companys consolidated statements of operations. All
intercompany transactions have been eliminated. The caption entitled Other consists of corporate
general and administrative expenses, net of investment income.
Information by business segment is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2011 |
|
|
2010 |
|
|
2011 |
|
|
2010 |
|
Operating Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential real estate |
|
$ |
16,445 |
|
|
$ |
12,986 |
|
|
$ |
24,210 |
|
|
$ |
18,497 |
|
Commercial real estate |
|
|
598 |
|
|
|
59 |
|
|
|
895 |
|
|
|
447 |
|
Rural land sales |
|
|
75 |
|
|
|
1,186 |
|
|
|
2,825 |
|
|
|
2,172 |
|
Forestry |
|
|
8,166 |
|
|
|
7,804 |
|
|
|
70,790 |
|
|
|
14,219 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated operating revenues |
|
$ |
25,284 |
|
|
$ |
22,035 |
|
|
$ |
98,720 |
|
|
$ |
35,335 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing
operations before equity in
loss of unconsolidated
affiliates and income taxes : |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential real estate |
|
$ |
(6,308 |
) |
|
$ |
(7,156 |
) |
|
$ |
(15,154 |
) |
|
$ |
(18,400 |
) |
Commercial real estate |
|
|
(2,906 |
) |
|
|
(1,320 |
) |
|
|
(4,772 |
) |
|
|
(1,754 |
) |
Rural land sales |
|
|
(388 |
) |
|
|
710 |
|
|
|
1,897 |
|
|
|
401 |
|
Forestry |
|
|
1,753 |
|
|
|
2,162 |
|
|
|
54,497 |
|
|
|
3,632 |
|
Other |
|
|
(12,424 |
) |
|
|
(9,115 |
) |
|
|
(35,074 |
) |
|
|
(16,234 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated income (loss)
from continuing operations
before equity in loss of
unconsolidated affiliates and
income taxes |
|
$ |
(20,273 |
) |
|
$ |
(14,719 |
) |
|
$ |
1,394 |
|
|
$ |
(32,355 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2011 |
|
|
December 31, 2010 |
|
Total Assets: |
|
|
|
|
|
|
|
|
Residential real estate |
|
$ |
638,467 |
|
|
$ |
639,460 |
|
Commercial real estate |
|
|
78,387 |
|
|
|
72,581 |
|
Rural land sales |
|
|
7,894 |
|
|
|
7,964 |
|
Forestry |
|
|
58,468 |
|
|
|
61,756 |
|
Other |
|
|
283,329 |
|
|
|
269,934 |
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
1,066,545 |
|
|
$ |
1,051,695 |
|
|
|
|
|
|
|
|
11. Contingencies
The Company and its affiliates are involved in litigation on a number of matters and are
subject to various claims which arise in the normal course of business, including claims resulting
from construction defects and contract disputes. When appropriate, the Company establishes
estimated accruals for litigation matters which meet the requirements of ASC 450 Contingencies.
The Company is subject to costs arising out of environmental laws and regulations, which
include obligations to remove or limit the effects on the environment of the disposal or release of
certain wastes or substances at various sites, including sites which have been previously sold. It
is the Companys policy to accrue and charge against earnings environmental cleanup costs when it
is probable that a liability has been incurred and an amount can be reasonably estimated. As
assessments and cleanups proceed, these accruals are reviewed and adjusted, if necessary, as
additional information becomes available.
17
The Companys former paper mill site in Gulf County and certain adjacent properties are
subject to various Consent Agreements and Brownfield Site Rehabilitation Agreements with the
Florida Department of Environmental Protection. The paper mill site has been rehabilitated by
Smurfit-Stone Container Corporation in accordance with these agreements. The Company is in the
process of assessing and rehabilitating certain adjacent properties. Management is unable to
quantify the rehabilitation costs at this time.
Other proceedings and litigation involving environmental matters are pending against the
Company. Aggregate environmental-related accruals were $1.6 million at June 30, 2011 and December
31, 2010. Although in the opinion of management none of our environmental litigation matters or
governmental proceedings is expected to have a material adverse effect on the Companys
consolidated financial position, results of operations or liquidity, it is possible that the actual
amounts of liabilities resulting from such matters could be material.
On November 3, 2010 and December 7, 2010, two securities class action complaints were filed
against the Company and certain of its 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 the Companys securities between February 19, 2008 and October 12, 2010 and
alleges that the Company and certain of its officers and directors, among others, violated the
Securities Act of 1933 and the 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,
the Company was failing to take adequate and required impairments and accounting write-downs on
many of the Companys Florida-based properties and as a result, the Companys financial statements
materially overvalued the Companys property developments. The plaintiffs also allege that the
Companys financial statements were not prepared in accordance with Generally Accepted Accounting
Principles, and that the Company lacked adequate internal and financial controls, and as a result
of the foregoing, the Companys financial statements were materially false and misleading. The
complaint seeks an unspecified amount in damages. The Company believes that it has meritorious
defenses to the plaintiffs claims and intends to defend the action vigorously. The Company filed a
motion to dismiss the case on April 6, 2011.
Additionally, on March 29, 2011 and July 21, 2011, two separate derivative lawsuits were filed by shareholders on behalf of
the Company against certain of its officers and directors in the United States District Court for
the Northern District of Florida (Nakata v. Greene et. al., No. 5:11-cv-00090 and Packer v. Greene et al.,
No. 3:11-cv-00344). The complaints
allege breaches of fiduciary duties, waste of corporate assets and unjust enrichment arising from
substantially similar allegations as those described above in the Meyer case. The Company has
received two other demand letters asking the Board of Directors to initiate derivative litigation
in this matter.
On January 4, 2011 the SEC notified the Company it was conducting an inquiry into the
Companys policies and practices concerning impairment of investment in real estate assets. On June
24, 2011, the Company received notice from the SEC that it has issued a related order of private
investigation. The order of private investigation covers a variety of matters for the period
beginning January 1, 2007 including (a) the antifraud provisions of the Federal securities laws as
applicable to the Company and its past and present officers, directors, employees, partners,
subsidiaries, and/or affiliates, and/or other persons or entities, (b) compliance by past and
present reporting persons or entities who were or are directly or indirectly the beneficial owner
of more than 5% of the Companys common stock (which includes Fairholme Funds, Inc, Fairholme
Capital Management L.L.C. and the Companys current Chairman Bruce R. Berkowitz) with their
reporting obligations under Section 13(d) of the Exchange Act, (c) internal controls, (d) books and
records, (e) communications with auditors and (f) financial reports. The order designates officers
of the SEC to take the testimony of the Company and third parties with respect to any or all of
these matters, and the Company is cooperating with the SEC.
On October 21, 2009, the Company entered into a strategic alliance agreement with Southwest
Airlines to facilitate the commencement of low-fare air service in May 2010 to the Northwest
Florida Beaches International Airport. The Company has agreed to reimburse Southwest Airlines if it
incurs losses on its service at the 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 the Company up to the maximum amount of its break-even payments.
The term of the agreement extends for a period of three years after the commencement of
Southwests air service at the airport. Although the agreement does not provide for maximum
payments, the agreement may be terminated
18
by the Company if the payments to Southwest exceed $12 million in the second year of air
service. The agreement also provides that Southwests profits from the air service during the term
of the agreement will be shared with the Company up to the maximum amount of our break-even
payments. Profits from any calendar year, however, do not carryover from year to year. Southwest
may terminate the agreement if its actual annual revenues attributable to the air service at the
airport are less than certain minimum annual amounts established in the agreement. The Company
carries a standby guarantee liability of $0.8 million at June 30, 2011 and December 31, 2010
related to this strategic alliance agreement.
The Company has retained certain self-insurance risks with respect to losses for third party
liability and property damage.
At June 30, 2011 and December 31, 2010, the Company was party to surety bonds of $28.7 million
and $27.9 million, respectively, and standby letters of credit in the amount of $0.8 million at
June 30, 2011 and December 31, 2010 which may potentially result in liability to the Company if the
underlying obligations, primarily development and litigation related obligations, of the Company
are not met.
12. Concentration of Risks and Uncertainties
The Companys real estate investments are concentrated in the State of Florida in a number of
specific development projects. Uncertainty of the duration of the prolonged real estate and
economic slump could have an adverse impact on the Companys real estate values and could cause the
Company to sell assets at depressed values in order to pay ongoing expenses.
Financial instruments that potentially subject the Company to a concentration of credit risk
consist of cash, cash equivalents, notes receivable and retained interests. The Company deposits
and invests excess cash with major financial institutions in the United States. Balances may exceed
the amount of insurance provided on such deposits.
Some of the Companys notes receivable are from homebuilders and other entities associated
with the real estate industry. As with many entities in the real estate industry, revenues have
contracted for these companies, and they may be increasingly dependent on their lenders continued
willingness to provide funding to maintain ongoing liquidity. The Company evaluates the need for an
allowance for doubtful notes receivable at each reporting date.
Smurfit-Stones Panama City mill is the largest consumer of pine pulpwood logs within the
immediate area in which most of the Companys timberlands are located. In July of 2010,
Smurfit-Stone emerged from approximately 18 months of bankruptcy protection, and during the first
quarter of 2011, RockTenn announced its acquisition of Smurfit-Stone. Deliveries made by St. Joe
during Smurfit-Stones bankruptcy proceedings were uninterrupted and payments were made on time.
Under the terms of the Wood Fiber Supply Agreement entered into in November 2010, Smurfit-Stone and
its successor RockTenn would be liable for any 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 would increase.
|
|
|
Item 2. |
|
Managements Discussion and Analysis of Financial Condition and Results of Operations |
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.
19
We have four operating segments: residential real estate, commercial real estate, rural land
sales and forestry. The table below sets forth the relative contribution of these operating
segments to our consolidated operating revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2011 |
|
|
2010 |
|
|
2011 |
|
|
2010 |
|
Segment Operating Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential real estate |
|
|
65.0 |
% |
|
|
58.9 |
% |
|
|
24.5 |
% |
|
|
52.4 |
% |
Commercial real estate |
|
|
2.4 |
% |
|
|
0.3 |
% |
|
|
0.9 |
% |
|
|
1.3 |
% |
Rural land sales |
|
|
0.3 |
% |
|
|
5.4 |
% |
|
|
2.9 |
% |
|
|
6.1 |
% |
Forestry |
|
|
32.3 |
% |
|
|
35.4 |
% |
|
|
71.7 |
% |
|
|
40.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated operating revenues |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Our business, financial condition and results of operations continued to be adversely affected
during the second quarter of 2011 by the real estate downturn, slow economic recovery and other
adverse market conditions. This challenging environment has exerted negative pressure on the demand
for all of our real estate products. Even though we have seen slightly improved residential sales
activity, as well as renewed interest in commercial sales activity, we do not expect any
significant improvement in market conditions during the remainder of 2011.
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. We have filed lawsuits seeking the recovery
of damages against parties we believe are responsible for the oil spill. We cannot be certain,
however, of the amount of any recovery or the ultimate success of our claims.
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 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 residential real estate segment incurs cost of revenues from:
|
|
|
costs directly associated with the land, development and construction
of real estate sold, indirect costs such as development overhead,
project administration, warranty, capitalized interest and selling
costs; |
|
|
|
|
resort and club personnel costs, cost of goods sold, and management
fees paid to third party managers; |
|
|
|
|
operating expenses of rental properties; and |
|
|
|
|
brokerage fees. |
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 and develop commercial
land and provide development
20
opportunities for national and regional retailers as well as strategic partners in Northwest
Florida. We also offer land for commercial and light industrial uses within large and small-scale
commerce parks, as well as for a wide range of multi-family rental projects. 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 commercial real
estate segment incurs costs of revenues from costs directly associated with the land, development
costs and selling costs and operating costs of rental properties.
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 prepares land for sale for
these uses through harvesting, thinning and other silviculture practices, and in some cases,
limited infrastructure development. Our rural land sales segment generates revenues from the sale
of undeveloped land, land with limited development, easements and mitigation bank credits. Our
rural land segment incurs costs of revenues from the cost of land sold, minimal development costs
and selling costs.
In recent years, our revenue from rural land sales have significantly decreased as a result of our decision
to sell only non-strategic rural land and to principally use our rural land resources to create
sources of recurring revenue as well as from declines in demand for rural land due to difficult
current market conditions. We may, however, rely on rural land sales as a significant source of
revenues and cash in the future.
Forestry
Our forestry segment focuses on the management and harvesting of our extensive timber
holdings. We grow, harvest and sell sawtimber, wood fiber and forest products and provide land
management services for conservation properties. Our forestry segment generates revenues from the
sale of wood fiber, sawtimber, standing timber and forest products and conservation land management
services. Our forestry segment incurs costs of revenues from internal costs of forestry management,
external logging costs, and property taxes.
In November 2010, we entered into a new wood fiber supply agreement with Smurfit-Stone (which
was recently acquired by RockTenn) (the Smurfit-Stone Wood Fiber Agreement). The new agreement
replaces an agreement that we had entered into in July 2000 and that was scheduled to expire in
June 2012. Under the agreement, we agreed to sell 4.0 million tons of pulpwood to Smurfit-Stones
pulp and paper mill in Panama City, Florida over the next seven years. The new agreement also
included more favorable pricing terms for us and guaranteed a steady demand for much of our wood
fiber harvest and removed certain restrictions on St. Joes timberlands contained in the previous
agreement. As a result of this new agreement, revenues from timber sales increased during the first
half of 2011 and are expected to slightly increase, period over period, during the remainder of the
year.
On March 31, 2011, we entered into a $55.9 million agreement for the sale of a timber deed
which gives the purchaser the right to harvest timber on specific tracts of land (encompassing
40,975 acres) over a maximum term of 20 years. Unlike a pay-as-cut sales contract, risk of loss and
title to the trees transfer to the buyer when the contract is signed. The buyer pays the full
purchase price when the contract is signed and we do not have any additional performance
obligations. Under a timber deed, the buyer or some other third party is responsible for all
logging and hauling costs, if any, and the timing of such activity. Revenue from a timber deed sale
is recognized when the contract is signed because the earnings process is complete. As part of the
agreement, we also entered into a Thinnings Supply Agreement, pursuant to which we agreed, to the
extent that the buyer decided to conduct a First Thinning to purchase 85% of such first thinnings
at fair market value. During the second quarter of 2011, we purchased approximately $0.6 million of
first thinnings.
2010 Restructuring and Relocation Program
In 2010, we announced that we were relocating our corporate headquarters from Jacksonville,
Florida to WaterSound, Florida and consolidating existing offices from Tallahassee, Port St. Joe
and Walton County into the WaterSound location. These relocations were completed in the second
quarter of 2011. As a result of this restructuring and relocation program we incurred approximately
$5.3 million of one-time charges during 2010 and $0.3 million during the first six months of 2011
primarily relating to one-time termination benefits in connection
21
with the termination of employees that would not be relocating and relocation benefits for
those employees that would be relocating, as well as certain ancillary facility-related costs. 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.
Although we previously announced that we would build a new headquarters facility, we have now
decided to indefinitely delay the development of the new corporate headquarters building and
impaired $0.8 million of predevelopment costs related to the new building in the first quarter of
2011.
2011 Restructuring Program
In the first quarter of 2011, as a result of discussions between our Board of Directors and
Fairholme Capital Management, L.L.C., the largest beneficial owner of our common stock, Mr. Greene
entered into a Separation Agreement with us and resigned as our President and Chief Executive
Officer. On April 11, 2011, we entered into separation agreements with four additional members of
senior management, including William S. McCalmont, Executive Vice President and Chief Financial
Officer, Roderick T. Wilson, President-West Bay Sector, Rusty Bozman, Senior Vice
President-Corporate Development and Reece B. Alford, Senior Vice President, General Counsel and
Secretary. As a result of these five separations, we incurred approximately $8.5 million in charges
during the six months ended June 30, 2011 pursuant to the separation agreements of these
individuals. These amounts do not include the additional $1.5 million non-cash compensation expense
arising from the accelerated vesting of Mr. Greenes restricted stock grants.
Our new management team has adopted a restructuring plan which is aimed at significantly
reducing operating costs. As part of this plan, we incurred approximately $1.6 million of charges
during the six months ended June 30, 2011 related to severance payments to employees. We expect
that our costs savings efforts will generate a decrease of approximately $15 million to $18 million
in operating and corporate expenses on an annualized basis.
Recent Developments
On June 28, 2011, the Company notified Branch Banking and Trust Company that it was exercising
its right to early terminate the Credit Agreement which was scheduled to mature on September 19,
2012. The termination was effective on July 1, 2011. The Company did not incur any prepayment
penalties in connection with the early termination of the Credit Agreement.
Critical Accounting Estimates
The discussion and analysis of our financial condition and results of operations are based
upon our consolidated financial statements, which have been prepared in accordance with U.S.
generally accepted accounting principles. The preparation of these financial statements requires us
to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues
and expenses, and related disclosures of contingent assets and liabilities. We base these estimates
on historical experience, available current market information and on various other assumptions
that management believes are reasonable under the circumstances. Additionally 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. Actual results may differ from these estimates under different assumptions or
conditions.
The critical accounting policies that we believe reflect our more significant judgments and
estimates used in the preparation of our consolidated financial statements are set forth in Item 7
of our annual report on Form 10-K for the year ended December 31, 2010. There have been no
significant changes in these policies during the first six months of 2011.
Recently Issued Accounting Standards
See Note 1 to our unaudited consolidated financial statements included in this report for
recently issued accounting standards, including the expected dates of adoption and estimated
effects on our consolidated financial statements.
22
Seasonality
Our real estate business and our Northwest Florida residential resort and seasonal and resort and club communities are
affected by seasonal fluctuations, with the spring and summer months traditionally being the most
active time of year for customer traffic and sales.
Results of Operations
Net loss increased $4.7 million to a loss of $(13.3) million, or $(0.14) per share, in the
second quarter of 2011, compared to a net loss of $(8.6) million, or $(0.09) per share, for the
second quarter of 2010. Net loss decreased $20.8 million to income of $0.8 million, or $.01 per
share, in the first six months of 2011, compared to a loss of $(20.0) million, or $(0.22) per
share, for the first six months of 2010. Included in our results for the three months and six
months ended June 30 are the following notable charges:
2011:
|
|
|
Acceleration of $6.2 million of stock compensation expense due to the change in control
of the Board of Directors and accelerating the vesting of most of our former President and
Chief Executive Officers restricted stock. |
|
|
|
|
Restructuring charges of $5.9 million and $10.4 million for the three months and six
months ended June 30, 2011, respectively, including payments to five members of our senior
management under the terms of their Separation Agreements. |
|
|
|
|
Impairment charges of $1.7 million and $2.5 million for the three months and six months
ended June 30, 2011, respectively, relating to homes sold or which management intends to
sell in the near future in our residential segment and the decision to indefinitely delay
the development of our new corporate headquarters. |
|
|
|
|
Legal fees totaling $3.5 million and $8.8 million for the three months and six months
ended June 30, 2011 due to defending the securities class action lawsuit, responding to the
SEC inquiry, pursuing the claims against the parties we believe are responsible
for the Deepwater Horizon oil spill, and legal costs incurred in connection with the
change of control of the Board and other corporate governance matters. |
2010:
|
|
|
Restructuring charges of $1.2 million and $2.7 million for the three months and six
months ended June, 2010 related to the consolidation of our offices. |
|
|
|
|
Impairment charges of $0.5 million and $0.6 million in the three months and six months
ended June 30, 2010, respectively. |
Consolidated Results
Operating revenues and expenses. The following table sets forth a comparison of revenues and
certain expenses of continuing operations for the three and six months ended June 30, 2011 and
2010.
23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2011 |
|
|
2010 |
|
|
Difference |
|
|
% Change |
|
|
2011 |
|
|
2010 |
|
|
Difference |
|
|
% Change |
|
|
|
(Dollars in millions) |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate sales |
|
$ |
3.5 |
|
|
$ |
2.8 |
|
|
$ |
0.7 |
|
|
|
25 |
% |
|
$ |
8.7 |
|
|
$ |
4.6 |
|
|
$ |
4.1 |
|
|
|
89 |
% |
Resort and club revenues |
|
|
13.0 |
|
|
|
10.8 |
|
|
|
2.2 |
|
|
|
20 |
|
|
|
18.1 |
|
|
|
15.4 |
|
|
|
2.7 |
|
|
|
18 |
|
Timber sales |
|
|
8.2 |
|
|
|
7.8 |
|
|
|
0.4 |
|
|
|
5 |
|
|
|
70.8 |
|
|
|
14.2 |
|
|
|
56.6 |
|
|
|
399 |
|
Other revenues |
|
|
0.6 |
|
|
|
0.6 |
|
|
|
|
|
|
|
|
|
|
|
1.1 |
|
|
|
1.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
25.3 |
|
|
|
22.0 |
|
|
|
3.3 |
|
|
|
15 |
|
|
|
98.7 |
|
|
|
35.3 |
|
|
|
63.4 |
|
|
|
180 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of real estate sales |
|
|
2.8 |
|
|
|
1.1 |
|
|
|
1.7 |
|
|
|
155 |
|
|
|
4.5 |
|
|
|
1.7 |
|
|
|
2.8 |
|
|
|
165 |
|
Cost of resort and club
revenues |
|
|
11.0 |
|
|
|
9.6 |
|
|
|
1.4 |
|
|
|
15 |
|
|
|
17.6 |
|
|
|
16.1 |
|
|
|
1.5 |
|
|
|
9 |
|
Cost of timber sales |
|
|
6.0 |
|
|
|
5.1 |
|
|
|
0.9 |
|
|
|
18 |
|
|
|
12.2 |
|
|
|
9.5 |
|
|
|
2.7 |
|
|
|
28 |
|
Cost of other revenues |
|
|
0.5 |
|
|
|
0.6 |
|
|
|
(0.1 |
) |
|
|
(17 |
) |
|
|
1.0 |
|
|
|
1.1 |
|
|
|
(0.1 |
) |
|
|
(9 |
) |
Other operating expenses |
|
|
6.3 |
|
|
|
7.6 |
|
|
|
(1.3 |
) |
|
|
(17 |
) |
|
|
13.3 |
|
|
|
15.5 |
|
|
|
(2.2 |
) |
|
|
(14 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
26.6 |
|
|
$ |
24.0 |
|
|
$ |
2.6 |
|
|
|
11 |
% |
|
$ |
48.6 |
|
|
$ |
43.9 |
|
|
$ |
4.7 |
|
|
|
11 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The increase in real estate sales revenues and cost of real estate sales for the three months
and six months ended June 30, 2011 compared to 2010 was primarily due to increased sales in our
residential real estate segment. Residential real estate sales continue to remain weak however as a
result of oversupply, depressed prices within the Florida real estate markets, poor economic
conditions and the oil spill from the Deepwater Horizon incident in the Gulf of Mexico. In
addition, our rural land sales decreased for the three months ended June 30, 2011 compared to 2010
as a result of our planned reduction in large tract rural land sales as well as weakened demand and
increased for the six months ended June 30, 2011 compared to 2010 due to higher average sales price
of acres sold. Gross margin on real estates sales decreased for the three months and six months
ended June 30, 2011 compared to 2010 primarily as a result of the higher proportion of residential
sales compared to rural land sales.
Resort and club revenues increased for the three months and six months ended June 30, 2011
compared to 2010. The increase in revenue was primarily due to rate and occupancy increases. Cost
of revenues increases were related to occupancy increases. Margins were enhanced through reduced
operating costs achieved primarily through adjustments in staffing models resulting in reduced
labor expenses.
Timber revenues and the cost of timber revenues for the quarter increased due to increased
sales under the fiber agreement. Timber revenues for the six months ended June 30, 2011 compared to
June 30, 2010 increased due to the sale of the timber deed to an investment fund, as well as
improved revenues from other timber operations. Cost of timber sales and depreciation also
increased, to a lesser extent, as a result of the sale of the timber deed. Gross margin on timber
sales decreased for the three months ended June 30, 2011 compared to 2010 due primarily to additional
purchases required subsequent to the timber deed (see Thinnings Supply Agreement discussed in the
forestry segment below). Gross margin on timber sales increased for the six months ended June 30,
2011 compared to 2010 due to higher margin generated on the timber deed transaction.
Other operating expenses relating to the residential real estate, commercial real estate,
rural land and forestry segments include salaries and benefits, marketing, homeowners
association assessments, property taxes and other administrative expenses. Other operating expenses
decreased by $1.3 million, or 17% for the second quarter of 2011 compared to 2010 and $2.2 million,
or 14% for the six months ended June 30, 2011 compared to 2010, both due to lower expenses as a
result of our restructuring and cost savings efforts. For further detailed discussion of revenues
and expenses, see Segment Results below.
Corporate expense. Corporate
expense, consisting of corporate general and administrative
expenses, was $8.3 million and $8.1 million, during the three months ended June 30, 2011 and 2010,
respectively, an increase of 2% due to higher legal fees. Corporate expense was $26.5 million and
$13.5 million, during the six months ended June 30, 2011 and 2010, respectively, an increase of
96%. As a result of the change in control of the Board of Directors in the first quarter of 2011,
the majority of our unvested restricted stock became fully-vested causing an acceleration of stock
compensation expense resulting in a non-cash charge of $4.7 million. We also accelerated the
vesting of most of our former President and CEOs restricted stock pursuant to his Separation
Agreement which resulted in a non-cash charge of $1.5 million to stock compensation expense.
24
Legal
fees increased $3.3 million during the three months ended June 30, 2011 compared to June
30, 2010 and $8.7 million during the six months ended June 30, 2011 compared to six months ended
June 30, 2010, primarily due to defending the securities class action lawsuit, responding to the
SEC inquiry, pursuing the claims against the parties we believe are responsible for the Deepwater
Horizon oil spill, and legal costs incurred in connection with the change in control of the Board
of Directors and other corporate matters.
Impairment Losses. 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 are measured at the lower of carrying value or
fair value less costs to sell. 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. During the second quarter of 2011 and the first six months of 2011, we recorded
impairment charges of $1.7 million relating to homes sold or which management intends to sell in
the near term. Additionally during the six months ended June 30, 2011, we recorded an impairment
charge of $0.8 million related to predevelopment costs written off in connection with the decision
to indefinitely delay the development of our new corporate headquarters.
During the second quarter of 2010 and the first six months of 2010, we recorded impairment
charges on homes and homesites of zero and $0.1 million, respectively, in the residential real
estate segments. During the second quarter of 2010 we also recorded a $0.5 million write-down
resulting from a renegotiated builder note receivable in the residential segment.
Restructuring charge. On February 25, 2011, we entered into a Separation Agreement with Wm.
Britton Greene in connection with his resignation as President, Chief Executive Officer and
director of the Company. In the first quarter of 2011, we expensed $4.2 million of restructuring
charges under the terms of this agreement (not including the additional $1.5 million of non-cash
compensation expense arising from the accelerated vesting of Mr. Greens restricted stock grants).
On April 11, 2011, we entered into separation agreements with four members of senior
management, including William S. McCalmont, Executive Vice President and Chief Financial Officer,
Roderick T. Wilson, President-West Bay Sector, Rusty Bozman, Senior Vice President-Corporate
Development and Reece B. Alford, Senior Vice President, General Counsel and Secretary.
Additionally, certain other employees were terminated pursuant to our present restructuring plan.
In the second quarter of 2011, we expensed $5.9 million related to these terminations including
amounts under the terms of the separation agreements.
We recorded restructuring charges of $1.2 million and $2.7 million for the three months and
six months ended June 30, 2010 respectively, under our 2010 restructuring and relocation program
related to termination and relocation benefits to employees as well as certain ancillary facility
related costs. See Note 6 to our consolidated financial statements for further information
regarding our restructuring charges.
Other income (expense). Other income (expense) consists of investment income, interest
expense, gains on sales and dispositions of assets, fair value adjustment of our retained interest
in monetized installment note receivables and other income. Other income (expense) was $0.3 million
and $0.5 million for the three months ended June 30, 2011 and 2010, respectively, and $0.6
million and less than $(0.1) million for the six months ended June 30, 2011 and 2010, respectively.
Investment income, net decreased $0.3 million and $0.5 million during the three and six months
ended June 30, 2011 compared to 2010, respectively, primarily as a result of lower investment
returns on our cash balances. Interest expense decreased $0.2 million during the three and six
months ended June 30, 2011 compared to 2010. Other, net decreased less than $0.1 million during
the three months ended and increased $0.8 million during the six months ended June 30, 2011
compared to 2010. The $0.8 million increase in other income was primarily the result of a $1.3
million charge for litigation settlement that occurred in 2010.
Equity in (loss) income of unconsolidated affiliates. We have investments in affiliates that
are accounted for by the equity method of accounting. Equity in (loss) income primarily related to
joint venture projects within our residential real estate segment which projects are now
substantially sold out.
25
Income tax (benefit) expense. Income tax (benefit) expense totaled $(6.9) million and $(6.1)
million for the three months ended June 30, 2011 and 2010, respectively and $0.6 million and
$(12.7) million for the six months ended June 30, 2011 and 2010, respectively. Our effective tax
rate was 34% and 42% for the three months ended June 30, 2011 and 2010, respectively, and 44% and
39% for the six months ended June 30, 2011 and 2010, respectively.
Segment Results
Residential Real Estate
Our residential sales improved from the previous year, although due to the continuing real
estate downturn, the slow economic recovery, the continuing impact from the Deepwater Horizon oil
spill and other adverse market conditions sales remain weak. Inventories of resale homes and
homesites remain high in our markets and prices remain depressed, and predicting when real estate
markets will return to health remains difficult. Although we have noticed some renewed interest in
residential real estate activity, we do not expect any significant improvement in market conditions
during the remainder of 2011.
We recorded impairment charges of $1.7 million in the three months and the six months ended
June 30, 2011 related to homes sold or which management intends to sell in the near term. We
recorded impairment charges of $0.5 million and $0.6 million in the three months and six months
ended June 30, 2010, respectively primarily related to a renegotiated builder note receivable.
The table below sets forth the results of continuing operations of our residential real estate
segment for the three and six months ended June 30, 2011 and 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2011 |
|
|
2010 |
|
|
2011 |
|
|
2010 |
|
|
|
(In millions) |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate sales |
|
$ |
2.8 |
|
|
$ |
1.6 |
|
|
$ |
5.1 |
|
|
$ |
2.2 |
|
Resort and club revenues |
|
|
13.0 |
|
|
|
10.8 |
|
|
|
18.1 |
|
|
|
15.4 |
|
Other revenues |
|
|
0.6 |
|
|
|
0.5 |
|
|
|
1.0 |
|
|
|
0.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
16.4 |
|
|
|
12.9 |
|
|
|
24.2 |
|
|
|
18.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of real estate sales |
|
|
2.2 |
|
|
|
1.1 |
|
|
|
3.9 |
|
|
|
1.5 |
|
Cost of resort and club revenues |
|
|
11.0 |
|
|
|
9.6 |
|
|
|
17.5 |
|
|
|
16.1 |
|
Cost of other revenues |
|
|
0.4 |
|
|
|
0.6 |
|
|
|
0.9 |
|
|
|
1.1 |
|
Other operating expenses |
|
|
4.1 |
|
|
|
4.8 |
|
|
|
8.7 |
|
|
|
10.1 |
|
Depreciation and amortization |
|
|
2.4 |
|
|
|
2.5 |
|
|
|
4.9 |
|
|
|
5.1 |
|
Restructuring charges |
|
|
0.2 |
|
|
|
|
|
|
|
0.2 |
|
|
|
0.7 |
|
Impairment losses |
|
|
1.7 |
|
|
|
0.5 |
|
|
|
1.7 |
|
|
|
0.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
|
22.0 |
|
|
|
19.1 |
|
|
|
37.8 |
|
|
|
35.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense) |
|
|
(0.7 |
) |
|
|
(0.9 |
) |
|
|
(1.5 |
) |
|
|
(1.7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax (loss) from continuing operations |
|
$ |
(6.3 |
) |
|
$ |
(7.1 |
) |
|
$ |
(15.1 |
) |
|
$ |
(18.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
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., development 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, four golf courses, marina
operations and other related resort activities. Other revenues and cost of other revenues consist
primarily of brokerage fees and rental operations.
Three Months Ended June 30, 2011 and 2010
The following table sets forth the components of our real estate sales and cost of real estate
sales related to homes and homesites:
26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2011 |
|
|
Three Months Ended June 30, 2010 |
|
|
|
Homes |
|
|
Homesites |
|
|
Total |
|
|
Homes |
|
|
Homesites |
|
|
Total |
|
|
|
(Dollars in millions) |
|
Sales |
|
$ |
0.5 |
|
|
$ |
2.3 |
|
|
$ |
2.8 |
|
|
$ |
|
|
|
$ |
1.4 |
|
|
$ |
1.4 |
|
Cost of sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct costs |
|
|
0.5 |
|
|
|
1.6 |
|
|
|
2.1 |
|
|
|
|
|
|
|
0.8 |
|
|
|
0.8 |
|
Selling costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.1 |
|
|
|
0.1 |
|
Other indirect costs |
|
|
|
|
|
|
0.1 |
|
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of sales |
|
|
0.5 |
|
|
|
1.7 |
|
|
|
2.2 |
|
|
|
|
|
|
|
0.9 |
|
|
|
0.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
$ |
|
|
|
$ |
0.6 |
|
|
$ |
0.6 |
|
|
$ |
|
|
|
$ |
0.5 |
|
|
$ |
0.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit margin |
|
|
|
% |
|
|
26 |
% |
|
|
21 |
% |
|
|
|
% |
|
|
36 |
% |
|
|
36 |
% |
Units sold |
|
|
1 |
|
|
|
24 |
|
|
|
25 |
|
|
|
|
|
|
|
16 |
|
|
|
16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table sets forth home and homesite sales activity by geographic region and
property type.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Month Ended June 30, 2011 |
|
|
Three Month Ended June 30, 2010 |
|
|
|
Closed |
|
|
|
|
|
|
Cost of |
|
|
Gross |
|
|
Closed |
|
|
|
|
|
|
Cost of |
|
|
Gross |
|
|
|
Units |
|
|
Revenues |
|
|
Sales |
|
|
Profit |
|
|
Units |
|
|
Revenues |
|
|
Sales |
|
|
Profit |
|
|
|
(Dollars in millions) |
|
Northwest Florida: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Resort and Seasonal |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Single-family homes |
|
|
1 |
|
|
$ |
0.5 |
|
|
$ |
0.5 |
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Homesites |
|
|
12 |
|
|
|
1.8 |
|
|
|
1.3 |
|
|
|
0.5 |
|
|
|
11 |
|
|
|
1.1 |
|
|
|
0.8 |
|
|
|
0.3 |
|
Primary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homesites |
|
|
12 |
|
|
|
0.5 |
|
|
|
0.4 |
|
|
|
0.1 |
|
|
|
5 |
|
|
|
0.3 |
|
|
|
0.1 |
|
|
|
0.2 |
|
Northeast Florida: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Primary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Single-family homes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homesites |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
25 |
|
|
$ |
2.8 |
|
|
$ |
2.2 |
|
|
$ |
0.6 |
|
|
|
16 |
|
|
$ |
1.4 |
|
|
$ |
0.9 |
|
|
$ |
0.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Also included in real estate sales are land sales of $0.2 million with related costs of $0.2
million for the second quarter of 2010.
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 Breakfast Point, Hawks Landing and SouthWood. Our Northeast
Florida community consisted of RiverTown.
Northwest Florida resort and seasonal homesite closings in the second quarter of 2011 included
ten homesites at WaterColor, and two at WaterSound West Beach, compared to seven at WaterColor and
four at WaterSound West Beach in the second quarter of 2010. Primary homesite closings included
three at Hawks Landing, one at Breakfast Point, six at Southwood and two in Port St. Joe during
the second quarter of 2011 compared to five at Hawks Landing in second quarter of 2010.
Resort and club revenues included revenues from the WaterColor Inn, WaterColor and WaterSound
Beach vacation rental programs and other resort, golf club and marina operations. Resort and club
revenues were $13.0 million in the second quarter of 2011, with $11.0 million in related costs,
compared to revenues totaling $10.8 million with $9.6 million in related costs in the second
quarter of 2010. The increase in revenues was primarily due
27
to rate increases at the WaterColor Inn and rate increases and higher occupancy in the
vacation rental programs. The increase in costs was related to the increased occupancy.
Other operating expenses included salaries and benefits, marketing, homeowners association
assessments, project administration, property taxes and other administrative expenses. Other
operating expenses were $4.1 million in the second quarter of 2011 compared to $4.8 million in the
second quarter of 2010. The decrease of $0.7 million in operating expenses was primarily due to
reductions in employee costs along with reductions in homeowners association assessments, other project costs and
property taxes.
Other expense was $0.7 million during the second quarter of 2011 which primarily consisted of
interest expense associated with our community development district obligations which was not
capitalized in 2011 due to reduced spending levels.
Six Months Ended June 30, 2011 and 2010
The following table sets forth the components of our real estate sales and cost of real estate
sales related to homes and homesites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2011 |
|
|
Six Months Ended June 30, 2010 |
|
|
|
Homes |
|
|
Homesites |
|
|
Total |
|
|
Homes |
|
|
Homesites |
|
|
Total |
|
|
|
(Dollars in millions) |
|
Sales |
|
$ |
0.5 |
|
|
$ |
4.6 |
|
|
$ |
5.1 |
|
|
$ |
|
|
|
$ |
2.0 |
|
|
$ |
2.0 |
|
Cost of sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct costs |
|
|
0.5 |
|
|
|
3.1 |
|
|
|
3.6 |
|
|
|
|
|
|
|
1.2 |
|
|
|
1.2 |
|
Selling costs |
|
|
|
|
|
|
0.1 |
|
|
|
0.1 |
|
|
|
|
|
|
|
0.1 |
|
|
|
0.1 |
|
Other indirect costs |
|
|
|
|
|
|
0.3 |
|
|
|
0.3 |
|
|
|
|
|
|
|
0.1 |
|
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of sales |
|
|
0.5 |
|
|
|
3.5 |
|
|
|
4.0 |
|
|
|
|
|
|
|
1.4 |
|
|
|
1.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
$ |
|
|
|
$ |
1.1 |
|
|
$ |
1.1 |
|
|
$ |
|
|
|
$ |
0.6 |
|
|
$ |
0.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit margin |
|
|
|
% |
|
|
24 |
% |
|
|
22 |
% |
|
|
|
% |
|
|
30 |
% |
|
|
30 |
% |
Units sold |
|
|
1 |
|
|
|
46 |
|
|
|
47 |
|
|
|
|
|
|
|
22 |
|
|
|
22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table sets forth home and homesite sales activity by geographic region and
property type.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2011 |
|
|
Six Months Ended June 30, 2010 |
|
|
|
Closed |
|
|
|
|
|
|
Cost of |
|
|
Gross |
|
|
Closed |
|
|
|
|
|
|
Cost of |
|
|
Gross |
|
|
|
Units |
|
|
Revenues |
|
|
Sales |
|
|
Profit |
|
|
Units |
|
|
Revenues |
|
|
Sales |
|
|
Profit |
|
|
|
(Dollars in millions) |
|
Northwest Florida: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Resort and Seasonal |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Single-family homes |
|
|
1 |
|
|
$ |
0.5 |
|
|
$ |
0.5 |
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Homesites |
|
|
26 |
|
|
|
3.7 |
|
|
|
2.8 |
|
|
|
0.9 |
|
|
|
16 |
|
|
|
1.6 |
|
|
|
1.2 |
|
|
|
0.4 |
|
Primary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homesites |
|
|
20 |
|
|
|
0.9 |
|
|
|
0.7 |
|
|
|
0.2 |
|
|
|
6 |
|
|
|
0.4 |
|
|
|
0.2 |
|
|
|
0.2 |
|
Northeast Florida: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Primary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Single-family homes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homesites |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
47 |
|
|
$ |
5.1 |
|
|
$ |
4.0 |
|
|
$ |
1.1 |
|
|
|
22 |
|
|
$ |
2.0 |
|
|
$ |
1.4 |
|
|
$ |
0.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28
Also included in real estate sales are land sales of $0.2 million with related cost of sales
of $0.2 million for the six months ended June 30, 2010.
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 Breakfast Point, Hawks Landing and Southwood. Our Northeast
Florida community consisted of RiverTown.
Northwest Florida resort and seasonal homesite closings for the six months ended June 30, 2011
included fifteen at WaterColor, one at WaterSound,and ten at WaterSound West Beach compared to
eleven at WaterColor and four at WaterSound West Beach and one at WaterSound in 2010. Primary
homesites closings in 2011 included three at Hawks Landing, one at Breakfast Point, thirteen at
Southwood and three in Port St. Joe compared to six at Hawks Landing in 2010.
Resort and club revenues were $18.1 million for the six months ended June 30, 2011, with $17.5
million in related costs compared to revenue totaling $15.4 million for the six months ended June
30, 2010, with $16.1 million in related costs. Revenues increased $2.7 million, primarily due to
rate increases at the Watercolor Inn and vacation rental programs. The increase in costs was
related to increased occupancy.
Other operating expenses were $8.7 million for the six months ended June 30, 2011 compared to
$10.1 million for the six months ended June 30, 2010. The decrease of $1.4 million in operating
expenses was primarily due to reductions in employee costs along with reductions in homeowners
association assessments and property taxes.
We recorded restructuring charges in our residential real estate segment of $0.2 million
during the first six months of 2011 and $0.7 million in the first six months of 2010.
Other expense was $1.5 million during the first six months of 2011 which primarily consisted
of interest expense associated with our community development district obligations which was not
capitalized in 2011 due to reduced development spending levels.
Commercial Real Estate
The market for commercial real estate, particularly retail, remained weak during the first
half of 2011.
The table below sets forth the results of the continuing operations of our commercial real
estate segment for the three and six months ended June 30, 2011 and 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2011 |
|
|
2010 |
|
|
2011 |
|
|
2010 |
|
|
|
(In millions) |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate sales |
|
$ |
0.6 |
|
|
$ |
|
|
|
$ |
0.8 |
|
|
$ |
0.3 |
|
Other revenues |
|
|
|
|
|
|
0.1 |
|
|
|
0.1 |
|
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
0.6 |
|
|
|
0.1 |
|
|
|
0.9 |
|
|
|
0.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of real estate sales |
|
|
0.5 |
|
|
|
|
|
|
|
0.5 |
|
|
|
|
|
Cost of other revenues |
|
|
0.1 |
|
|
|
|
|
|
|
0.2 |
|
|
|
|
|
Other operating expenses |
|
|
1.3 |
|
|
|
1.5 |
|
|
|
2.8 |
|
|
|
3.1 |
|
Restructuring charges |
|
|
1.7 |
|
|
|
|
|
|
|
1.7 |
|
|
|
|
|
Impairment losses |
|
|
|
|
|
|
|
|
|
|
0.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
|
3.6 |
|
|
|
1.5 |
|
|
|
6.0 |
|
|
|
3.1 |
|
Other income |
|
|
0.1 |
|
|
|
0.1 |
|
|
|
0.3 |
|
|
|
0.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax (loss) from continuing operations |
|
$ |
(2.9 |
) |
|
$ |
(1.3 |
) |
|
$ |
(4.8 |
) |
|
$ |
(1.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
29
Late in the second quarter of 2011, we began collecting rent from the build-to-suit lease with
CVS Pharmacy in Port St. Joe and revenue from the three hundred space covered parking facility at
the entrance to the Northwest Florida Beaches International Airport. The projects will contribute
to our recurring revenue going forward.
We had one commercial land sale in Bay County during the three months ended June 30, 2011 of 1
acre at a price of $550,000 and no sales during the three months ended June 30, 2010. Additionally,
we had one commercial land sale in Bay County included in the six months ended June 30, 2011 of 1.2
acres at an average price of $192,000 per acre and one in Bay County during the six months ended
June 30, 2010 of 2.8 acres at an average price of $110,000 per acre.
Other operating expenses included costs associated with operating our parking facility at the
Northwest Florida Beaches International Airport as well as personnel and administrative expenses
related to our commercial real estate operations.
We recorded an impairment charge in the commercial real estate segment of $0.8 million for the
six months ended June 30, 2011 as a result of the write-off of predevelopment costs arising from
the decision to indefinitely delay the development of the new corporate headquarters building in
VentureCrossings Enterprise Centre during the first quarter of 2011.
We recorded restructuring charges in our commercial real estate segment of $1.7 million during
the three months and six months ended June, 2011 pursuant to our 2011 restructuring program.
Rural Land Sales
During the first half of 2011, demand for rural land sales continued to remain weak as a
result of difficult market conditions. In addition, in 2011 we continued to sell only non-strategic
rural land and to principally use our rural land resources to create sources of recurring revenue.
The table below sets forth the results of operations of our rural land sales segment for the three
and six months ended June 30, 2011 and 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2011 |
|
|
2010 |
|
|
2011 |
|
|
2010 |
|
|
|
(In millions) |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate sales |
|
$ |
|
|
|
$ |
1.2 |
|
|
$ |
2.8 |
|
|
$ |
2.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of real estate sales |
|
|
|
|
|
|
0.1 |
|
|
|
0.1 |
|
|
|
0.2 |
|
Other operating expenses |
|
|
0.3 |
|
|
|
0.7 |
|
|
|
0.8 |
|
|
|
1.4 |
|
Restructuring charge |
|
|
0.2 |
|
|
|
|
|
|
|
0.2 |
|
|
|
0.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
|
0.5 |
|
|
|
0.8 |
|
|
|
1.1 |
|
|
|
2.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income |
|
|
0.1 |
|
|
|
0.3 |
|
|
|
0.2 |
|
|
|
0.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax (loss) income from continuing operations |
|
$ |
(0.4 |
) |
|
$ |
0.7 |
|
|
$ |
1.9 |
|
|
$ |
0.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rural land sales for the three and six months ended June 30 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
Number of |
|
Average Price |
|
Gross Sales |
|
Gross |
|
|
Sales |
|
Acres |
|
per Acre |
|
Price |
|
Profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
(In millions) |
Three Months Ended: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2011 |
|
|
1 |
|
|
|
5 |
|
|
$ |
15,152 |
|
|
$ |
0.08 |
|
|
$ |
0.07 |
|
June 30, 2010 |
|
|
3 |
|
|
|
42 |
|
|
$ |
9,482 |
|
|
$ |
0.4 |
|
|
$ |
0.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2011 |
|
|
2 |
|
|
|
103 |
|
|
$ |
27,387 |
|
|
$ |
2.8 |
|
|
$ |
2.7 |
|
June 30, 2010 |
|
|
5 |
|
|
|
114 |
|
|
$ |
6,770 |
|
|
$ |
0.8 |
|
|
$ |
0.7 |
|
30
We made a decision to sell only non-strategic rural land and to create sources of recurring
revenue. We continued with that same strategy in 2011. We may, however, rely on rural land sales as
a significant source of revenues and cash in the future.
During the three months ended June 30, 2011, we closed one land sale of 5 acres in Franklin
County for $75,760, or $15,152 per acre. 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.
We also sell credits to developers, utility companies and other users from our wetland
mitigation banks. Included in real estate sales was $0.6 million related to the sale of nine
mitigation bank credits at an average sales price of $65,201 per credit during the first six months
of 2010.
Sales and costs of sales for the second quarter and six months ended June 30, 2010 also
included previously deferred revenue and gain on sales of $0.4 million resulting from an easement
sale transaction.
Forestry
Our forestry segment focuses on the management and harvesting of our extensive timber
holdings. We grow, harvest and sell sawtimber, wood fiber and forest products and provide land
management services for conservation properties.
The table below sets forth the results of the continuing operations of our forestry segment
for the three and six months ended June 30, 2011 and 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2011 |
|
|
2010 |
|
|
2011 |
|
|
2010 |
|
|
|
(In millions) |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timber sales |
|
$ |
8.2 |
|
|
$ |
7.8 |
|
|
$ |
70.8 |
|
|
$ |
14.2 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of timber sales |
|
|
6.0 |
|
|
|
5.1 |
|
|
|
12.2 |
|
|
|
9.5 |
|
Other operating expenses |
|
|
0.5 |
|
|
|
0.5 |
|
|
|
1.0 |
|
|
|
1.0 |
|
Depreciation and amortization |
|
|
0.4 |
|
|
|
0.5 |
|
|
|
4.1 |
|
|
|
1.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
|
6.9 |
|
|
|
6.1 |
|
|
|
17.3 |
|
|
|
11.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income |
|
|
0.5 |
|
|
|
0.5 |
|
|
|
1.0 |
|
|
|
1.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income from continuing operations |
|
$ |
1.8 |
|
|
$ |
2.2 |
|
|
$ |
54.5 |
|
|
$ |
3.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2011 and 2010
Timber sales during the three months ended June 30, 2011 and June 30, 2010 arose from sales of
wood fiber to RockTenn, formerly known as Smurfit-Stone Container Company, pursuant to our Wood
Fiber Agreement and sales in the open market. In November 2010, we entered into a new Wood Fiber
Agreement, which increased our pricing terms by approximately 25%, to more closely mirror current
market rates. Sales under the wood fiber agreement increased to $4.4 million, for 170,000 tons, in
the second quarter of 2011 from $3.5 million, for 167,000 tons, during the second quarter of 2010
principally as a result of the increased pricing. Open market sales in the second quarter totaled
$3.7 million (133,000 tons) in 2011 as compared to $4.0 million (146,000 tons) in 2010, with fairly
consistent pricing. Revenues for 2011 and 2010 included $0.1 million related to land management services. Our 2010 revenues also included $0.2 million related to the Biomass Crop assistance program sponsored by the federal government.
Cost of sales for the forestry segment increased $0.9 million in the second quarter of 2011
compared to 2010 due primarily to the purchases made pursuant to the Thinnings Supply Agreement
discussed below and increased logging and hauling expense related to diesel fuel prices.
Six Months Ended June 30, 2011 and 2010
Timber sales during the six months ended June 30, 2011 arose from the sale of a timber deed
during the first quarter of 2011 and from our ongoing sales of wood fiber. On March 31, 2011, we
entered into a $55.9 million
31
agreement for the sale of a timber deed which gives the purchaser the right to harvest timber
on specific tracts of land (encompassing 40,975 acres) over a maximum term of 20 years. As part of
the agreement, we also entered into a Thinnings Supply Agreement to purchase first thinnings of
timber included in the timber deed at fair market value from the investment fund. During the first
six months of 2011, we recognized revenue of $54.5 million related to the timber deed with $1.4
million recorded as an imputed land lease to be recognized over the life of the timber deed. The
resulting pre-tax gain on this timber deed transaction, net of cost of sales and depletion of $4.2
million was $50.3 million during the first quarter.
During the first six months of 2011, we also had sales of pulpwood (1) under the wood fiber
agreement of $8.4 million (325,000 tons) in the first six months of 2011, up from $7.1 million
(342,000 tons) for the same period of 2010 and (2) in open market sales of $7.7 million (273,000
tons) up from $6.3 million (256,000 tons) for the same period in 2010. Increased sales under the
wood fiber agreement were due to the increased pricing, slightly offset by lower volume. Revenues
from open market sales increased due to more sales of delivered wood in 2011 which sell at a higher
price than non-delivered wood. Our 2011 and 2010 revenues included $0.2 million related to the revenue
received for land management services. Our 2010 revenues included $0.6 million related to the Biomass Crop assistance program sponsored by the federal government.
Cost of sales for the forestry segment increased $2.7 million in the first six months of 2011
compared to 2010 due primarily to professional fees associated with the timber deed and purchases
made pursuant to the Thinnings Supply Agreement.
Liquidity and Capital Resources
As of June 30, 2011, we had cash and cash equivalents of $199.8 million, compared to $183.8
million as of December 31, 2010.
We invest our excess cash primarily in bank deposit accounts, 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.
On June 28, 2011, we notified Branch Banking and Trust Company that we were exercising our
right to early terminate the Credit Agreement which was scheduled to mature on September 19, 2012.
The termination was effective on July 1, 2011. The description of the material terms of the Credit
Agreement is set forth in the Companys Form 10-K for the year ended December 31, 2010. We did not
incur any prepayment penalties in connection with the early termination of the Credit Agreement.
We believe that our current cash position and our anticipated cash flows will provide us with
sufficient liquidity to satisfy our currently anticipated working capital needs and capital
expenditures. The early termination of the Credit Agreement will allow us to avoid unused fees
payable pursuant to the agreement and eliminate contractual restrictions and covenants set forth in
the Credit Agreement, including, without limitation, restrictions relating to acquisitions or
dispositions, investments, capital expenditures, dividends and stock repurchases. We believe that
this additional flexibility will permit us to explore additional opportunities that may be
accretive to shareholders.
We have entered into a strategic alliance agreement with Southwest Airlines to facilitate
low-fare air service to the new Northwest Florida Beaches International Airport. 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 by making break-even payments. There has been no reimbursement required
since the effective date of the agreement in May 2010.
Cash Flows from Operating Activities
Net cash provided by (used in) operations was $26.7 million, due primarily to the sale of the
timber deed and ($29.4) million in the first six months of 2011 and 2010, respectively. During such
periods, capital expenditures relating to our residential real estate segment were $3.5 million and
$3.5 million, respectively. Additional capital expenditures were $6.4 million and $2.2 million,
respectively, and primarily related to commercial real estate development in Venture Crossings.
32
Cash Flows from Investing Activities
Net cash (used in) provided by investing activities was $(6.0) million and $0.1 million in the
first six months of 2011 and 2010, respectively. During the six months ended June 30, 2011 $4.4
million was contributed to the East San Marco joint venture for the purpose of paying off the joint
ventures debt.
Cash Flows from Financing Activities
Net cash used in (provided by) financing activities was $(4.7) million and $4.3 million in
the first six months of 2011 and 2010, respectively.
Off-Balance Sheet Arrangements
There were no material changes to the quantitative and qualitative disclosures about
off-balance sheet arrangements presented in our Form 10-K for the year ended December 31, 2010,
during the first six months of 2011.
Contractual Obligations and Commercial Commitments
There have been no material changes in the amounts of our contractual obligations and
commercial commitments presented in our Form 10-K for the year ended December 31, 2010 during the
first six months of 2011 except for obligations under the Thinnings Supply Agreement and the
termination of the credit agreement with Branch Banking and Trust Company as previously discussed.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes to the quantitative and qualitative disclosures about
market risk set forth in our Form 10-K for the year ended December 31, 2010, during the first six
months of 2011.
Forward-Looking Statements
This quarterly report contains forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These
statements concern expectations, beliefs, projections, plans and strategies, anticipated events or
trends and similar expressions concerning matters that are not historical facts. Specifically, this
quarterly report contains forward-looking statements regarding:
|
|
|
our expectations on the potential economic recovery and future growth of (i) the
residential and commercial real estate industry and (ii) resort activity in Northwest
Florida, in 2011 and beyond, and the drivers of such growth; |
|
|
|
|
our expectations regarding the impact of our recent restructuring initiatives on our
future operating expenses and results of operations; |
|
|
|
|
our expectations regarding our currently anticipated working capital needs and capital expenditures; |
|
|
|
|
our expectations regarding the amount of cash we expect to generate from operating
activities and that such amounts will provide us with sufficient liquidity to satisfy our
working capital needs and capital expenditures and provides us with the financial
flexibility to withstand the current market downturn; |
|
|
|
|
our expectations regarding the projected operating results and economic impact of the
Northwest Florida Beaches International Airport and anticipated impact of our reimbursement
obligation to Southwest Airlines on our future operating results; |
|
|
|
|
expectations regarding the impact of pending environmental litigation matters or
governmental proceedings on our financial position or results of operations; |
33
|
|
|
our beliefs regarding the impact of the Deepwater Horizon oil spill on real estate
development in Northwest Florida, the value of claims that we may have in connection with
the settlement of litigation arising as a result of such oil spill and our expectations
regarding the amounts and timing of any recoveries; and |
|
|
|
|
our belief that by removing the contractual restrictions imposed by our prior revolving
credit facility, we will have flexibility that will permit us to explore additional
opportunities that may be accretive to shareholders. |
These forward-looking statements reflect our current views about future events and are subject
to risks, uncertainties and assumptions. We wish to caution readers that certain important factors
may have affected and could in the future affect our actual results and could cause actual results
to differ significantly from those expressed in any forward-looking statement. The most important
factors that could prevent us from achieving our goals, and cause the assumptions underlying
forward-looking statements and the actual results to differ materially from those expressed in or
implied by those forward-looking statements include, but are not limited to, the following:
|
|
|
a delay in the recovery of real estate markets in Florida and across the nation, or any
further downturn in such markets; |
|
|
|
|
economic or other business conditions that affect the desire or ability of our customers
to purchase new homes in markets in which we conduct our business, such as reductions in
the availability of mortgage financing or property insurance, increases in foreclosures,
interest rates, the cost of property insurance, inflation, or unemployment rates or
declines in consumer confidence or the demand for, or the prices of, housing; |
|
|
|
|
our ability to successfully dispose of developed properties or undeveloped land or
homesites at expected prices and within anticipated time frames; |
|
|
|
|
our ability to effect our growth strategies in our commercial and residential real
estate operations and our rural land and forestry business; |
|
|
|
|
an increase in the prices, or shortages in the availability, of labor and building
materials; |
|
|
|
|
a decline in the value of the land and home inventories we maintain or possible future
write-downs of the book value of our real estate assets and notes receivable; |
|
|
|
|
the impact of natural or man-made disasters or weather conditions, including hurricanes
and other severe weather conditions, on our business, including the economic health of the
Northwest Florida region, the willingness of businesses and home buyers to invest in the
region and of tourists to visit, and on the condition of our timber; |
|
|
|
|
the adverse impact of Deepwater Horizon oil spill to the economy and future growth of
Northwest Florida and other coastal states; |
|
|
|
|
the expense, management distraction and possible liability associated with pending
securities class action litigation, shareholder derivative litigation and/or the SEC
inquiry; |
|
|
|
|
the financial impact to our results of operations if the Smurfit-Stone mill in Panama
City were to permanently cease operations; |
|
|
|
|
a reduction or termination of air service at Northwest Florida Beaches International
Airport, especially any reduction or termination of Southwest Airlines service; |
|
|
|
|
potential liability under environmental or construction laws, or other laws or
regulations; |
34
|
|
|
expectations regarding the impact of pending environmental litigation matters or
governmental proceedings on our financial position or results of operations; |
|
|
|
|
the amounts and timing of any recoveries arising from the Horizon Deepwater Oil Spill
litigation; |
|
|
|
|
our ability to identify and successfully implement new opportunities that are accretive
to shareholders; |
|
|
|
|
changes in laws, regulations or the regulatory environment affecting the development of
real estate or forestry activities; |
|
|
|
|
significant tax payments arising from any acceleration of deferred taxes; |
|
|
|
|
our ability to realize the anticipated benefits of our recent restructuring, including
the expected reductions in operating and corporate expenses on an on-going basis; and |
|
|
|
|
our estimates of upfront costs associated with our restructuring initiatives; consulting
or other professional fees that we may incur as a result of our reduced headcount and the
impact of our restructuring initiatives on our operations |
Item 4. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures. Our Principal 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) under the Securities Exchange Act of 1934,
as amended ) as of the end of the period covered by this report. Based on this evaluation, our
Principal 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.
(b) Changes in Internal
Controls. During the period ended June 30, 2011, 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.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Oil Spill Lawsuits
We have several ongoing lawsuits against certain parties we believe are responsible for
Deepwater Horizon oil spill in the Gulf of Mexico. The oil spill has negatively impacted our
properties, results of operations and stock price.
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. On March 15,
2011, Judge Leonard Stark of the United States District Court for the District of Delaware issued
an order in our action against Transocean Holdings, LLC and its related entities agreeing with us
that the case must proceed in Delaware state court, not in federal court. Transocean appealed that
ruling to the Third Circuit Court of Appeals, which promptly dismissed the appeal. On March 25,
2011, Judge Carl Barbier of the United States District Court for the Eastern District of Louisiana,
who is overseeing the federal multidistrict litigation against a number of the Deepwater Horizon
defendants, temporarily stayed our case against Transocean until he determines certain related
legal issues, which were scheduled for oral argument on May 26, 2011. On June
8, 2011, we filed a notice of appeal from Judge Barbiers order staying the Transocean action.
35
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 March 29, 2011, we voluntarily dismissed our separate actions against Halliburton Energy
Services, Inc. and M-I, L.L.C., and filed a new consolidated complaint against both entities in
Delaware Superior Court. Halliburton and M-I removed the consolidated action to Delaware federal
court, and we are now litigating whether this case, like the Transocean case, must proceed in state
court. On April 15, 2011, Judge Barbier in the Eastern District of Louisiana ruled that our prior
dismissal of the separate Halliburton and M-I actions was ineffective, and has restored those cases
to that courts docket. We have filed a petition for writ of mandamus with the Fifth Circuit Court
of Appeals seeking to overturn that order.
Shareholder Lawsuits
We have an ongoing securities class action lawsuit against St. Joe and certain of our current
and former officers pending before Judge Richard Smoak in the United States District Court for the
Northern District of Florida (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 alleging
various securities laws violations primarily related to our accounting for our real
estate assets. The complaint seeks an unspecified amount in damages. On April 5, 2011, at the
request of the lead plaintiff, Judge Smoak issued an order dismissing the claims under the
Securities Act of 1933 and dismissing Deutsche Bank and the current and former director defendants
from the case. We filed a motion to dismiss the remaining claims under the case on April 6, 2011.
On March 29, 2011 and July 21, 2011, two separate derivative lawsuits were filed by shareholders on behalf of St. Joe
against certain of its officers and directors in the United States District Court for the Northern
District of Florida (Nakata v. Greene et. al., No. 5:11-cv-00090 and Packer v. Greene et al.,
No. 3:11-cv-00344). The complaints allege breaches
of fiduciary duties, waste of corporate assets and unjust enrichment arising from substantially
similar allegations as those described above in the Meyer case.
Other
Additional information on certain judicial, regulatory and legal proceedings is incorporated
herein by reference to the information set forth in Note 11 of Notes to Consolidated Financial
Statements included in Part I, Item 1 of this Form 10-Q.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
Our Board of Directors, in a series of board actions, has approved the repurchase of up to an
aggregate of $950.0 million of our outstanding common stock from shareholders from time to time
(the Stock Repurchase Program), of which $103.8 million remained available at June 30, 2011.
Shares may be repurchased through open market repurchases in compliance with Rule 10b-18 of the
Securities Exchange Act of 1934, as amended, through unsolicited or solicited privately negotiated
transactions, or in such other manner as will comply with the terms of applicable federal and state
securities laws and regulations. The timing and amount of any shares repurchased will depend upon a
variety of factors, including market and business conditions, applicable legal requirements and
other
36
factors. The stock repurchase program will continue until otherwise modified or terminated by
our Board of Directors at any time in its sole discretion.
|
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|
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|
|
|
|
|
|
(d) |
|
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|
|
|
|
|
|
|
|
(c) |
|
Maximum Dollar |
|
|
|
|
|
|
|
|
|
|
Total Number of |
|
Amount that |
|
|
(a) |
|
(b) |
|
Shares Purchased |
|
May Yet Be |
|
|
Total Number |
|
Average |
|
as Part of Publicly |
|
Purchased Under |
|
|
of Shares |
|
Price Paid |
|
Announced Plans |
|
the Plans or |
Period |
|
Purchased(1) |
|
per Share |
|
or Programs |
|
Programs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
Month Ended April 30, 2011 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
103,793 |
|
Month Ended May 31, 2011 |
|
|
2,461 |
|
|
$ |
25.22 |
|
|
|
|
|
|
$ |
103,793 |
|
Month Ended June 30, 2011 |
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
103,793 |
|
|
|
|
(1) |
|
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. |
37
Item 6. Exhibits
|
|
|
Exhibit |
|
|
Number |
|
Description |
31.1
|
|
Certification by Principal Executive Officer. |
|
|
|
31.2
|
|
Certification by Chief Financial Officer. |
|
|
|
32.1
|
|
Certification by Principal Executive Officer. |
|
|
|
32.2
|
|
Certification by Chief Financial Officer. |
|
|
|
99.1
|
|
Supplemental Information regarding Land-Use Entitlements,
Sales by Community and other quarterly information. |
|
|
|
101 *
|
|
The following information from the Companys Quarterly Report
on Form 10-Q for the quarterly period ended June 30, 2011,
formatted in XBRL (eXtensible Business Reporting Language): |
|
|
(i) the Consolidated Balance Sheets, (ii) the Consolidated
Statements of Operations, (iii) the Consolidated Statement of
Changes in Equity (iv) the Consolidated Statements of Cash
Flow and (v) Notes to the Consolidated Financial Statements,
tagged as blocks of text. |
|
|
|
* |
|
In accordance with Regulation S-T, the XBRL-related
information in Exhibit 101 to this Quarterly Report on Form
10-Q shall be deemed to be furnished and not filed. |
38
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 thereunto duly authorized.
|
|
|
|
|
|
The St. Joe Company
|
|
Date: August 4, 2011 |
/s/ Park Brady
|
|
|
Park Brady |
|
|
Principal Executive Officer |
|
|
|
|
|
Date: August 4, 2011 |
/s/ Janna L. Connolly
|
|
|
Janna L. Connolly |
|
|
Senior Vice President and Chief Financial Officer |
|
|
39
exv31w1
Exhibit 31.1
CERTIFICATION
I, Park Brady, certify that:
1. I have reviewed this quarterly
report on Form 10-Q for the period ended June 30, 2011 of The
St. Joe Company;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, 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;
(c) Evaluated the effectiveness of the registrants disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrants internal control over financial
reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth
fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrants auditors and the audit
committee of the registrants board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the registrants
ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrants internal control over financial reporting.
Date: August 4, 2011
|
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|
/s/ Park Brady
|
|
|
Park Brady |
|
|
Principal Executive Officer |
|
|
exv31w2
Exhibit 31.2
CERTIFICATION
I, Janna L. Connolly, certify that:
1. I have reviewed this quarterly report on
Form 10-Q for the period ended June 30, 2011 of The
St. Joe Company;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, 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;
(c) Evaluated the effectiveness of the registrants disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrants internal control over financial
reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth
fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrants auditors and the audit
committee of the registrants board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the registrants
ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrants internal control over financial reporting.
Date: August 4, 2011
|
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|
|
|
|
|
|
/s/ Janna L. Connolly
|
|
|
Janna L. Connolly |
|
|
Senior Vice President and Chief Financial Officer |
|
|
exv32w1
Exhibit 32.1
CERTIFICATION
Pursuant to 18 USC §1350, the undersigned officer of The St. Joe Company (the Company)
hereby certifies that the Companys Quarterly Report on Form 10-Q for the period ended June 30,
2011 (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 and that the information contained in the Report fairly presents,
in all material respects, the financial condition and results of operations of the Company.
|
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|
/s/ Park Brady
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|
Park Brady |
|
|
Principal Executive Officer |
|
|
Dated: August 4, 2011
exv32w2
Exhibit 32.2
CERTIFICATION
Pursuant to 18 USC §1350, the undersigned officer of The St. Joe Company (the Company)
hereby certifies that the Companys Quarterly Report on Form 10-Q for the period ended June 30,
2011 (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 and that the information contained in the Report fairly presents,
in all material respects, the financial condition and results of operations of the Company.
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/s/ Janna L. Connolly
|
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Janna L. Connolly |
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|
Senior Vice President and Chief Financial Officer |
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|
Dated: August 4, 2011
exv99w1
Exhibit 99.1
Table 1
Summary of Land-Use Entitlements(1)
Active St. Joe Residential and Mixed-Use Projects
June 30, 2011
|
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|
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Residential |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units |
|
Residential |
|
Total |
|
Remaining |
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|
|
|
|
|
|
|
|
|
|
|
|
|
Closed |
|
Units Under |
|
Residential |
|
Commercial |
|
|
|
|
|
|
Project |
|
Project |
|
Since |
|
Contract as |
|
Units |
|
Entitlements |
Project |
|
Class.(2) |
|
County |
|
Acres |
|
Units(3) |
|
Inception |
|
of 6/30/11 |
|
Remaining |
|
(Sq. Ft.)(4) |
In Development: (5) |
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|
|
|
|
|
|
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Breakfast Point, Phase 1 |
|
PR/RS |
|
Bay |
|
|
132 |
|
|
|
348 |
|
|
|
1 |
|
|
|
|
|
|
|
347 |
|
|
|
|
|
Landings at Wetappo |
|
RR |
|
Gulf |
|
|
113 |
|
|
|
24 |
|
|
|
7 |
|
|
|
|
|
|
|
17 |
|
|
|
|
|
RiverCamps on Crooked Creek |
|
RS |
|
Bay |
|
|
1,491 |
|
|
|
408 |
|
|
|
192 |
|
|
|
|
|
|
|
216 |
|
|
|
|
|
RiverSide at Chipola |
|
RR |
|
Calhoun |
|
|
120 |
|
|
|
10 |
|
|
|
2 |
|
|
|
|
|
|
|
8 |
|
|
|
|
|
RiverTown |
|
PR |
|
St. Johns |
|
|
4,170 |
|
|
|
4,500 |
|
|
|
32 |
|
|
|
|
|
|
|
4,468 |
|
|
|
500,000 |
|
SouthWood |
|
PR |
|
Leon |
|
|
3,370 |
|
|
|
4,770 |
|
|
|
2,565 |
|
|
|
1 |
|
|
|
2,204 |
|
|
|
4,535,588 |
|
SummerCamp Beach |
|
RS |
|
Franklin |
|
|
762 |
|
|
|
499 |
|
|
|
88 |
|
|
|
|
|
|
|
411 |
|
|
|
25,000 |
|
Topsail |
|
PR |
|
Walton |
|
|
115 |
|
|
|
610 |
|
|
|
|
|
|
|
|
|
|
|
610 |
|
|
|
220,000 |
|
WaterColor |
|
RS |
|
Walton |
|
|
499 |
|
|
|
1,140 |
|
|
|
947 |
|
|
|
|
|
|
|
193 |
|
|
|
47,600 |
|
WaterSound |
|
RS |
|
Walton |
|
|
2,425 |
|
|
|
1,432 |
|
|
|
32 |
|
|
|
|
|
|
|
1,400 |
|
|
|
457,380 |
|
WaterSound Beach |
|
RS |
|
Walton |
|
|
256 |
|
|
|
511 |
|
|
|
447 |
|
|
|
|
|
|
|
64 |
|
|
|
29,000 |
|
WaterSound West Beach |
|
RS |
|
Walton |
|
|
62 |
|
|
|
199 |
|
|
|
62 |
|
|
|
|
|
|
|
137 |
|
|
|
|
|
West Bay DSAP I |
|
PR/RS |
|
Bay |
|
|
15,089 |
|
|
|
5,628 |
|
|
|
|
|
|
|
|
|
|
|
5,628 |
|
|
|
4,430,000 |
|
Wild Heron (6) |
|
RS |
|
Bay |
|
|
17 |
|
|
|
28 |
|
|
|
2 |
|
|
|
|
|
|
|
26 |
|
|
|
|
|
WindMark Beach |
|
RS |
|
Gulf |
|
|
2,020 |
|
|
|
1,516 |
|
|
|
150 |
|
|
|
|
|
|
|
1,366 |
|
|
|
76,157 |
|
|
|
|
|
|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal |
|
|
|
|
|
|
30,641 |
|
|
|
21,623 |
|
|
|
4,527 |
|
|
|
1 |
|
|
|
17,095 |
|
|
|
10,320,725 |
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|
In Pre-Development: (5) |
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Avenue A |
|
PR |
|
Gulf |
|
|
6 |
|
|
|
96 |
|
|
|
|
|
|
|
|
|
|
|
96 |
|
|
|
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|
Bayview Estates |
|
PR |
|
Gulf |
|
|
31 |
|
|
|
45 |
|
|
|
|
|
|
|
|
|
|
|
45 |
|
|
|
|
|
Bayview Multifamily |
|
PR |
|
Gulf |
|
|
20 |
|
|
|
300 |
|
|
|
|
|
|
|
|
|
|
|
300 |
|
|
|
|
|
Beacon Hill |
|
RR |
|
Gulf |
|
|
3 |
|
|
|
12 |
|
|
|
|
|
|
|
|
|
|
|
12 |
|
|
|
|
|
Beckrich NE |
|
PR |
|
Bay |
|
|
15 |
|
|
|
74 |
|
|
|
|
|
|
|
|
|
|
|
74 |
|
|
|
|
|
Boggy Creek |
|
PR |
|
Bay |
|
|
630 |
|
|
|
526 |
|
|
|
|
|
|
|
|
|
|
|
526 |
|
|
|
|
|
Bonfire Beach |
|
RS |
|
Bay |
|
|
550 |
|
|
|
750 |
|
|
|
|
|
|
|
|
|
|
|
750 |
|
|
|
70,000 |
|
College Station |
|
PR |
|
Bay |
|
|
567 |
|
|
|
800 |
|
|
|
|
|
|
|
|
|
|
|
800 |
|
|
|
|
|
Cutter Ridge |
|
PR |
|
Franklin |
|
|
10 |
|
|
|
25 |
|
|
|
|
|
|
|
|
|
|
|
25 |
|
|
|
|
|
DeerPoint Cedar Grove |
|
PR |
|
Bay |
|
|
686 |
|
|
|
950 |
|
|
|
|
|
|
|
|
|
|
|
950 |
|
|
|
|
|
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 |
|
|
|
|
|
|
6,498 |
|
|
|
14,466 |
|
|
|
|
|
|
|
|
|
|
|
14,466 |
|
|
|
1,254,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
37,139 |
|
|
|
36,089 |
|
|
|
4,527 |
|
|
|
1 |
|
|
|
31,561 |
|
|
|
11,575,225 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
(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 JOE land classifications for its residential developments or the
residential portion of its mixed-use projects: |
|
|
|
|
|
|
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 horizontal construction has commenced and sales
and/or marketing has commenced or will commence 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 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 WestBay DSAP I. |
Table 2
Summary of Additional Commercial Land-Use Entitlements (1)
(Commercial Projects Not Included in Table 1 Above)
Active St. Joe Commercial Projects
June 30, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acres Sold |
|
Acres Under |
|
|
|
|
|
|
Project |
|
Since |
|
Contract |
|
Total Acres |
Project |
|
County |
|
Acres |
|
Inception |
|
As of 6/30/11 |
|
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 |
|
|
|
|
|
|
|
0 |
|
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 JOE projects that are either operating, under development or in the pre-development
stage. |
Table 3
Residential Real Estate
Sales Activity
Three Months Ended June 30,
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011 |
|
|
2010 |
|
|
|
Number |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number |
|
|
|
|
|
|
|
|
|
|
|
|
|
of Units |
|
|
|
|
|
|
Cost of |
|
|
Gross |
|
|
of Units |
|
|
|
|
|
|
Cost of |
|
|
Gross |
|
|
|
Closed |
|
|
Revenue |
|
|
Sales(1) |
|
|
Profit |
|
|
Closed |
|
|
Revenue |
|
|
Sales(1) |
|
|
Profit |
|
Homesites |
|
|
24 |
|
|
$ |
2.3 |
|
|
$ |
1.7 |
|
|
$ |
0.6 |
|
|
|
16 |
|
|
$ |
1.4 |
|
|
$ |
0.9 |
|
|
$ |
0.5 |
|
Homes |
|
|
1 |
|
|
|
0.5 |
|
|
|
0.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
25 |
|
|
$ |
2.8 |
|
|
$ |
2.2 |
|
|
$ |
0.6 |
|
|
|
16 |
|
|
$ |
1.4 |
|
|
$ |
0.9 |
|
|
$ |
0.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Cost of sales for homesites in the second quarter of 2011 consisted of $1.6
million in direct costs and $0.1 million in indirect costs. Cost of sales for homesites in
the second quarter of 2010 consisted of $0.8 million in direct costs and $0.1 million in
selling costs. Cost of sales for homes in the second quarter of 2011 consisted of $0.5
million in direct costs. |
Table 4
Residential Real Estate Sales Activity
Three Months Ended June 30,
($ in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011 |
|
|
2010 |
|
|
|
Units |
|
|
Avg. |
|
|
|
|
|
|
Avg. |
|
|
Units |
|
|
Avg. |
|
|
|
|
|
|
Avg. |
|
|
|
Closed |
|
|
Price |
|
|
Accepted(1) |
|
|
Price |
|
|
Closed |
|
|
Price |
|
|
Accepted(1) |
|
|
Price |
|
Breakfast Point |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homesites |
|
|
1 |
|
|
$ |
50.0 |
|
|
|
1 |
|
|
$ |
50.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hawks Landing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homesites |
|
|
3 |
|
|
$ |
55.0 |
|
|
|
3 |
|
|
$ |
55.0 |
|
|
|
5 |
|
|
$ |
56.7 |
|
|
|
5 |
|
|
$ |
56.7 |
|
Port St. Joe Primary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homesites |
|
|
2 |
|
|
$ |
19.0 |
|
|
|
2 |
|
|
$ |
19.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RiverCamps at Crooked Creek |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Single-Family Homes |
|
|
1 |
|
|
$ |
450.0 |
|
|
|
1 |
|
|
$ |
450.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SouthWood |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homesites |
|
|
6 |
|
|
$ |
48.3 |
|
|
|
6 |
|
|
$ |
48.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SummerCamp |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homesites |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4 |
|
|
$ |
300.0 |
|
Single-Family Homes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
|
$ |
450.0 |
|
WaterColor |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homesites |
|
|
10 |
|
|
$ |
112.0 |
|
|
|
10 |
|
|
$ |
112.0 |
|
|
|
7 |
|
|
$ |
107.3 |
|
|
|
6 |
|
|
$ |
109.0 |
|
WaterSound
West Beach |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homesites |
|
|
2 |
|
|
$ |
83.8 |
|
|
|
2 |
|
|
$ |
83.8 |
|
|
|
4 |
|
|
$ |
112.9 |
|
|
|
4 |
|
|
$ |
112.9 |
|
WindMark Beach |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homesites |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
|
$ |
120.0 |
|
Total Homesites |
|
|
24 |
|
|
$ |
76.3 |
(2) |
|
|
24 |
|
|
$ |
76.3 |
(2) |
|
|
16 |
|
|
$ |
92.9 |
(2) |
|
|
20 |
|
|
$ |
135.4 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Single-Family Homes |
|
|
1 |
|
|
$ |
450.00 |
|
|
|
1 |
|
|
$ |
450.0 |
|
|
|
|
|
|
|
|
|
|
|
1 |
|
|
$ |
450.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
25 |
|
|
$ |
91.2 |
|
|
|
25 |
|
|
$ |
91.2 |
|
|
|
16 |
|
|
$ |
92.9 |
|
|
|
21 |
|
|
$ |
150.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Contracts accepted during the quarter. Contracts accepted and closed in the same
quarter are also included as units closed. |
|
(2) |
|
Average prices differ from quarter to quarter primarily because of the relative mix
and location of sales. |
Table 5
Commercial Land Sales
Three Months Ended June 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Sales |
|
Acres Sold |
|
Gross Sales Price |
|
Average Price/Acre |
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
2011 |
|
|
1 |
|
|
|
1 |
|
|
$ |
550 |
|
|
$ |
550,000 |
|
2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 6
Rural Land Sales
Three Months Ended June 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Sales |
|
Acres Sold |
|
Gross Sales Price |
|
Average Price/Acre |
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
2011 |
|
|
1 |
|
|
|
5 |
|
|
$ |
75 |
|
|
$ |
15,152 |
|
2010 |
|
|
3 |
|
|
|
42 |
|
|
$ |
396 |
|
|
$ |
9,482 |
|
Also included in rural land sales in the first quarter of 2010 was $0.6
million related to the sale of nine mitigation bank credits at an average sales price of $65,201
per credit.
Table 7
Quarterly Segment Pretax Income (Loss)
From Continuing Operations
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
Mar. 31, |
|
|
Dec. 31, |
|
|
Sept. 30, |
|
|
June 30, |
|
|
Mar. 31, |
|
|
Dec. 31, |
|
|
Sept. 30, |
|
|
June 30, |
|
|
|
2011 |
|
|
2011 |
|
|
2010 |
|
|
2010 |
|
|
2010 |
|
|
2010 |
|
|
2009 |
|
|
2009 |
|
|
2009 |
|
Residential |
|
$ |
(6.3 |
) |
|
$ |
(8.8 |
) |
|
$ |
(12.3 |
) |
|
$ |
(16.5 |
) |
|
$ |
(7.2 |
) |
|
$ |
(11.3 |
) |
|
$ |
(80.6 |
) |
|
$ |
(19.7 |
) |
|
$ |
(23.3 |
) |
Commercial |
|
|
(2.9 |
) |
|
|
(1.9 |
) |
|
|
(1.2 |
) |
|
|
1.5 |
|
|
|
(1.3 |
) |
|
|
(0.4 |
) |
|
|
1.3 |
|
|
|
(0.5 |
) |
|
|
(0.7 |
) |
Rural Land Sales |
|
|
(0.4 |
) |
|
|
2.3 |
|
|
|
18.2 |
|
|
|
3.5 |
|
|
|
0.7 |
|
|
|
(0.3 |
) |
|
|
0.9 |
|
|
|
(0.5 |
) |
|
|
6.8 |
|
Forestry |
|
|
1.7 |
|
|
|
52.7 |
|
|
|
1.9 |
|
|
|
0.8 |
|
|
|
2.2 |
|
|
|
1.4 |
|
|
|
1.3 |
|
|
|
1.2 |
|
|
|
1.1 |
|
Corporate and other |
|
|
(12.4 |
) |
|
|
(22.6 |
) |
|
|
(8.0 |
) |
|
|
(10.9 |
) |
|
|
(9.1 |
) |
|
|
(7.0 |
) |
|
|
(8.8 |
) |
|
|
(6.6 |
) |
|
|
(57.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pretax income (loss) from
continuing operations (1) |
|
$ |
(20.3 |
) |
|
$ |
21.7 |
|
|
$ |
(1.4 |
) |
|
$ |
(21.6 |
) |
|
$ |
(14.7 |
) |
|
$ |
(17.6 |
) |
|
$ |
(85.9 |
) |
|
$ |
(26.1 |
) |
|
$ |
(73.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes one time charges as described in our SEC filings. |
Table 8
Other Income (Expense)
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2011 |
|
|
2010 |
|
|
2011 |
|
|
2010 |
|
Dividend and interest income |
|
$ |
0.2 |
|
|
$ |
0.5 |
|
|
$ |
0.4 |
|
|
$ |
0.8 |
|
Interest expense |
|
|
(1.0 |
) |
|
|
(1.1 |
) |
|
|
(2.0 |
) |
|
|
(2.2 |
) |
Gain on sale of office buildings |
|
|
0.2 |
|
|
|
0.2 |
|
|
|
0.4 |
|
|
|
0.4 |
|
Other |
|
|
0.8 |
|
|
|
0.8 |
|
|
|
1.6 |
|
|
|
0.8 |
|
Retained
interest in monetized installment notes |
|
|
0.1 |
|
|
|
0.1 |
|
|
|
0.2 |
|
|
|
0.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
0.3 |
|
|
$ |
0.5 |
|
|
$ |
0.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|