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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Form 10-Q

(Mark One)
þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the quarterly period ended September 30, 2004
o		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

Florida		59-0432511
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
Suite 500, 245 Riverside Avenue, Jacksonville, Florida (Address of principal executive offices)		32202 (Zip Code)

(904) 301-4200

None.

      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 is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).     YES þ          NO o

APPLICABLE ONLY TO CORPORATE ISSUERS:

      As of November 5, 2004, there were 103,043,480 shares of common stock, no par value, issued and 76,013,413 outstanding, with 27,030,067 shares of treasury stock.

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THE ST. JOE COMPANY

INDEX

				Page
				No.
PART I Financial Information
Item 1.		Financial Statements
		Consolidated Balance Sheets — September 30, 2004 and December 31, 2003			2
		Consolidated Statements of Income — Three months and nine months ended September 30, 2004 and 2003			3
		Consolidated Statement of Changes in Stockholders’ Equity — Nine months ended September 30, 2004			4
		Consolidated Statements of Cash Flows — Nine months ended September 30, 2004 and 2003			5
		Notes to Consolidated Financial Statements			6
Item 2.		Management’s Discussion and Analysis of Consolidated Financial Condition and Results of Operations			15
Item 3.		Quantitative and Qualitative Disclosures About Market Risk			39
Item 4.		Controls and Procedures			39
PART II Other Information
Item 1.		Legal Proceedings			40
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds			40
Item 3.		Defaults upon Senior Securities			N/A
Item 4.		Submission of Matters to a Vote of Security Holders			N/A
Item 5.		Other Information			N/A
Item 6.		Exhibits			40
Signatures					42
EX-10.2 Retirement Agreement dated as of 8/24/04
EX-31.1 Section 302 CEO Certification
EX-31.2 Section 302 CFO Certification
EX-32.1 Section 906 CEO Certification
EX-32.2 Section 906 CFO Certification

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PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements

THE ST. JOE COMPANY

				September 30, 2004				December 31, 2003
				(Unaudited)
				(Dollars in thousands)
ASSETS
Investment in real estate				$	907,042			$	886,076
Cash and cash equivalents					95,572				57,403
Accounts receivable, net					81,130				75,692
Prepaid pension asset					95,168				91,768
Property, plant and equipment, net					34,800				36,272
Goodwill, net					51,599				48,721
Intangible assets, net					33,460				37,795
Other assets					47,727				42,003
				$	1,346,498			$	1,275,730
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES:
Debt				$	400,267			$	382,176
Accounts payable					69,735				60,343
Accrued liabilities					124,750				105,524
Deferred income taxes					254,427				232,184
		Total liabilities			849,179				780,227
Minority interest in consolidated subsidiaries					6,831				8,188
STOCKHOLDERS’ EQUITY:
	Common stock, no par value; 180,000,000 shares authorized; 102,969,953 and 100,824,269 issued at September 30, 2004 and December 31, 2003, respectively				258,416				199,787
	Retained earnings				976,819				944,000
	Restricted stock deferred compensation				(21,483	)			(18,807	)
	Treasury stock at cost, 26,886,411 and 24,794,178 shares held at September 30, 2004 and December 31, 2003, respectively				(723,264	)			(637,665	)
		Total stockholders’ equity			490,488				487,315
				$	1,346,498			$	1,275,730

See notes to consolidated financial statements.

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THE ST. JOE COMPANY

					Three Months Ended								Nine Months Ended
					September 30,								September 30,
					2004				2003				2004				2003
					(Unaudited)
					(Dollars in thousands except per share amounts)
Revenues:
	Real estate sales				$	189,928			$	155,122			$	503,241			$	411,628
	Realty revenues					23,894				16,813				66,743				42,581
	Timber sales					8,086				8,392				27,162				28,205
	Rental revenues					10,547				7,763				29,771				22,043
	Other revenues					13,692				9,039				33,314				22,476
		Total revenues				246,147				197,129				660,231				526,933
Expenses:
	Cost of real estate sales					128,680				93,581				333,279				247,487
	Cost of realty revenues					16,198				9,746				42,413				23,888
	Cost of timber sales					5,149				5,708				16,905				19,270
	Cost of rental revenues					4,123				3,796				11,555				10,329
	Cost of other revenues					11,359				7,998				27,874				20,697
	Other operating expenses					24,319				22,616				73,646				64,607
	Corporate expense, net					10,620				10,000				29,236				24,691
	Depreciation and amortization					8,616				6,675				25,396				19,038
	Impairment losses					—				—				1,994				14,083
		Total expenses				209,064				160,120				562,298				444,090
			Operating profit			37,083				37,009				97,933				82,843
Other (expense) income:
	Investment income, net					288				209				487				806
	Interest expense					(3,487	)			(2,647	)			(9,338	)			(7,921	)
	Other, net					687				499				1,944				1,838
		Total other (expense) income				(2,512	)			(1,939	)			(6,907	)			(5,277	)
Income from continuing operations before equity in income (loss) of unconsolidated affiliates, income taxes, and minority interest						34,571				35,070				91,026				77,566
Equity in income (loss) of unconsolidated affiliates						1,371				1,282				3,010				(2,457	)
Income tax expense						13,839				13,609				36,114				27,872
Income from continuing operations before minority interest						22,103				22,743				57,922				47,237
Minority interest						415				(35	)			895				645
Income from continuing operations						21,688				22,778				57,027				46,592
Discontinued operations:
	(Loss) income from discontinued operations (net of income taxes of $(134), $88, $121, and $426, respectively)					(224	)			201				147				709
	Gain on sales of property (net of income taxes of $2,903)					4,839				—				4,839				—
		Total income from discontinued operations				4,615				201				4,986				709
		Net income			$	26,303			$	22,979			$	62,013			$	47,301
EARNINGS PER SHARE
Basic:
Income from continuing operations					$	0.29			$	0.30			$	0.75			$	0.61
Earnings from discontinued operations						0.06				—				0.07				0.01
		Net income			$	0.35			$	0.30			$	0.82			$	0.62
Diluted:
Income from continuing operations					$	0.28			$	0.30			$	0.74			$	0.60
Earnings from discontinued operations						0.06				—				0.07				0.01
		Net income			$	0.34			$	0.30			$	0.81			$	0.61

See notes to consolidated financial statements.

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THE ST. JOE COMPANY

			Common Stock												Restricted Stock
											Retained				Deferred				Treasury
			Shares				Amount				Earnings				Compensation				Stock				Total
			(Unaudited)
			(Dollars in thousands, except per share amounts)
Balance at December 31, 2003				76,030,091			$	199,787			$	944,000			$	(18,807	)		$	(637,665	)		$	487,315
Comprehensive income:
	Net income			—				—				62,013				—				—				62,013
Total comprehensive income				—				—				—				—				—				62,013
Issuances of restricted stock				158,465				7,340				—				(7,340	)			—				—
Forfeitures of restricted stock				(2,123	)			(81	)			—				81				—				—
Dividends ($0.38 per share)				—								(29,194	)			—				—				(29,194	)
Issuances of common stock				1,989,342				33,291				—				—				—				33,291
Tax benefit on exercises of stock options				—				18,079				—				—				—				18,079
Amortization of restricted stock deferred compensation				—				—				—				4,583				—				4,583
Purchases of treasury shares, including surrenders of shares by executives				(2,092,233	)			—				—				—				(85,599	)			(85,599	)
Balance at September 30, 2004				76,083,542			$	258,416			$	976,819			$	(21,483	)		$	(723,264	)		$	490,488

See notes to consolidated financial statements.

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THE ST. JOE COMPANY

					Nine Months Ended
					September 30,
					2004				2003
					(Unaudited)
					(Dollars in thousands)
Cash flows from operating activities:
	Net income				$	62,013			$	47,301
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization				27,180				21,099
		Minority interest in income				895				645
		Equity in (income) loss of unconsolidated joint ventures				(3,010	)			2,457
		Distributions from unconsolidated community residential joint ventures				5,800				5,310
		Deferred income tax expense				22,243				15,216
		Impairment losses				1,994				14,083
		Tax benefit on exercise of stock options				18,079				8,942
		Cost of operating properties sold				330,839				246,260
		Expenditures for operating properties				(382,979	)			(276,533	)
		Amortization of deferred compensation				5,677				2,755
		Changes in operating assets and liabilities:
			Accounts receivable			(19,183	)			(48,964	)
			Other assets and deferred charges			(30,588	)			(13,449	)
			Accounts payable and accrued liabilities			21,215				20,162
			Income taxes payable			(1,495	)			—
			Gain on sale of discontinued operations			(4,839	)			—
Net cash provided by operating activities					$	53,841			$	45,284
Cash flows from investing activities:
	Purchases of property, plant and equipment					(7,967	)			(3,716	)
	Purchases of investments in real estate					(26,971	)			(29,827	)
	Investments in joint ventures and purchase business acquisitions, net of cash received					1,868				(20,652	)
	Proceeds from dispositions of assets					11,905				—
	Proceeds received on sale of discontinued assets					41,082				—
	Maturities and redemptions of short-term investments, net of purchases					—				511
Net cash provided by (used in) investing activities					$	19,917			$	(53,684	)
Cash flows from financing activities:
	Proceeds from revolving credit agreements, net of repayments					(40,000	)			30,000
	Proceeds from other long-term debt					119,782				20,775
	Repayments of other long-term debt					(47,590	)			(1,445	)
	Proceeds from exercises of stock options and stock purchase plan					12,398				20,823
	Contribution from minority interest owner					—				2,860
	Dividends paid to stockholders					(29,194	)			(15,354	)
	Treasury stock purchases					(50,985	)			(59,046	)
Net cash used in financing activities					$	(35,589	)		$	(1,387	)
Net increase (decrease) in cash and cash equivalents						38,169				(9,787	)
Cash and cash equivalents at beginning of year						57,403				73,273
Cash and cash equivalents at end of year					$	95,572			$	63,486

See notes to consolidated financial statements.

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THE ST. JOE COMPANY

1.	Basis of Presentation

      The accompanying unaudited interim financial statements have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and footnotes required by accounting principles generally accepted in the United States for complete financial statements are not included herein. The interim statements should be read in conjunction with the financial statements and notes thereto included in the Company’s latest Annual Report on Form 10-K. In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial position as of September 30, 2004 and December 31, 2003 and the results of operations and cash flows for the three-month and nine-month periods ended September 30, 2004 and 2003. The results of operations and cash flows for the three-month and nine-month periods ended September 30, 2004 and 2003 are not necessarily indicative of the results that may be expected for the full year.

      During the three months ended September 30, 2004, the Company sold two of its commercial buildings. The Company has reported the sales of these two buildings and their operations prior to sale as discontinued operations for all periods presented.

2.	Summary of Significant Accounting Policies

	Principles of Consolidation

      In December 2003, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 46R (“FIN 46R”), Consolidation of Variable Interest Entities, to replace Interpretation No. 46 (“FIN 46”) which was issued in January 2003. FIN 46R addresses how a business enterprise should evaluate whether it has a controlling financial interest in an entity through means other than voting rights and whether it should consolidate the entity. FIN 46R is applicable immediately to variable interest entities created after January 31, 2003 and as of the first interim period ending after March 15, 2004 to those created before February 1, 2003 and not already consolidated under FIN 46 in previously issued financial statements. The Company did not create any significant variable interest entities before February 1, 2003 or after January 31, 2003. The Company has adopted FIN 46R, analyzed the applicability of this interpretation to its structures, and determined that the Company is not a party to any variable interest entities that should be consolidated.

      In May 2003, the FASB issued Statement of Financial Accounting Standards No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity (“FAS 150”). FAS 150 requires companies having consolidated entities with specified termination dates to treat minority owner’s interests in such entities as liabilities in an amount based on the fair value of the entities. Although FAS 150 was originally effective July 1, 2003, the FASB has indefinitely deferred certain provisions related to classification and measurement requirements for mandatorily redeemable financial instruments that become subject to FAS 150 solely as a result of consolidation. As a result, FAS 150 has no impact on the Company’s Consolidated Statements of Income for the nine months ended September 30, 2004. The Company has one consolidated entity with a specified termination date: Artisan Park, L.L.C. (“Artisan Park”). At September 30, 2004, the carrying amount of the minority interest in Artisan Park was $6.8 million and the fair value was $11.5 million. The Company has no other material financial instruments that are affected currently by FAS 150.

	Stock-Based Compensation

      Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (“FAS 123”), permits entities to recognize as expense over the vesting period the fair value of all stock-based awards on the date of grant. Alternatively, FAS 123 allows entities to apply the provisions of Accounting

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Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (“APB 25”), and provide pro forma net income and pro forma earnings per share disclosures for employee stock option grants as if the fair-value based method defined in FAS 123 has been applied. Under APB 25, compensation expense would be recorded on the date of grant only if the current market price of the underlying stock exceeded the exercise price.

      Statement of Financial Accounting Standards No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure (“FAS 148”), requires prominent disclosure in both annual and interim financial statements of the method of accounting for stock-based employee compensation and the effect of the method used on reported results. As permitted under FAS 148 and FAS 123, the Company has elected to continue to apply the provisions of APB 25 and provide the pro forma disclosure in accordance with the provisions of FAS 148 and FAS 123. Accordingly, no compensation cost has been recognized for its stock options in the consolidated financial statements.

      Had the Company determined compensation costs based on the fair value at the grant date for its stock options under SFAS No. 123, the Company’s net income would have been reduced to the pro forma amounts indicated below (in thousands except per share amounts):

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2004				2003				2004				2003
Net income:
Net income as reported		$	26,303			$	22,979			$	62,013			$	47,301
Add: stock-based employee compensation expense included in reported net income, net of related tax effects			966				501				2,863				781
Deduct: total stock-based employee compensation expense determined under fair value based methods for all awards, net of related tax effects			(1,829	)			(1,521	)			(6,013	)			(4,857	)
Net income — pro forma		$	25,440			$	21,959			$	58,863			$	43,225
Per share — Basic:
Earnings per share as reported		$	0.35			$	0.30			$	0.82			$	0.62
Earnings per share — pro forma		$	0.34			$	0.29			$	0.78			$	0.57
Per share — Diluted:
Earnings per share as reported		$	0.34			$	0.30			$	0.81			$	0.61
Earnings per share — pro forma		$	0.34			$	0.29			$	0.78			$	0.56

	Earnings Per Share

      Earnings per share (“EPS”) is based on the weighted average number of common shares outstanding during the period. Diluted EPS assumes weighted average options have been exercised to purchase 916,918 and 1,940,913 shares of common stock in the three months ended September 30, 2004 and 2003, respectively, and that 320,605 shares of unvested restricted stock are issued in the three months ended September 30, 2004, each net of assumed repurchases using the treasury stock method. Diluted EPS assumes weighted average options have been exercised to purchase 1,275,532 and 2,045,331 shares of common stock in the nine months ended September 30, 2004 and 2003, respectively, net of assumed repurchases using the treasury stock method.

      From August 1998 through September 30, 2004, the Board of Directors authorized a total of $800.0 million for the repurchase of the Company’s outstanding common stock from time to time (the “Stock Repurchase Program”), of which a total of approximately $657.8 million had been expended through September 30, 2004. In addition to repurchases on the open market, the Company has also repurchased shares

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from the Alfred I. duPont Testamentary Trust and its beneficiary, The Nemours Foundation (collectively, the “Trust”),from time to time based on a share multiplier (0.31 from May 8, 2004 through August 6, 2004) times the number of shares the Company purchased from the public during the previous week (the “public shares”) at a price equal to the volume weighted average price, excluding commissions, paid by the Company for the public shares, subject to a minimum sales price ($37.00 per share through August 6, 2004). The most recent stock repurchase agreement with the Trust expired on August 6, 2004 and there is no intent to renew that agreement.

      From the inception of the Stock Repurchase Program to September 30, 2004, the Company repurchased from shareholders 24,952,711 shares (17,016,366 shares on the open market and 7,936,345 shares from the Trust), and executives surrendered 2,022,229 shares as payment for strike prices and taxes due on exercised stock options and taxes due on vested restricted stock, for a total of 26,974,940 acquired shares. During the nine months ended September 30, 2004, the Company repurchased from shareholders 1,221,865 shares (958,500 shares on the open market and 263,365 shares from the Trust), and 870,368 shares were surrendered to the Company by executives as payment for the strike prices and taxes due on exercised stock options and taxes due on vested restricted stock. During the nine months ended September 30, 2003, the Company repurchased from shareholders 2,017,170 shares (1,140,300 shares on the open market and 876,870 shares from the Trust), and executives surrendered 341,884 shares of Company stock as payment for the strike prices and taxes due on exercised stock options and taxes due on vested restricted stock.

      Shares of Company stock issued upon the exercise of stock options for the nine months ended September 30, 2004 and 2003 were 1,989,342 shares and 1,763,330 shares, respectively.

      Weighted average basic and diluted shares, taking into consideration shares issued, weighted average unvested restricted shares, weighted average options used in calculating EPS and treasury shares repurchased, for each of the periods presented are as follows:

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2004				2003				2004				2003
Basic			75,333,313				75,953,183				75,541,830				75,843,650
Diluted			76,570,836				77,894,096				76,999,375				77,888,981

	Supplemental Cash Flow Information

      The Company paid $18.4 million and $18.8 million for interest in the first nine months of 2004 and 2003, respectively. The Company paid state income taxes of $2.5 million, net of refunds, in the first nine months of 2004 and received income tax refunds, net of state income tax payments made, of $2.8 million in the first nine months of 2003. The Company capitalized interest expense of $6.8 million and $6.5 million during the first nine months of 2004 and 2003, respectively.

      The Company’s non-cash activities included the assumption of a mortgage by the purchaser of a building that was sold, the execution of a debt agreement in payment for an interest in a new unconsolidated affiliate, the surrender of shares of Company stock by executives of the Company as payment for the exercise of stock options and the tax benefit on exercises of stock options. During the first nine months of 2004, a mortgage in the amount of $25.4 million was assumed by the purchaser of a commercial building that the Company sold and the Company executed a debt agreement in the amount of $11.4 million as payment for its interest in a new unconsolidated affiliate. (See Note 4.) During the nine months ended September 30, 2004 and 2003, executives surrendered Company stock worth $20.9 million and $6.5 million, respectively, as payment for the strike price of stock options.

      Cash flows related to residential and commercial real estate development activities are included in operating activities on the statements of cash flows.

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	Percentage of Completion Adjustment

      Revenue for the Company’s multi-family residences under construction at WaterSound Beach is recognized, in accordance with Statement of Financial Accounting Standards No. 66, Accounting for Sales of Real Estate (FAS 66), using the percentage-of-completion method of accounting. Under this method, revenue is recognized in proportion to the percentage of total costs incurred in relation to estimated total costs. Since the project was substantially completed as of December 31, 2003, the Company had recorded substantially all of the activity related to this property during the year ended December 31, 2003. During the period ended March 31, 2004, the Company incurred $2.0 million in construction costs for contract adjustments related to the project. These costs represented changes to the original construction cost estimates for this project. Had these costs been quantified in 2003, they would have been included within the Company’s budgets and thus have had an impact on its results for the year ended December 31, 2003. If these costs had been included within the total project budget, 2003 gross profit would have been reduced by $3.6 million (pre-tax), $2.3 million (after tax), since a lower percentage of revenue would also have been recognized. The results for the nine months ended September 30, 2004 would have been increased by $3.6 million (pre-tax), $2.3 million (after tax).

      Management has evaluated the impact of this item, which represented 3% of net income ($0.03 per diluted share) for the year ended December 31, 2003, and concluded that it is not significant to its 2003 results of operations. In addition, while the impact of this item would increase net income for the first nine months of 2004 by 4% ($0.03 per diluted share), management has concluded that it is not expected to be significant to its results of operations for the year ending December 31, 2004, based upon its current forecast for the full year period.

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3.	Investment in Real Estate

      Real estate investments by segment include the following (in thousands):

			September 30, 2004				December 31, 2003
Operating property:
	Towns & Resorts development		$	75,228			$	74,547
	Commercial real estate			31,464				94,904
	Land sales			985				959
	Forestry			77,726				80,617
	Other			111				2,225
Total operating property				185,514				253,252
Development property:
	Towns & Resorts development			325,365				262,893
	Land sales			8,800				5,591
Total development property				334,165				268,484
Investment property:
	Commercial real estate			368,528				350,456
	Land sales			182				167
	Forestry			973				981
	Other			6,891				4,802
Total investment property				376,574				356,406
Investment in unconsolidated affiliates:
	Towns & Resorts development			31,234				22,625
	Commercial real estate development and services			11,764				15,745
Total investment in unconsolidated affiliates				42,998				38,370
Total real estate investments				939,251				916,512
Less: Accumulated depreciation				32,209				30,436
Net real estate investments			$	907,042			$	886,076

      Included in operating property are Company-owned amenities related to Towns & Resorts, the Company’s timberlands and land and buildings developed by the Company and used for commercial rental purposes. Development property consists of Towns & Resorts land and inventory currently under development to be sold. Investment property includes the Company’s commercial buildings purchased with tax-deferred proceeds and land held for future use.

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4.	Debt

      Debt consists of the following (in thousands):

			September 30, 2004				December 31, 2003
Senior notes			$	275,000			$	175,000
Debt secured by certain commercial and residential property				109,932				163,026
Senior revolving credit facility				—				40,000
Various secured and unsecured notes payable				15,335				4,150
	Total debt		$	400,267			$	382,176

      During the first quarter of 2004, the Company entered into a debt agreement with a new joint venture in the amount of $11.4 million. The other party to the joint venture contributed land with a fair value of equal amount. This debt reflects the Company’s agreement to pay all of the expenses of the joint venture up to the amount of principal and interest owed. Thereafter, all expenses of the joint venture will be shared equally. The $11.4 million debt bears interest at one-month LIBOR plus 100 basis points. The principal is due at the earlier of December 31, 2008 or the date of the first partnership distribution. Interest is payable annually on the anniversary of the date of the agreement.

      On June 8, 2004, the Company issued senior notes in a private placement with an aggregate principal amount of $100 million, with $25 million maturing on June 8, 2009 with a fixed interest rate of 4.97% and $75 million maturing on June 8, 2011 with a fixed interest rate of 5.31%. Interest will be payable semiannually. The notes, as well as the $175 million senior notes issued previously, contain financial covenants similar to those in the Company’s $250.0 million senior revolving credit facility.

      During the third quarter of 2004, the Company sold a commercial building in which the purchaser assumed the remaining balance on the mortgage in the amount of $25.4 million. During the nine months ended September 30, 2004, the Company repaid debt secured by commercial buildings in the amount of $32.7 million.

      The aggregate maturities of debt subsequent to September 30, 2004 are as follows: 2004, $0.4 million; 2005, $21.2 million; 2006, $3.7 million; 2007, $70.0 million; 2008, $86.0 million; thereafter, $219.0 million.

5.	Employee Benefit Plans

      A summary of the net periodic pension credit follows (in thousands):

			Three Months Ended								Nine Months Ended
			September 30, 2004				September 30, 2003				September 30, 2004				September 30, 2003
Service cost			$	1,800			$	875			$	4,200			$	3,706
Interest cost				2,200				1,562				6,400				6,617
Expected return on assets				(4,800	)			(3,254	)			(14,600	)			(13,783	)
Prior service costs				200				137				600				580
	Total pension income		$	(600	)		$	(680	)		$	(3,400	)		$	(2,880	)

6.	Segment Information

      The Company conducts primarily all of its business in four reportable operating segments: Towns & Resorts development, commercial real estate development and services, land sales, and forestry. The Towns & Resorts development segment develops and sells housing units and homesites and manages residential

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communities. The commercial real estate development and services segment owns, leases, and manages commercial, retail, office and industrial properties throughout the Southeast and sells developed and undeveloped land and buildings. The land sales segment sells parcels of land included in the Company’s holdings of timberlands. The forestry segment produces and sells pine pulpwood and timber and cypress products.

      The Company uses earnings before interest, taxes, depreciation and amortization (“EBITDA”) as a supplemental performance measure, along with net income, to report operating results. The Company’s management believes EBITDA is an important metric commonly used by companies in the real estate industry for comparative performance purposes. EBITDA is not a measure of operating results or cash flows from operating activities as defined by generally accepted accounting principles (“GAAP”). Additionally, EBITDA is not necessarily indicative of cash available to fund cash needs and should not be considered as an alternative to cash flows as a measure of liquidity. However, management believes that EBITDA provides relevant information about the Company’s operations and, along with net income, is useful in understanding the Company’s operating results.

      The accounting policies of the segments are the same as those described above in the summary of significant accounting policies. Total revenues represent sales to unaffiliated customers, as reported in the Company’s consolidated income statements. All intercompany transactions have been eliminated. The caption entitled “Other” primarily consists of general and administrative expenses, net of investment income.

      The Company’s reportable segments are strategic business units that offer different products and services. They are each managed separately and decisions about allocations of resources are determined by management based on these strategic business units.

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      Information by business segment follows:

				Three Months Ended								Nine Months Ended
				September 30,								September 30,
				2004				2003				2004				2003
Total Revenues:
	Towns & Resorts development			$	167,542			$	144,159			$	444,225			$	359,261
	Commercial real estate development and services				55,882				25,538				137,519				80,672
	Land sales				14,643				19,017				51,374				58,685
	Forestry				8,080				8,439				27,133				28,221
	Other				—				(24	)			(20	)			94
		Total revenues		$	246,147			$	197,129			$	660,231			$	526,933
EBITDA:
	Towns & Resorts development			$	37,140			$	36,396			$	90,830			$	73,856
	Commercial real estate development and services				17,108				5,879				32,751				8,508
	Land sales				11,670				14,212				41,023				44,770
	Forestry				2,882				3,330				10,132				9,553
	Other				(10,960	)			(10,219	)			(29,758	)			(24,999	)
		EBITDA		$	57,840			$	49,598			$	144,978			$	111,688
Adjustments to reconcile to income from continuing operations:
	Depreciation and amortization			$	(8,756	)		$	(6,651	)		$	(25,840	)		$	(18,932	)
	Interest expense				(5,669	)			(5,114	)			(15,110	)			(13,736	)
	Income tax expense				(13,839	)			(13,609	)			(36,114	)			(27,872	)
	Discontinued operations				(7,845	)			(1,446	)			(10,802	)			(4,556	)
	Minority interest				(43	)			—				(85	)			—
		Income from continuing operations		$	21,688			$	22,778			$	57,027			$	46,592

				September 30, 2004				December 31, 2003
Total Assets:
	Towns & Resorts development			$	566,822			$	501,924
	Commercial real estate development and services				503,531				527,157
	Land sales				26,456				15,093
	Forestry				90,485				90,837
	Other corporate assets				159,204				140,719
		Total assets		$	1,346,498			$	1,275,730

7.	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, none of which, in the opinion of management, is expected to have a material adverse effect on the Company’s consolidated financial position, results of operations or liquidity. However, the aggregate amount being sought by the claimants in these matters is presently estimated to be several million dollars.

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      The Company has retained certain self-insurance risks with respect to losses for third party liability, worker’s compensation, property damage, group health insurance provided to employees and other types of insurance.

      At September 30, 2004, the Company was party to surety bonds and standby letters of credit in the amounts of $35.1 million and $16.0 million, respectively, which may potentially result in liability to the Company if certain obligations of the Company are not met.

      The Company is not liable as guarantor on any credit obligations that relate to unconsolidated affiliates in accordance with Financial Accounting Standards Board Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.

      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 Company’s 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 will be reviewed and adjusted, if necessary, as additional information becomes available.

      Pursuant to the terms of various agreements by which the Company disposed of its sugar assets in 1999, the Company is obligated to complete certain defined environmental remediation. Approximately $5.0 million of the sales proceeds remain in escrow pending the completion of the remediation. The Company has separately funded the costs of remediation. In addition, approximately $1.7 million is being held in escrow representing the value of the land subject to remediation. Remediation was substantially completed in 2003. The Company expects remaining remediation to be completed and the amounts held in escrow to be released to the Company in 2005.

      The Company is currently a party to, or involved in, legal proceedings directed at the cleanup of Superfund sites. The Company is also involved in regulatory proceedings related to its former mill site in Gulf County, Florida. The Company has accrued an allocated share of the total estimated cleanup costs for these sites. Based upon management’s evaluation of the other potentially responsible parties, the Company does not expect to incur additional amounts even though the Company has joint and several liability. Other proceedings involving environmental matters such as alleged discharge of oil or waste material into water or soil are pending or threatened against the Company. It is not possible to quantify future environmental costs because many issues relate to actions by third parties or changes in environmental regulation. However, based on information presently available, management believes that the ultimate disposition of currently known matters will not have a material effect on the Company’s consolidated financial position, results of operations or liquidity. Environmental liabilities are paid over an extended period and the timing of such payments cannot be predicted with any confidence. Aggregate environmental-related accruals were $4.1 million and $4.0 million as of September 30, 2004 and December 31, 2003, respectively.

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Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

      The St. Joe Company is one of Florida’s largest real estate operating companies. We have one of the largest inventories of private land suitable for development in the State of Florida, with very low cost basis. The majority of our land is located in Northwest Florida. In order to optimize the value of our core real estate assets in Northwest Florida, our strategic plan calls for us to reposition our substantial timberland holdings for higher and better uses. We increase the value of our raw land assets, most of which are currently managed as timberland, through the development and subsequent sale of parcels, homesites, and homes, or through the direct sale of unimproved land. In addition, we reinvest qualifying asset sales proceeds into like-kind properties under our tax deferral strategy which has enabled us to create a significant portfolio of commercial rental properties. We also provide commercial real estate services, including brokerage, property management and construction management for Company-owned assets as well as for third parties.

      We have four operating segments: Towns & Resorts development, commercial real estate development and services, land sales, and forestry.

      Our Towns & Resorts development segment generates revenues from:

	•	the sale of housing units built by us;
	•	the sale of developed homesites;
	•	rental income;
	•	club operations;
	•	investments in limited partnerships and joint ventures;
	•	brokerage and title issuance fees; and
	•	management fees.

      Our commercial real estate development and services segment generates revenues from:

	•	the rental of commercial properties owned by us;
	•	the sale of developed and undeveloped land for commercial, retail, apartment, and industrial properties and in-service buildings;
	•	realty revenues, consisting of property and asset management fees, construction management fees and lease and sales brokerage commissions;
	•	development fees; and
	•	investments in limited partnerships and joint ventures.

      Our land sales segment generates revenues from:

	•	the sale of parcels of undeveloped land; and
	•	the sale of developed rural homesites.

      Our forestry segment generates revenues from:

	•	the sale of pulpwood and timber;
	•	the sale of cypress, lumber and mulch; and
	•	the sale of bulk land.

      Our ability to generate revenues, cash flows and profitability is directly related to the real estate market, primarily in Florida, and the economy in general. Considerable economic and political uncertainties exist that could have adverse effects on consumer buying behavior, construction costs, availability of labor and materials

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      Management periodically conducts market research in the early stages of a project’s development to ensure our product meets expected customer demand. We also continuously and actively monitor local competitors’ product offerings to evaluate the competitive position of our products. We are disciplined about the release of new product in Northwest Florida and plan no additional releases of units at our resort communities in 2004. Our goal is to ensure that as much of our land as possible benefits from the appreciation that we are building with the region’s increased visibility, infrastructure development and place-making. Real estate market conditions in our regions of development, particularly for residential and resort property in Northwest Florida, have been exceptionally strong. These current market conditions place us in an unusually favorable position which may not continue in the future. However, we believe that long-term prospects of job growth, coupled with strong in-migration population expansion, in Florida indicate that demand levels may remain favorable over at least the next two to five years.

      Our commercial real estate development and services segment continues to build on strong market interest in Northwest Florida’s retail, office, multi-family and other mixed-use products caused by historical constraints on supply in the area as well as high interest by developers.

Forward-Looking Statements

      This report contains forward-looking statements, including statements about our beliefs, plans, objectives, goals, expectations, estimates and intentions, as well as trends and uncertainties that could affect our results. These statements are subject to risks and uncertainties and are subject to change based on various factors, many of which are beyond our control. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to risks, uncertainties and assumptions about our business, including those identified in our Annual Report on Form 10-K for the year ended December 31, 2003, those described from time to time in other filings with the Securities and Exchange Commission, and the following:

	•	Economic conditions, particularly in Northwest Florida, Florida as a whole and key areas of the southeast United States that serve as feeder markets to our Northwest Florida operations;
	•	Acts of war or terrorism or other geopolitical events;
	•	Local conditions such as an oversupply of homes and homesites and residential or resort properties or a reduction in the demand for real estate in an area;
	•	Timing and costs associated with property developments and rentals;
	•	The pace of commercial development in Northwest Florida;
	•	Competition from other real estate developers;
	•	Whether potential residents or tenants consider our properties attractive;
	•	Increases in operating costs, including increases in real estate taxes and the cost of construction materials;
	•	Changes in the amount or timing of federal and state income tax liabilities resulting from either a change in our application of tax laws, an adverse determination by a taxing authority or court, or legislative changes to existing laws;
	•	How well we manage our properties;
	•	Changes in interest rates and the performance of the financial markets;

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	•	Decreases in market rental rates for our commercial and resort properties;
	•	Changes in the prices of wood products;
	•	The pace of development of public infrastructure, particularly in Northwest Florida, including a proposed new airport in Bay County which is dependent on approvals of the local airport authority and the Federal Aviation Administration and the availability of adequate funding;
	•	Potential liability under environmental laws or other laws or regulations;
	•	Adverse changes in laws, regulations or the regulatory environment affecting the development of real estate;
	•	The availability of adequate funding from governmental agencies and others to purchase conservation lands;
	•	Fluctuations in the size and number of transactions from period to period; and
	•	Adverse weather conditions or natural disasters and the impact on future demand in Florida, including whether the costs arising from Hurricanes Charley, Frances, Ivan and Jeanne could rise to a material level as we continue to assess the impact of these storms.

      We have no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or risks. New information, future events or risks may cause the forward-looking events we discuss in this Form 10-Q not to occur.

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 accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. We base these estimates on historical experience 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. Management’s 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, 2003. There have been no significant changes in these policies during the first nine months of 2004.

      Investment in Real Estate and Cost of Real Estate Sales/ Percentage of Completion Adjustment. Revenue for our multi-family residences which were under construction at WaterSound Beach in 2003 was recognized, in accordance with Statement of Financial Accounting Standards No. 66, Accounting for Sales of Real Estate (FAS 66), using the percentage-of-completion method of accounting. Under this method, revenue is recognized in proportion to the percentage of total costs incurred in relation to estimated total costs. Since the project was substantially completed as of December 31, 2003, we recorded substantially all of the activity related to this property during the year ended December 31, 2003. During the period ended March 31, 2004, we incurred $2.0 million in construction costs for contract adjustments related to the project. These costs represented changes to the original construction cost estimates for this project. Had these costs been quantified in 2003, they would have been included within our budgets and thus have had an impact on our results for the year ended December 31, 2003. If these costs had been included within the total project budget, 2003 gross profit would have been reduced by $3.6 million (pre-tax), $2.3 million (after tax), since a lower percentage of revenue would also have been recognized. The results for the nine months ended September 30, 2004 would have been increased by $3.6 million (pre-tax), $2.3 million (after tax).

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      Management has evaluated the impact of this item, which represented 3% of net income ($0.03 per diluted share) for the year ended December 31, 2003, and concluded that it is not significant to our 2003 results of operations. In addition, while the impact of this item would increase net income for the first nine months of 2004 by 4% ($0.03 per diluted share), management has concluded that it is not expected to be significant to our results of operations for the year ending December 31, 2004, based upon our current forecast for the full year period.

Results of Operations

      Net income for the third quarter of 2004 was $26.3 million, or $0.34 per diluted share, compared with $23.0 million, or $0.30 per diluted share, for the third quarter of 2003. Net income for the first nine months of 2004 was $62.0 million, or $0.81 per diluted share, compared with $47.3 million, or $0.61 per diluted share, for the first nine months of 2003. Net income for the first nine months of 2003 included a non-cash charge of $8.8 million net of tax, or $0.11 per share, to reduce the carrying value of goodwill associated with Advantis Real Estate Services (“Advantis”), the company’s commercial real estate services unit. Net income for the third quarter of 2004 included after tax conservation land sales gains of $0.1 million, or less than $0.01 per share, compared to $2.3 million, or $0.03 per share, in the third quarter of 2003. Net income for the first nine months of 2004 included after-tax conservation land sales gains of $1.6 million, or $0.02 per share, compared to $13.8 million, or $0.18 per share, in the first nine months of 2003.

      We report revenues from our four operating segments: Towns & Resorts development, commercial real estate development and services, land sales, and forestry. Real estate sales are generated from sales of housing units and developed homesites in our Towns & Resorts development segment, developed and undeveloped land and in-service buildings in our commercial real estate development and services segment which are not reported as discontinued operations, parcels of undeveloped land and developed rural sites in our land sales segment and occasionally sales of bulk land from our forestry segment. Realty revenues, consisting of property and asset management fees, construction management fees, and lease and sales commissions, are generated from the commercial real estate development and services segment. Timber sales are generated from the forestry segment. Rental revenue is generated primarily from lease income related to our portfolio of investment and development properties as a component of the commercial real estate development and services segment. Other revenues are primarily club operations and management fees from the Towns & Resorts development segment and development fees from the commercial real estate development and services segment.

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Consolidated Results

      Revenues and expenses. The following table sets forth a comparison of the revenues and expenses for the three–month and nine-month periods ended September 30, 2004 and 2003.

				Three Months Ended September 30,																Nine Months Ended September 30,
				2004				2003				Difference				% Change				2004				2003				Difference				% Change
				(Dollars in millions)
Revenues:
	Real estate sales			$	189.9			$	155.1			$	34.8				22	%		$	503.2			$	411.6			$	91.6				22	%
	Realty				23.9				16.8				7.1				42				66.7				42.6				24.1				57
	Timber sales				8.1				8.4				(0.3	)			(4	)			27.2				28.2				(1.0	)			(4	)
	Rental				10.5				7.8				2.7				35				29.8				22.0				7.8				35
	Other				13.7				9.0				4.7				52				33.3				22.5				10.8				48
		Total			246.1				197.1				49.0				25				660.2				526.9				133.3				25
Expenses:
	Cost of real estate sales				128.7				93.6				35.1				38				333.3				247.5				85.8				35
	Cost of realty revenues				16.2				9.7				6.5				67				42.4				23.9				18.5				77
	Cost of timber sales				5.1				5.7				(0.6	)			(11	)			16.9				19.3				(2.4	)			(12	)
	Cost of rental revenues				4.1				3.8				0.3				8				11.6				10.3				1.3				13
	Cost of other revenues				11.4				8.0				3.4				43				27.9				20.7				7.2				35
	Other operating expenses				24.3				22.6				1.7				8				73.6				64.6				9.0				14
		Total		$	189.8			$	143.4			$	46.4				32	%		$	505.7			$	386.3			$	119.4				31	%

      The increases in revenues from real estate sales and cost of real estate sales for the three and nine month periods ended September 30, 2004 compared to 2003 were in each case primarily due to increased sales in the Towns & Resorts development segment and land sales in the commercial real estate development services segment and, in the nine months ended September 30, 2004, to the sale of a building in the commercial real estate development and services segment. Additionally, during the third quarter of 2004, two buildings were sold and recorded as discontinued operations. In our Towns & Resorts development segment, there were fewer homesites sold in our resort communities in the third quarter of 2004 compared to the third quarter of 2003 as we continue to manage inventory to maximize value to benefit from expected near-term price increases caused by strong demand in the market. Also, in the nine months ended September 30, 2004, costs of real estate sales increased due to actual construction costs in excess of estimates at WaterSound Beach, one of our residential communities. (For a more detailed discussion of this increase, see Investment in Real Estate and Cost of Real Estate Sales/ Percentage of Completion Adjustment under Critical Accounting Estimates above.) The increases in realty revenues were primarily due to increases in construction and brokerage activity and related revenues. The increases in cost of realty revenues were primarily associated with the increased revenues. The increases in rental revenues and cost of rental revenues were in each case primarily due to the purchase of commercial buildings and improved leased percentages of rental property in the commercial real estate development and services segment. Timber revenue decreased due to a reduction in volume harvested from Company-owned lands and an intentional reduction in production at the cypress mill operation for the purpose of improving margins and profitability. Cost of timber revenues decreased due to lower costs in the timber operation and increased efficiencies in the cypress mill operation. Other revenues and cost of other revenues increased primarily due to increases in volume and pricing in the Towns & Resorts development segment’s club operations. Other operating expenses increased primarily due to increases in marketing and project administration costs in the Towns & Resorts development segment and staffing costs in the commercial real estate development and services segment. For further discussion of revenues and expenses, see Segment Results below.

      Corporate expense. Corporate expense, representing corporate general and administrative expenses, increased $0.6 million, or 6%, to $10.6 million in the third quarter of 2004, from $10.0 million in the third quarter of 2003. The increase was due to an increase of $0.7 million in compensation expense on restricted stock issuances and $0.3 million in miscellaneous corporate expenses, including increased audit and audit

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      Depreciation and amortization. Depreciation and amortization increased $1.9 million, or 28%, to $8.6 million in the third quarter of 2004, compared to $6.7 million in the third quarter of 2003. The increase was due to a $0.6 million increase in depreciation resulting primarily from additional investments in commercial investment property and residential operating property and property, plant and equipment and a $1.3 million increase in amortization resulting from an increase in intangible assets associated with our commercial operating properties. Depreciation and amortization increased $6.4 million, or 34%, to $25.4 million in the first nine months of 2004, compared to $19.0 million in the first nine months of 2003. The increase was due to a $2.5 million increase in depreciation resulting primarily from additional investments in commercial investment property and residential operating property and property, plant and equipment and a $3.9 million increase in amortization resulting from an increase in intangible assets.

      Impairment losses. During the second quarter of 2004, we recorded a $2.0 million impairment loss related to one of our Towns & Resorts projects in North Carolina. During the second quarter of 2003, we recorded an impairment loss to reduce the carrying amount of Advantis’ goodwill from $28.9 million to $14.8 million, pursuant to Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets. The impairment related to Advantis resulted in an impairment loss of $14.1 million pre-tax, or $8.8 million net of tax.

      Other income (expense). Other income (expense) consists of investment income, interest expense, gains on sales and dispositions of assets and other income. Other income (expense) was $(2.5) million in the third quarter of 2004 and $(1.9) million in the third quarter of 2003. Other income (expense) was $(6.9) million in the first nine months of 2004 and $(5.3) million in the first nine months of 2003. Interest expense was higher in the 2004 periods due to an increase in the average amount of debt outstanding in the 2004 periods compared to the 2003 periods.

      Equity in income (loss) of unconsolidated affiliates. We have investments in affiliates that are accounted for by the equity method of accounting. Equity in income (loss) of unconsolidated affiliates totaled $1.4 million in the third quarter of 2004 and $1.3 million in the third quarter of 2003. Equity in income (loss) of unconsolidated affiliates totaled $3.0 million in the first nine months of 2004 and $(2.5) million in the first nine months of 2003.

      The Towns & Resorts development segment recorded equity in the income (loss) of unconsolidated affiliates of $1.0 million for the third quarter of 2004, compared to $(0.2) million for the third quarter of 2003. The increase was primarily due to an increase in closings at Paseos and Rivercrest, two 50% owned unconsolidated affiliates. The Towns & Resorts development segment recorded equity in the income (loss) of unconsolidated affiliates of $3.1 million for the first nine months of 2004, compared to $(4.3) million for the first nine months of 2003. Equity in the income (loss) of unconsolidated affiliates for the first nine months of 2003 included a $(3.5) million pre-tax charge based on estimates of future costs and future cash distributions associated with the completion of operations of Arvida/ JMB Partners, L.P. (“Arvida/ JMB”), which completed its operations in 2003 and is winding up its affairs. Arvida/ JMB had no contribution to equity in income (loss) of unconsolidated affiliates in the first nine months of 2004. Equity in the income (loss) of other joint ventures increased $3.9 million from $(0.8) million for the first nine months of 2003 to $3.1 million for the first nine months of 2004, primarily as a result of an increase in closings of residential sales at these unconsolidated affiliates.

      The commercial real estate development and services segment recorded equity in the income (loss) of unconsolidated affiliates of $0.4 million in the third quarter of 2004, compared to $1.5 million in the third quarter of 2003 and $(0.1) million in the first nine months of 2004, compared to $1.8 million in the first nine months of 2003. Equity in income of Deerfield, LLC decreased $0.4 million to $0.7 million for the three months ended September 30, 2004 compared to the same period in 2003 and $0.2 million to $1.1 million for

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      Income tax expense. Income tax expense totaled $13.8 million in the third quarter of 2004 and $13.6 million in the third quarter of 2003. Income tax expense totaled $36.1 million in the first nine months of 2004 and $27.9 million in the first nine months of 2003. Our effective tax rate was 39% in the three and nine month periods ended September 30, 2004 and 37% in the three and nine month periods ended September 30, 2003. The increases in rates were due to increases in restricted stock deferred compensation, a portion of which is not deductible for tax purposes.

      Discontinued operations. Discontinued operations include the operations and subsequent sales of two commercial office buildings. On July 30, 2004, we sold 1750 K Street for proceeds of $47.3 million ($21.9 million, net of the assumption of a mortgage by the purchaser) and a pre-tax gain of $7.5 million ($4.6 million net of taxes). We sold Westchase Corporate Center on August 16, 2004, for proceeds of $20.3 million and a pre-tax gain of $0.2 million ($0.1 million net of taxes).

Segment Results

	Towns & Resorts Development

      The table below sets forth the results of operations of our Towns & Resorts development segment for the three month and nine month periods ended September 30, 2004 and 2003.

				Three Months								Nine Months
				Ended								Ended
				September 30,								September 30,
				2004				2003				2004				2003
				(In millions)
Revenues:
	Real estate sales			$	153.9			$	135.1			$	411.2			$	337.8
	Rental revenues				0.3				0.3				0.8				0.7
	Other revenues				13.3				8.8				32.2				20.8
		Total revenues			167.5				144.2				444.2				359.3
Expenses:
	Cost of real estate sales				110.2				90.9				296.8				234.8
	Cost of rental revenues				0.4				0.5				0.9				1.3
	Cost of other revenues				11.0				7.7				27.0				20.2
	Other operating expenses				11.6				11.1				34.7				30.1
	Depreciation and amortization				2.5				1.9				7.4				5.4
	Impairment loss				—				—				2.0				—
		Total expenses			135.7				112.1				368.8				291.8
Other income (expense)					—				—				(0.1	)			—
Pretax income from continuing operations				$	31.8			$	32.1			$	75.3			$	67.5

      Our Towns & Resorts development division develops large-scale, mixed-use communities primarily on land with very low cost basis. We own large tracts of land in Northwest Florida, including significant Gulf of Mexico beach frontage and waterfront properties, and land near Jacksonville, in Deland, and near Tallahassee, the state capital. Our residential homebuilding in North Carolina and South Carolina is conducted through Saussy Burbank, Inc. (“Saussy Burbank”), a wholly owned subsidiary. We are disciplined about the release of

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	Northwest Florida

      WaterColor is situated on approximately 499 acres on the beaches of the Gulf of Mexico in south Walton County. We are building single-family and multi-family residences and selling developed homesites in WaterColor. At full build-out, the community is planned to include approximately 1,140 units including the 60-room WaterColor Inn, a beach club, tennis center, boat house, restaurants in the WaterColor Inn and on an inland freshwater lake, commercial space and parks. In the third quarter of 2004, development began on phase four, a 60-acre parcel adjacent to WaterColor Crossing with approximately 185 units. Reservations have been accepted for all 88 ownership interests in the 11 residential units at the Watercolor Private Residence Club (“PRC”), adjacent to the WaterColor Inn. The completion of the PRC building and initial closings are scheduled for the fourth quarter of 2004. Each PRC owner receives a deed to 1/8 interest in a specific residence and is entitled to a minimum of five weeks per year in the PRC. From WaterColor’s inception through September 30, 2004, total contracts accepted or closed totaled 789 homes and homesites and 83 PRC shares.

      WaterSound Beach is located approximately four miles east of WaterColor. Situated on approximately 256 acres with over a mile of white sand beach, this gated community is currently expected to have 499 units at full build-out. Contracts have been accepted on all of the initial 49 units of Compass Point, a 92-unit neighborhood of multi-family residences. The remaining 43 units are scheduled for sales release in 2005 and 2006. From WaterSound Beach’s inception through September 30, 2004, contracts for 361 units were accepted or closed.

      Infrastructure construction continues on WaterSound, a resort community located three miles from WaterSound Beach. Sales are expected to begin in 2006.

      WaterSound West Beach is approximately one mile west of WaterSound Beach, with beach access through the adjacent Deer Lake State Park. Designed as a gated, high-end community with pricing expected to be comparable to WaterSound Beach, a number of environmental regulatory steps remain before construction can begin. Construction and sales are expected to begin in 2005.

      Land-use approvals have been finalized for WindMark Beach, a mixed-use development on approximately 2,080 acres in Gulf County. WindMark Beach includes an 80-acre first phase, with 110 homesites. At September 30, 2004, the six remaining homesites have not yet been released for sale. Sales in the new phases of WindMark Beach are scheduled to begin in late 2005. From WindMark Beach’s inception through September 30, 2004, contracts for 104 homesites were accepted or closed.

      SouthWood, four miles east of the state capitol building in Tallahassee, is entitled for a maximum of 4,770 residential units plus retail shops, restaurants, community facilities, light industrial sites and professional offices. Certain regulatory approvals are required prior to commencing development on construction in Phase II that is scheduled to begin in the 2006-2007 timeframe. From SouthWood’s inception through September 30, 2004, contracts for 785 units were accepted or closed.

      SummerCamp is located approximately 45 miles south of Tallahassee on the Gulf Coast in Franklin County. With nearly 4 miles of waterfront, the community is entitled for a maximum of 499 units on 782 acres of timberland. Current plans call for beach clubs, observation piers, gathering pavilions, a canoe and kayak boathouse, a community dock and nature trails. On July 9, 2004, 296 potential buyers sought reservations for 12 homesites at SummerCamp in the third release of homesites for sale. Pending the receipt of regulatory and environmental permits, closings of these homesites, as well as the 40 homesites and 29 homes from previous releases, are expected to begin in the first quarter of 2005.

	Northeast Florida

      RiverTown is entitled for a maximum of 4,500 units situated on 4,170 acres located in St. Johns County, south of Jacksonville, with more than 3.5 miles of frontage on the St. Johns River. RiverTown is being

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      In the third quarter of 2004, infrastructure construction continued on the final phases of St. Johns Golf and Country Club, a primary residential community located in St. Johns County. From its inception through September 30, 2004, contracts for 616 units of this 799 unit community were accepted or closed. Sales in this community are expected to be completed by the middle of 2006.

	Central Florida

      Victoria Park, located in Volusia County, is situated on approximately 1,859 acres we acquired near Interstate 4 in Deland between Daytona Beach and Orlando. Victoria Park is entitled for a maximum of 4,000 residences built among parks, lakes and conservation areas. From Victoria Park’s inception through September 30, 2004, contracts for 578 units were accepted or closed.

      Artisan Park, a 160-acre village located in Celebration, near Orlando, is being developed through a joint venture managed by us in which we own 74%. From Artisan Park’s inception through September 30, 2004, contracts for 276 units were accepted or closed out of 616 maximum project units entitled.

      The Company manages and owns 50% of the joint ventures developing Rivercrest and Paseos, two primary residential communities. At Rivercrest, a 413-acre community located near Tampa, 902 units have been sold or are under contract out of a total of 1,300 maximum units entitled. At Paseos, a 175-acre community in Jupiter, 315 units have been sold or are under contract out of 325 maximum units entitled.

	Three Months Ended September 30

      Real estate sales include sales of homes and homesites and sales of land. Cost of real estate sales includes direct costs, selling costs and other indirect costs. In the third quarter of 2004, the components of cost of real estate sales were $91.9 million in direct costs, $8.3 million in selling costs, and $10.0 million in other indirect costs. In the third quarter of 2003, the components of cost of real estate sales were $73.4 million in direct costs, $6.8 million in selling costs, and $9.0 million in other indirect costs. The overall increases in real estate sales and cost of real estate sales were primarily due to increases in revenues and cost of sales recorded at Saussy Burbank and on multi-family residences and PRC units using the percentage-of-completion method of accounting.

      Sales of homes in the third quarter of 2004 totaled $127.9 million, with related cost of sales of $103.2 million, resulting in a gross profit percentage of 19%, compared to sales in the third quarter of 2003 of $80.6 million, with cost of sales of $68.8 million, resulting in a gross profit percentage of 15%. The increase in gross profit percentage was primarily due to higher margin condominiums being built and under contract at WaterSound Beach and the PRC being built at WaterColor, both causing an increase in the gross profit recognized using the percentage-of-completion method of accounting.

      Cost of real estate sales for homes in the third quarter of 2004 consisted of $86.8 million in direct costs, $7.1 million in selling costs, and $9.3 million in indirect costs. Cost of real estate sales for homes in the third quarter of 2003 consisted of $57.3 million in direct costs, $4.1 million in selling costs, and $7.4 million in indirect costs.

      Sales of homesites in the third quarter of 2004 totaled $25.6 million, with related cost of sales of $7.0 million, resulting in a gross profit percentage of 73%, compared to sales in the third quarter of 2003 of $52.5 million, with related cost of sales of $20.4 million, resulting in a gross profit percentage of 61%. The increase in gross profit percentage was primarily due to better pricing at WaterColor and WindMark Beach. There were 29 homesites sold in our resort communities in the third quarter of 2004 compared to 168 homesites sold in those communities in the third quarter of 2003. We continue to manage inventory to maximize value to benefit from expected near-term price increases caused by strong demand in the market. Cost of real estate sales for homesites in the third quarter of 2004 consisted of $5.1 million in direct costs,

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      Other revenues totaled $13.3 million in the third quarter of 2004 with $11.0 million in related costs, compared to revenues totaling $8.8 million in the third quarter of 2003 with $7.7 million in related costs. These included revenues from the WaterColor Inn, other resort operations and management fees.

      Other operating expenses, including salaries and benefits of personnel and other administrative expenses, increased $0.5 million in the third quarter of 2004 compared to the third quarter of 2003. The increase was primarily due to damages of some walkovers at WaterColor and WaterSound resulting from Hurricane Ivan.

      The following table sets forth home and homesite sales activity by individual developments:

						Three Months Ended																Three Months Ended
						September 30, 2004																September 30, 2003
						Closed								Cost of				Gross				Closed								Cost of				Gross
						Units				Revenues				Sales				Profit				Units				Revenues				Sales				Profit
						(Dollars in millions)
Northwest Florida:
	Walton County:
		WaterColor:
			Homes:
				Single-family			1			$	0.9			$	0.6			$	0.3				2			$	1.7			$	1.2			$	0.5
				Multi-family			—				—				—				—				11				—				0.6				(0.6	)
				PRC			—				8.6				4.9				3.7				—				—				—				—
			Homesites				28				19.3				4.5				14.8				115				27.7				11.0				16.7
		WaterSound Beach:
			Multi-family homes				—				24.1				13.9				10.2				—				11.5				8.1				3.4
			Homesites				—				—				—				—				46				17.3				6.7				10.6
	Bay County:
		The Hammocks:
			Homes				17				2.4				2.3				0.1				8				1.2				1.1				0.1
			Homesites				28				1.1				0.6				0.5				1				—				—				—
		Palmetto Trace: Homes					24				3.3				3.1				0.2				27				4.0				3.5				0.5
	Leon County:
		SouthWood:
			Homes				35				7.8				6.8				1.0				45				8.8				7.6				1.2
			Homesites				19				1.9				0.9				1.0				20				1.8				0.8				1.0
	Gulf County:
		Windmark Beach: Homesites					1				1.0				0.2				0.8				7				3.8				0.7				3.1
Northeast Florida:
	St. Johns County:
		St. Johns Golf & Country Club:
			Homes				26				9.0				7.4				1.6				36				11.8				9.6				2.2
			Homesites				4				0.5				0.2				0.3				8				0.4				0.1				0.3
	Duval County:
		James Island: Homes					1				0.5				0.4				0.1				12				4.6				3.8				0.8
		Hampton Park: Homes					13				5.0				4.3				0.7				13				4.1				3.4				0.7
Central Florida:
	Osceola County:
		Artisan Park:
			Single-family				9				3.8				3.1				0.7				—				—				—				—
			Multi-family				—				4.7				3.8				0.9				—				—				—				—
			Homesites				4				0.9				0.2				0.7				5				0.6				0.4				0.2

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					Three Months Ended																Three Months Ended
					September 30, 2004																September 30, 2003
					Closed								Cost of				Gross				Closed								Cost of				Gross
					Units				Revenues				Sales				Profit				Units				Revenues				Sales				Profit
					(Dollars in millions)
	Volusia County:
		Victoria Park:
			Homes			42				9.6				8.4				1.2				28				5.8				5.2				0.6
			Homesites			11				0.9				0.4				0.5				13				0.9				0.5				0.4
North Carolina and South Carolina:
		Saussy Burbank:
			Homes			208				48.2				44.2				4.0				131				27.1				24.9				2.2
Total						471			$	153.5			$	110.2			$	43.3				528			$	133.1			$	89.2			$	43.9

      Revenue and costs of sales associated with multi-family units and PRC units under construction are recognized using the percentage of completion method of accounting. Revenue is recognized in proportion to the percentage of total costs incurred in relation to estimated total costs. If a deposit is received for less than 10% for a multi-family unit or a PRC unit, percentage of completion accounting is not utilized. Instead, full accrual accounting criteria is used, which generally recognizes revenue when sales contracts are closed and adequate investment from the buyer is received. In the WaterSound Beach community, deposits of 10% are required upon executing the contract and another 10% is required 180 days later. For PRC units, a 10% deposit is required. All deposits are non-refundable (subject to a 10-day waiting period as required by law) except for non-delivery of the unit. In the event a contract does not close for reasons other than non-delivery, we are entitled to retain the deposit. However, the revenue and margin related to the previously recorded contract would be reversed. Revenues and cost of sales associated with multi-family units where construction has been completed before contracts are signed and deposits made are recognized on the full accrual method of accounting, as contracts are closed.

      At WaterColor, the gross profit percentage on single-family residence sales decreased to 22% in the third quarter of 2004 from 29% for the third quarter of 2003, primarily due to the relative mix and location of the homes sold. There was one single-family residence sold in the third quarter of 2004 for $918,000, compared to the average price of $823,000 for the two single-family residences sold in the third quarter of 2003. In the third quarter of 2004, there was no revenue or gross profit recognized on the sale of multi-family residences due to the wind up of the first phase of multi-family residences in 2003. The gross profit percentage from homesite sales increased to 77% in the third quarter of 2004 from 60% in the third quarter of 2003 due to an increase in average price and the mix of locations of the closed homesites. The average price of a homesite sold in the third quarter of 2004 was $694,000, compared to $295,000 in the third quarter of 2003.

      At WaterSound Beach, the gross profit percentage from sales of multi-family residences, for which the percentage of completion method of accounting is used, was 42% in the third quarter of 2004, all of which was generated by sales at the new Compass Point community. In the third quarter of 2003, the gross profit percentage generated from sales of multi-family residences was 30%, all of which was generated by sales at WaterSound Crossings in the Bridges community.

      At Artisan Park, the gross profit percentage on homesite sales increased to 78% in the third quarter of 2004 from 33% in 2003, primarily due to increased prices. The average price of a homesite sold in the third quarter of 2004 was $225,000 compared to $122,000 in the third quarter of 2003.

      At Victoria Park, the gross profit percentage on home sales increased to 13% in the third quarter of 2004 from 10% in the third quarter of 2003, primarily due to an increase in the prices of comparable units. The gross profit percentage on homesite sales increased to 56% in the third quarter of 2004 from 44% in the third quarter of 2003, primarily due to the recognition in the third quarter of 2004 of previously deferred revenue.

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	Nine Months Ended September 30

      In the first nine months of 2004, the components of cost of real estate sales were $247.0 million in direct costs, $21.6 million in selling costs, and $28.4 million in other indirect costs. In the first nine months of 2003, the components of cost of real estate sales were $195.1 million in direct costs, $16.4 million in selling costs, and $21.8 million in other indirect costs. The overall increase in real estate sales was primarily due to an increase in the number of units sold and higher selling prices. Cost of real estate sales increased primarily due to the increased volume of sales. Increases in real estate sales and cost of real estates sales were both partially offset by a decrease in revenues and cost of sales recorded on multi-family residences because the majority of the gross profit on units closed in the first nine months of 2004 was recognized in 2003 due to the percentage-of-completion method of accounting.

      Sales of homes in the first nine months of 2004 totaled $316.2 million, with related cost of sales of $267.4 million, resulting in a gross profit percentage of 15%, compared to sales in the first nine months of 2003 of $243.3 million, with cost of sales of $198.7 million, resulting in a gross profit percentage of 18%. The decrease in gross profit percentage was primarily due to a decrease in the contribution from high margin multi-family homes. Additionally, as discussed above (See Critical Accounting Estimates.), we incurred $2.0 million in construction costs in the first nine months of 2004 due to contract adjustments on a multi-family property for which substantially all of the activity had been recorded during the year ended December 31, 2003.

      Cost of real estate sales for homes in the first nine months of 2004 consisted of $224.8 million in direct costs, $17.1 million in selling costs, and $25.5 million in indirect costs. Cost of real estate sales for homes in the first nine months of 2003 consisted of $167.8 million in direct costs, $11.9 million in selling costs, and $19.0 million in indirect costs.

      Sales of homesites in the first nine months of 2004 totaled $94.1 million, with related cost of sales of $29.6 million, resulting in a gross profit percentage of 69%, compared to sales in the first nine months of 2003 of $91.5 million, with related cost of sales of $34.6 million, resulting in a gross profit percentage of 62%. The increase in gross profit percentage was due to better pricing at WaterColor, WaterSound Beach, and Windmark Beach, partially offset by an increase in cost of sales at WaterColor. Cost of real estate sales for homesites in the first nine months of 2004 consisted of $22.2 million in direct costs, $4.5 million in selling costs, and $2.9 million in indirect costs. Cost of real estate sales for homesites in the first nine months of 2003 consisted of $27.3 million in direct costs, $4.5 million in selling costs, and $2.8 million in indirect costs.

      Other revenues totaled $32.2 million in the first nine months of 2004 with $27.0 million in related costs, compared to revenues totaling $20.8 million in the first nine months of 2003 with $20.2 million in related costs. These included revenues from the WaterColor Inn, other resort operations and management fees.

      Other operating expenses, including salaries and benefits of personnel and other administrative expenses, increased $4.6 million during the first nine months of 2004 compared to the first nine months of 2003. The increase was primarily due to increases in marketing and project administration costs attributable to the increase in residential development activity.

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      The following table sets forth home and homesite sales activity by individual developments:

						Nine Months Ended																Nine Months Ended
						September 30, 2004																September 30, 2003
						Closed								Cost of				Gross				Closed								Cost of				Gross
						Units				Revenues				Sales				Profit				Units				Revenues				Sales				Profit
						(Dollars in millions)
Northwest Florida:
	Walton County:
		WaterColor:
			Homes:
				Single-family			8			$	6.9			$	5.2			$	1.7				4			$	3.3			$	2.3			$	1.0
				Multi-family			—				—				—				—				18				2.6				2.7				(0.1	)
				PRC			—				14.8				8.3				6.5				—				—				—				—
			Homesites				135				62.6				19.5				43.1				158				42.2				16.1				26.1
		WaterSound Beach:
			Multi-family homes				50				36.3				24.1				12.2				—				60.3				37.4				22.9
			Homesites				29				15.0				3.7				11.3				75				31.9				11.8				20.1
	Bay County:
		The Hammocks:
			Homes				48				7.1				6.6				0.5				30				4.2				3.8				0.4
			Homesites				66				2.5				1.3				1.2				30				0.9				0.7				0.2
		Palmetto Trace: Homes					59				8.9				8.1				0.8				60				8.9				8.0				0.9
		Summerwood: Homes					—				—				1.7				(1.7	)			—				—				—				—
	Leon County:
		SouthWood:
			Homes				122				27.9				23.7				4.2				99				18.9				16.2				2.7
			Homesites				33				3.2				1.4				1.8				50				4.6				2.1				2.5
	Gulf County:
		Windmark Beach: Homesites					4				4.0				0.6				3.4				13				7.4				1.4				6.0
Northeast Florida:
	St. Johns County:
		St. Johns Golf & Country Club:
			Homes				76				26.3				21.5				4.8				83				26.2				21.7				4.5
			Homesites				23				2.2				0.9				1.3				29				1.5				0.7				0.8
	Duval County:
		James Island: Homes					11				4.3				3.8				0.5				46				15.4				13.3				2.1
		Hampton Park: Homes					47				16.1				14.2				1.9				30				9.5				8.1				1.4
Central Florida:
	Osceola County:
		Artisan Park:
			Single-family				25				10.8				8.0				2.8				—				—				—				—
			Multi-family				—				4.6				3.8				0.8				—				—				—				—
			Homesites				13				2.3				1.0				1.3				5				0.6				0.4				0.2
	Volusia County:
		Victoria Park:
			Homes				125				27.5				23.9				3.6				76				15.1				13.3				1.8
			Homesites				27				2.3				1.2				1.1				26				1.9				1.1				0.8
North Carolina and South Carolina:
		Saussy Burbank:
			Homes				575				124.7				114.5				10.2				382				79.0				71.8				7.2
			Homesites				—				—				—				—				19				0.4				0.4				—
Total							1,476			$	410.3			$	297.0			$	113.3				1,233			$	334.8			$	233.3			$	101.5

      At WaterColor, the gross profit percentage from single-family residence sales decreased to 25% in the first nine months of 2004 from 30% in the first nine months of 2003, primarily due to the mix of relative location and size of the home sales closed in each period. The average price of a single-family residence sold in

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      At WaterSound Beach, the gross profit percentage on sales of multi-family residences decreased to 34% in the first nine months of 2004 from 38% in the first nine months of 2003. Increased margins in 2004 were offset by an increase in the cost of revenues associated with the 80 completed and sold multi-family residences caused by actual construction costs exceeding estimates in the first quarter of 2004, as discussed above (See Critical Accounting Estimates). Most of the contribution from income for the 50 multi-family units that closed in the first nine months of 2004 was recorded in 2003 due to percentage of completion accounting. The gross profit percentage on homesites increased to 75% in the first nine months of 2004 from 63% in the first nine months of 2003, primarily due to price increases and a decrease in development costs.

      At The Hammocks, the gross profit percentage on homesite sales increased to 48% in the first nine months of 2004 from 22% in the first nine months of 2003, primarily due to price increases and a decrease in development costs. The gross profit percentage on home sales decreased to 7% in the first nine months of 2004 from 10% in the first nine months of 2003 due to a change in the mix of relative size and location of homes sold in each period.

      At Summerwood, there was a $1.7 million expense taken in the first nine months of 2004 for warranty costs in excess of warranty reserves.

      At St. Johns Golf and Country Club, the gross profit percentage on homesite sales increased to 59% in the first nine months of 2004 from 53% in the first nine months of 2003, primarily due to the mix of the relative size of the homesites sold in each period.

      At James Island, the gross profit percentage on home sales decreased to 12% in the first nine months of 2004 from 14% in the first nine months of 2003, primarily due to increases in marketing, interest and warranty costs and declining sales as the community nears completion.

      At Hampton Park, the gross profit percentage on home sales decreased to 12% in the first nine months of 2004 from 15% in the first nine months of 2003, primarily due to increases in warranty and selling costs and in the cost of purchased lots.

      At Artisan Park, the gross profit percentage on homesite sales increased to 57% in the first nine months of 2004 from 33% in 2003, primarily due to increased prices. The average price of a homesite sold in the third quarter of 2004 was $180,000 compared to $122,000 in the third quarter of 2003.

      At Victoria Park, the gross profit percentage on homesite sales increased to 48% in the first nine months of 2004 from 42% in 2003, primarily due to the mix of relative locations of homesites sold in each period.

      During the first nine months of 2004 we recorded an impairment loss of $2.0 million related to one of Saussy Burbank’s community development projects. Average prices of homes sold in the nine months ended September 30, 2004 and 2003 were approximately $217,000 and $207,000, respectively.

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	Commercial Real Estate Development and Services.

      The table below sets forth the results of operations of our commercial real estate development and services segment for the three month and nine month periods ended September 30, 2004 and 2003.

				Three Months								Nine Months
				Ended								Ended
				September 30,								September 30,
				2004				2003				2004				2003
				(In millions)
Revenues:
	Real estate sales			$	21.4			$	0.9			$	40.7			$	15.1
	Realty revenues				23.9				16.8				66.7				42.6
	Rental revenues				10.2				7.5				28.9				21.4
	Other revenues				0.4				0.3				1.2				1.6
		Total revenues			55.9				25.5				137.5				80.7
Expenses:
	Cost of real estate sales				17.5				0.3				31.6				4.6
	Cost of realty revenues				16.2				9.8				42.4				23.9
	Cost of rental revenues				3.8				3.3				10.6				9.0
	Other operating expenses				10.3				9.2				31.9				27.0
	Depreciation and amortization				4.1				2.9				12.0				7.9
	Impairment losses				—				—				—				14.1
		Total expenses			51.9				25.5				128.5				86.5
Other income (expense)					(1.1	)			(1.5	)			(4.0	)			(4.3	)
Pretax income from continuing operations				$	2.9			$	(1.5	)		$	5.0			$	(10.1	)

      Our commercial real estate development and services segment develops and sells real estate for commercial purposes. We also own and manage office, industrial and retail properties throughout the southeastern United States. Through the Advantis business unit, we provide commercial real estate services, including brokerage, property management and construction management for company-owned assets as well as third parties.

	Three Months Ended September 30

      Rental revenues. Rental revenues generated by our commercial real estate development and services segment on owned operating properties increased $2.7 million, or 36%, in the third quarter of 2004 compared to the third quarter of 2003, due to six buildings with an aggregate of 694,000 square feet placed in service or acquired since September 30, 2003 and an increase in the overall leased percentage, partially offset by the sale of a building with 100,000 square feet on February 12, 2004. Operating expenses related to these revenues increased $0.5 million, or 15%, primarily due to the buildings placed in service since September 30, 2003. This segment’s results include rental revenue and cost of rental revenue from 22 rental properties with 2.5 million total rentable square feet in service at September 30, 2004 and 19 rental properties with 2.3 million total rentable square feet in service at September 30, 2003. Additionally, this segment had an interest in one building totaling approximately 0.1 million square feet and 3 buildings totaling approximately 0.4 million square feet at September 30, 2004 and 2003, respectively, that were owned by partnerships and accounted for using the equity method of accounting. Excluding buildings accounted for using the equity method of accounting, the overall leased percentage increased to 85% at September 30, 2004, compared to 80% at September 30, 2003. Further information about commercial income producing properties that we owned or managed, along with results of operations for the three month periods ended September 30, 2004 and 2003, is presented in the tables below.

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						Net Rentable				Percentage				Net Rentable				Percentage
						Square Feet at				Leased at				Square Feet at				Leased at
						September 30,				September 30,				September 30,				September 30,
		Location				2004				2004				2003				2003
Buildings purchased with tax- deferred proceeds:
Harbourside			Clearwater, FL				153,000				77	%			147,000				92	%
Prestige Place I and II			Clearwater, FL				147,000				90				143,000				86
Lakeview			Tampa, FL				127,000				81				125,000				77
Palm Court			Tampa, FL				62,000				66				62,000				60
Westside Corporate Center(a)			Plantation, FL					(a)				(a)			100,000				74
280 Interstate North			Atlanta, GA				127,000				67				126,000				67
Southhall Center			Orlando, FL				159,000				48				155,000				88
1133 20th Street			Washington, DC				119,000				99				119,000				99
1750 K Street(d)			Washington, DC					(d)				(d)			152,000				87
Millenia Park One			Orlando, FL				158,000				90				158,000				62
Beckrich Office			Panama City Beach, FL				67,000				72				34,000				88
5660 New Northside			Atlanta, GA				273,000				96				275,000				91
SouthWood Office One			Tallahassee, FL				89,000				92				88,000				58
Crescent Ridge			Charlotte, NC				158,000				100				158,000				100
Windward Plaza Portfolio			Atlanta, GA				465,000				89					(b)				(b)
245 Riverside			Jacksonville, FL				136,000				57					(c)				(c)
Overlook			Richmond, VA				129,000				99					(b)				(b)
Subtotal/Average							2,369,000				84	%			1,842,000				83	%
Development property:
Westchase Corporate Center(d)			Houston, TX					(d)				(d)			184,000				93	%
TNT Logistics			Jacksonville, FL				99,000				94				99,000				83
Nextel Two			Panama City Beach, FL				30,000				100					(b)				(b)
Beckrich Office II			Panama City Beach, FL					(c)				(c)			34,000				8
245 Riverside			Jacksonville, FL					(c)				(c)			134,000				38
Subtotal/Average							129,000				95				451,000				68
Total/Average							2,498,000				85	%			2,293,000				80	%

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(a)		On February 12, 2004, we sold Westside Corporate Center.
(b)		These properties were completed or acquired after the date reported.
(c)		245 Riverside and Beckrich Office II were transferred from development property to buildings purchased with tax-deferred proceeds after the date reported.
(d)		These buildings were sold in the three months ended September 30, 2004, and are reported as discontinued operations.

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		Three Months Ended September 30, 2004																				Three Months Ended September 30, 2003
																		Pre-tax																				Pre-tax
		Rental				Operating				NOI				Adjustments				Income				Rental				Operating				NOI				Adjustments				Income
		Revenues				Expenses				(a)				(b)				(Loss)				Revenues				Expenses				(a)				(b)				(Loss)
		(In millions)
Buildings purchased with tax-deferred proceeds:
Harbourside		$	0.8			$	0.3			$	0.5			$	(0.3	)		$	0.2			$	0.9			$	0.3			$	0.6			$	(0.4	)		$	0.2
Prestige Place I and II			0.6				0.3				0.3				(0.3	)			—				0.5				0.3				0.2				(0.2	)			—
Lakeview			0.5				0.2				0.3				(0.4	)			(0.1	)			0.5				0.2				0.3				(0.4	)			(0.1	)
Palm Court			0.1				0.1				—				—				—				0.1				0.1				—				—				—
Westside Corporate Center			—				—				—				—				—				0.5				0.2				0.3				(0.2	)			0.1
280 Interstate North			0.4				0.2				0.2				(0.2	)			—				0.4				0.2				0.2				(0.2	)			—
Southhall Center			0.4				0.2				0.2				(0.5	)			(0.3	)			0.7				0.3				0.4				(0.4	)			—
1133 20th Street			1.0				0.4				0.6				(0.5	)			0.1				1.0				0.4				0.6				(0.5	)			0.1
Millenia Park One			0.7				0.2				0.5				(0.4	)			0.1				0.5				0.2				0.3				(0.4	)			(0.1	)
Beckrich Office			0.2				0.1				0.1				(0.1	)			—				0.1				0.1				—				—				—
5660 New Northside			1.4				0.5				0.9				(0.5	)			0.4				1.2				0.5				0.7				(0.4	)			0.3
SouthWood Office One			0.3				0.1				0.2				(0.1	)			0.1				0.2				0.1				0.1				(0.1	)			—
Crescent Ridge			0.8				0.2				0.6				(0.6	)			—				0.3				0.1				0.2				(0.2	)			—
Windward Plaza			1.8				0.4				1.4				(0.8	)			0.6				—				—				—				—				—
245 Riverside(c)			0.1				0.2				(0.1	)			(0.2	)			(0.3	)			—				—				—				—				—
Overlook I and II			0.6				0.2				0.4				(0.2	)			0.2				—				—				—				—				—
Subtotal		$	9.7			$	3.6			$	6.1			$	(5.1	)		$	1.0			$	6.9			$	3.0			$	3.9			$	(3.4	)		$	0.5
Development property:
TNT Logistics			0.4				0.2				0.2				(0.1	)			0.1				0.3				0.1				0.2				(0.2	)			—
245 Riverside(c)			—				—				—				—				—				0.3				0.2				0.1				(0.3	)			(0.2	)
Nextel II			0.1				—				0.1				(0.1	)			—				—				—				—				—				—
Subtotal		$	0.5			$	0.2			$	0.3			$	(0.2	)		$	0.1			$	0.6			$	0.3			$	0.3			$	(0.5	)		$	(0.2	)
Total		$	10.2			$	3.8			$	6.4			$	(5.3	)		$	1.1			$	7.5			$	3.3			$	4.2			$	(3.9	)		$	0.3

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(a)		NOI is Net Operating Income.
(b)		Adjustments include interest expense, depreciation and amortization.
(c)		245 Riverside was transferred from development property to buildings purchased with tax-deferred proceeds during the first quarter of 2004.

      At Harbourside and Southhall Center, the loss of tenants caused a decrease in the leased percentages and rental revenues. We are now marketing these spaces. At Millenia Park One and SouthWood Office One, leased percentages and revenues increased due to the addition of new tenants.

      Realty revenues. Advantis’ realty revenues in the third quarter of 2004 increased $7.1 million, or 42%, over the third quarter of 2003, primarily due to increases in construction and brokerage revenues. Cost of Advantis’ realty revenue increased $6.4 million, or 65%, primarily due to increased costs associated with the increase in construction and brokerage revenues. The gross profit percentage was 32% for the third quarter of 2004 compared to 42% in the third quarter of 2003. The decrease in gross profit percentage was due to increases in broker agent compensation rates related to the increase in brokerage activity and due to the expansion of the construction business to include base building projects which have a lower margin than tenant renovation projects. Advantis’ other operating expenses, consisting of office administration expenses, increased to $7.9 million in the third quarter of 2004 from $7.4 million in the third quarter of 2003, a 7% increase, primarily due to an increase in staffing costs. Advantis recorded a pre-tax loss of $(0.3) million for the third quarter of 2004 after eliminations of intercompany profits of $0.3 million, compared to $(0.6) million for the third quarter of 2003, after eliminations of intercompany profits of $0.4 million.

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      Real estate sales. Total proceeds from land sales in the third quarter of 2004 were $21.4 million, with a pre-tax gain of $3.9 million. Land sales included the following:

			Number of								Gross				Average
Land			Sales				Acres Sold				Sales Price				Price/Acre
											(In millions)				(In thousands)
Florida:
	Unimproved			4				81			$	1.9			$	23
	Improved			8				48				18.6				388
Texas				1				4				0.9				216
Total/ Average				13				133			$	21.4			$	161

      During the third quarter of 2003, total proceeds from land sales were $0.9 million, with a pre-tax gain of $0.6 million. Land sales included the following:

			Number of								Gross				Average
Land			Sales				Acres Sold				Sales Price				Price/Acre
											(In millions)				(In thousands)
Florida:
	Unimproved			4				9			$	0.2			$	19
	Improved			5				15				0.7				50
Total/Average				9				24			$	0.9			$	39

      There were no building sales recorded in continuing operations during the three months ended September 30, 2004 and 2003.

      Depreciation and amortization, primarily consisting of depreciation on income producing properties and amortization of lease intangibles, was $4.1 million in the third quarter of 2004 compared to $2.9 million in the third quarter of 2003.

      Discontinued operations. Building sales in the third quarter of 2004 consisted of the sales of 1750 K Street and Westchase Corporate Center, both of which are reported as discontinued operations. 1750 K Street was sold on July 30, 2004, for proceeds of $47.3 million ($21.9 million, net of the assumption of a mortgage by the purchaser) and a pre-tax gain of $7.5 million. Westchase Corporate Center was sold on August 16, 2004, for proceeds of $20.3 million and a pre-tax gain of $0.2 million.

	Nine Months Ended September 30

      Rental revenues. Rental revenues generated by our commercial real estate development and services segment on owned operating properties increased $7.5 million, or 35%, in the first nine months of 2004 compared to the first nine months of 2003, primarily due to six buildings with an aggregate of 694,000 square feet placed in service or acquired since September 30, 2003 and an increase in the overall leased percentage, partially offset by the sale of a building with 100,000 square feet on February 12, 2004. Operating expenses related to these revenues increased $1.6 million, or 18%, primarily due to the buildings placed in service since September 30, 2003. Further information about commercial income producing properties that we owned or managed, along with results of operations for the nine month periods ended September 30, 2004 and 2003, is presented in the table below.

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		Nine Months Ended September 30, 2004																				Nine Months Ended September 30, 2003
																		Pre-tax																				Pre-tax
		Rental				Operating				NOI				Adjustments				Income				Rental				Operating				NOI				Adjustments				Income
		Revenues				Expenses				(a)				(b)				(Loss)				Revenues				Expenses				(a)				(b)				(Loss)
		(In millions)
Buildings purchased with tax- deferred proceeds:
Harbourside		$	2.2			$	0.8			$	1.4			$	(1.0	)		$	0.4			$	2.3			$	0.8			$	1.5			$	(1.2	)		$	0.3
Prestige Place I and II			1.7				0.8				0.9				(0.9	)			—				1.6				0.8				0.8				(0.8	)			—
Lakeview			1.5				0.6				0.9				(1.0	)			(0.1	)			1.5				0.7				0.8				(1.0	)			(0.2	)
Palm Court			0.4				0.3				0.1				(0.1	)			—				0.3				0.3				—				(0.2	)			(0.2	)
Westside Corporate Center			—				0.1				(0.1	)			(0.2	)			(0.3	)			1.5				0.6				0.9				(0.8	)			0.1
280 Interstate North			1.2				0.6				0.6				(0.6	)			—				1.3				0.6				0.7				(0.7	)			—
Southhall Center			1.2				0.6				0.6				(1.4	)			(0.8	)			2.1				0.7				1.4				(1.2	)			0.2
1133 20th Street			3.0				1.2				1.8				(1.4	)			0.4				2.9				1.1				1.8				(1.5	)			0.3
Millenia Park One			1.9				0.5				1.4				(1.3	)			0.1				1.3				0.6				0.7				(1.1	)			(0.4	)
Beckrich Office			0.4				0.3				0.1				(0.3	)			(0.2	)			0.5				0.3				0.2				(0.1	)			0.1
5660 New Northside			4.4				1.4				3.0				(1.4	)			1.6				4.4				1.4				3.0				(1.1	)			1.9
SouthWood Office One			0.6				0.3				0.3				(0.3	)			—				0.2				0.1				0.1				(0.2	)			(0.1	)
Crescent Ridge			2.4				0.6				1.8				(1.4	)			0.4				0.3				0.1				0.2				(0.2	)			—
Windward Plaza			5.6				1.4				4.2				(2.3	)			1.9				—				—				—				—				—
245 Riverside(c)			0.3				0.6				(0.3	)			(0.7	)			(1.0	)			—				—				—				—				—
Overlook I and II			0.8				0.2				0.6				(0.4	)			0.2
Subtotal		$	27.6			$	10.3			$	17.3			$	(14.7	)		$	2.6			$	20.2			$	8.1			$	12.1			$	(10.1	)		$	2.0
Development property:
Tree of Life			—				—				—				—				—				—				—				—				—				—
TNT Logistics			1.2				0.4				0.8				(0.6	)			0.2				1.0				0.4				0.6				(0.5	)			0.1
245 Riverside(c)			—				—				—				—				—				0.6				0.4				0.2				(0.5	)			(0.3	)
Nextel II			0.1				—				0.1				(0.1	)			—				—				—				—				—				—
Other			—				—				—				—				—				(0.4	)			0.1				(0.5	)			0.4				(0.1	)
Subtotal		$	1.3			$	0.4			$	0.9			$	(0.7	)		$	0.2			$	1.2			$	0.9			$	0.3			$	(0.6	)		$	(0.3	)
Total		$	28.9			$	10.7			$	18.2			$	(15.4	)		$	2.8			$	21.4			$	9.0			$	12.4			$	(10.7	)		$	1.7

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(a)		NOI is Net Operating Income.
(b)		Adjustments include interest expense, depreciation and amortization.
(c)		245 Riverside was transferred from development property to buildings purchased with tax-deferred proceeds during the first quarter of 2004.

      Realty revenues. Advantis’ realty revenues in the first nine months of 2004 increased $24.1 million, or 57%, over the first nine months of 2003, due to increases in construction and brokerage revenues. Cost of Advantis’ realty revenue increased $18.5 million, or 77%, primarily due to increased costs associated with the increase in construction and brokerage revenues. The gross profit percentage was 36% for the first nine months of 2004 compared to 44% in the first nine months of 2003. The decrease in gross profit percentage was due to increases in broker agent compensation rates related to the increase in brokerage activity and due to the expansion of the construction business to include base building projects which have a lower margin than tenant renovation projects. Advantis’ other operating expenses, consisting of office administration expenses, increased to $24.4 million in the first nine months of 2004 from $21.4 million in the first nine months of 2003, a 14% increase, primarily due to an increase in staffing costs. Advantis recorded a pre-tax loss of $(0.8) million for the first nine months of 2004, compared to $(17.7) million for the first nine months of 2003, including the 2003 impairment loss of $(14.1) million.

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      Real estate sales. Total proceeds from land sales in the first nine months of 2004 were $40.7 million, with a pre-tax gain of $9.1 million. Land sales included the following:

			Number of								Gross				Average
Land			Sales				Acres Sold				Sales Price				Price/Acre
											(In millions)				(In thousands)
Florida:
	Unimproved			10				197			$	5.8			$	29
	Improved			18				70				20.7				297
Texas				2				7				2.2				322
Total/ Average				30				274			$	28.7			$	105

      During the first nine months of 2003, total proceeds from land sales were $15.1 million, with a pre-tax gain of $10.5 million. Land sales included the following:

			Number of								Gross				Average
Land			Sales				Acres Sold				Sales Price				Price/Acre
											(In millions)				(In thousands)
Florida:
	Unimproved			13				151			$	6.1			$	40
	Improved			22				84				8.0				95
Texas				1				2				1.0				449
Total/ Average				36				237			$	15.1			$	64

      Building sales recorded in continuing operations during the nine months ended September 30, 2004 consisted of the sale of Westside Corporate Center. On February 12, 2004, we sold the 100,000-square-foot Westside Corporate Center building in Plantation, Florida, for proceeds of $12.0 million, with no pre-tax gain. The operations of Westside Corporate Center have not been recorded as a discontinued operation due to the fact that our affiliate continues to provide brokerage and leasing services for the building. There were no building sales during the nine month period ended September 30, 2003.

      Depreciation and amortization, primarily consisting of depreciation on income producing properties and amortization of lease intangibles, was $12.0 million in the first nine months of 2004 compared to $7.9 million in the first nine months of 2003.

      Discontinued operations. The 1750 K Street and Westchase Corporate Center building sales are both reported as discontinued operations. 1750 K Street was sold on July 30, 2004, for proceeds of $47.3 million and a pre-tax gain of $7.5 million. Westchase Corporate Center was sold on August 16, 2004, for proceeds of $20.3 million and a pre-tax gain of $0.2 million.

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	Land Sales

      The table below sets forth the results of operations of our land sales segment for the three and nine month periods ended September 30, 2004 and 2003.

				Three Months								Nine Months
				Ended								Ended
				September 30,								September 30,
				2004				2003				2004				2003
				(In millions)
Revenues:
	Real estate sales			$	14.7			$	19.0			$	51.4			$	58.7
Expenses:
	Cost of real estate sales				1.0				2.3				4.9				8.2
	Cost of other revenues				0.3				0.3				0.7				0.4
	Other operating expenses				1.7				1.6				4.8				4.8
	Depreciation and amortization				0.1				—				0.3				0.2
		Total expenses			3.1				4.2				10.7				13.6
Other income (expense)					—				—				—				0.1
Pretax income from continuing operations				$	11.6			$	14.8			$	40.7			$	45.2

      Land sales activity for the three month and nine month periods ended September 30, 2004 and 2003, excluding conservation lands, was as follows:

			Number				Number of				Average Price				Gross
Period			of Sales				Acres				Per Acre				Sales Price				Gross Profit
															(In millions)				(In millions)
Three Months Ended:
	September 30, 2004			35				2,822			$	5,032			$	14.2			$	13.2
	September 30, 2003			43				9,051			$	1,667			$	15.1			$	12.7
Nine Months Ended:
	September 30, 2004			126				15,006			$	3,192			$	47.9			$	43.6
	September 30, 2003			129				18,495			$	1,813			$	33.5			$	27.3

      Land sales for the third quarter of 2004 included one large parcel of approximately 323 acres with frontage on North Bay in Bay County, Florida, which sold for $8.7 million, or approximately $27,000 per acre. Land sales for the first nine months of 2004 included that sale and the sale of an 866-acre parcel with some bay frontage in Bay County which sold for $10.0 million, or approximately $11,550 per acre. Since average sales prices per acre vary according to the characteristics of each particular piece of land being sold, our average prices may vary from one period to another.

      Conservation land sales activity for the three month and nine month periods ended September 30, 2004 and 2003 was as follows:

			Number				Number of				Average Price				Gross
Period			of Sales				Acres				Per Acre				Sales Price				Gross Profit
															(In millions)				(In millions)
Three Months Ended:
	September 30, 2004			1				50			$	5,000			$	0.2			$	0.2
	September 30, 2003			1				2,734			$	1,414			$	3.9			$	3.9
Nine Months Ended:
	September 30, 2004			3				1,799			$	1,668			$	3.0			$	2.7
	September 30, 2003			2				21,344			$	1,146			$	24.5			$	22.2

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      During the first nine months of 2004, we released 27 home sites at RiverCamps on Crooked Creek. Early in the fourth quarter of 2004, an additional 15 homesites were offered for sale. We expect to accept contracts and close sales of home sites in these releases in the fourth quarter of 2004. Work also continues on other potential RiverCamps locations in Northwest Florida. During the three and nine month periods ended September 30, 2004, the land sales segment recognized $0.3 million and $0.5 million, respectively, in revenue related to RiverCamps, with related costs of $0.1 million and $0.3 million, respectively. In the first nine months of 2003, RiverCamps generated $0.7 million in revenues with $0.7 million in related costs, all from the sale of the 2003 HGTV Dream Home located on East Bay in Bay County, Florida.

	Forestry

      The table below sets forth the results of operations of our forestry segment for the three month and nine month periods ended September 30, 2004 and 2003.

				Three Months								Nine Months
				Ended								Ended
				September 30,								September 30,
				2004				2003				2004				2003
				(In millions)
Revenues:
	Timber sales			$	8.1			$	8.5			$	27.2			$	28.2
Expenses:
	Cost of timber sales				5.1				5.7				16.9				19.3
	Other operating expenses				0.6				0.6				1.9				1.9
	Depreciation and amortization				1.0				1.1				3.1				3.1
		Total expenses			6.7				7.4				21.9				24.3
Other income					0.5				0.6				1.7				1.9
Pretax income from continuing operations				$	1.9			$	1.7			$	7.0			$	5.8

      Revenues for the forestry segment in the third quarter and first nine months of 2004 decreased 4% compared to the comparable periods in 2003. Total sales under our fiber agreement with Smurfit-Stone Container Corporation were $3.4 million (171,000 tons) in the third quarter of 2004, compared to $3.0 million (168,000 tons) in the third quarter of 2003. Total sales under this agreement were $9.8 million (513,000 tons) in the first nine months of 2004, compared to $8.7 million (504,000 tons) in the first nine months of 2003. The increase in revenues was primarily due to increasing prices under the terms of the agreement. Sales to other customers totaled $3.2 million (140,000 tons) in the third quarter of 2004, compared to $3.8 million (199,000 tons) in the third quarter of 2003. Sales to other customers totaled $11.1 million (502,000 tons) in the first nine months of 2004, compared to $12.3 million (656,000 tons) in the first nine months of 2003. Sales to other customers decreased as we reduced the volume harvested from Company-owned lands. Revenues from our cypress mill operation were $1.5 million in the third quarter of 2004 and $1.7 million in the third quarter of 2003. Revenues from the cypress mill operation were $6.3 million in the first nine months of 2004 and $7.2 million in the first nine months of 2003. Revenues from the cypress mill operation decreased as we intentionally reduced production to help improve margins and profitability in response to challenges in finding wood supplies at good prices.

      Cost of timber sales decreased $0.6 million for the third quarter of 2004 compared to the third quarter of 2003. Cost of sales as a percentage of revenue was 63% for the third quarter of 2004 compared to 67% for the third quarter of 2003. Cost of timber sales decreased $2.4 million for the first nine months of 2004 compared to the first nine months of 2003. Cost of sales as a percentage of revenue was 62% for the first nine months of 2004 compared to 68% for the first nine months of 2003. The decrease in cost of sales as a percentage of revenue was due to increased efficiencies in our cypress mill operation and slightly lower cost of sales for timber in the 2004 periods compared to 2003. Cost of sales for the cypress mill operation was $1.1 million, or 73% of revenue, for the third quarter of 2004 compared to $1.3 million, or 76% of revenue, for the third quarter

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Liquidity and Capital Resources

      We generate cash from:

	•	Operations;
	•	Sales of land holdings, other assets and subsidiaries;
	•	Borrowings from financial institutions and other debt; and
	•	Issuances of equity, primarily from the exercise of employee stock options.

      We use cash for:

	•	Operations;
	•	Payments of taxes;
	•	Real estate development;
	•	Construction and homebuilding;
	•	Repurchases of our common stock;
	•	Payments of dividends;
	•	Repayments of debt; and
	•	Investments in joint ventures and acquisitions.

      Management believes that our financial condition is strong and that our cash, real estate and other assets, operating cash flows, and borrowing capacity, taken together, provide adequate resources to fund ongoing operating requirements and future capital expenditures related to the expansion of existing businesses, including the continued investment in real estate developments. If our liquidity is not adequate to fund operating requirements, capital development, stock repurchases and dividends, we have various alternatives to change our cash flow, including eliminating or reducing our stock repurchase program, eliminating or reducing dividends, altering the timing of our development projects and/or selling existing assets.

	Cash Flows from Operating Activities

      Net cash provided by operations was $53.8 million and $45.3 million in the first nine months of 2004 and 2003, respectively. Expenditures relating to our Towns & Resorts development segment were $360.8 million and $243.5 million in the first nine months of 2004 and 2003, respectively. Expenditures for operating properties in the first nine months of 2004 and 2003 totaled $22.2 million and $33.0 million, respectively, and were made up of commercial property development and residential club and resort property development.

      The expenditures for operating activities relating to our Towns & Resorts development and commercial development and services segments are primarily for site infrastructure development, general amenity construction and construction of homes and commercial space. Approximately one-half of these expenditures are for home construction and generally take place after the signing of a binding contract with a buyer to purchase the home following construction. As a consequence, if contract activity slows, home construction will similarly slow. We expect this general expenditure level and relationship between expenditures and housing contracts to continue in the future.

      We have generated a net operating loss for tax purposes in each of the three prior tax years, thereby negating the cash payment of federal income taxes during 2001-2003. For the full year 2004, however, federal

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	Cash Flows from Investing Activities

      Net cash provided by investing activities in the first nine months of 2004 was $19.9 million and included $41.1 million in proceeds from the sale of discontinued assets and proceeds of $11.9 million from the sale of a commercial building, partially offset by $19.1 million for the purchase of two commercial buildings, $5.1 million for improvements to commercial investment property, and $2.8 million for the purchase of the remaining interests in two commercial buildings of which we already owned a majority interest. In the first nine months of 2003, net cash used in investing activities was $53.7 million and included $22.1 million for the purchase of a commercial building and $7.7 million for improvements to commercial investment property.

	Cash Flows from Financing Activities

      In the first nine months of 2004 and 2003, net cash used in financing activities was $35.6 million and $1.4 million, respectively.

      We have approximately $0.4 million of debt maturing in the remainder of 2004. For the full year ended December 31, 2004, we expect to spend $125 million to $175 million for the repurchase of shares, the acquisition of surrendered shares and dividend payments.

      We have a $250 million senior revolving credit facility (the “credit facility”), which matures on March 30, 2006 and can be used for general corporate purposes. The credit facility includes financial performance covenants relating to our leverage position, interest coverage and a minimum net worth requirement. The credit facility also has negative pledge restrictions. Management believes that we are currently in compliance with the covenants of the credit facility. At September 30, 2004, there was no balance on this credit facility. At December 31, 2003, the outstanding balance was $40.0 million.

      On June 8, 2004, we issued senior notes in a private placement with an aggregate principal amount of $100 million, with $25 million maturing on June 8, 2009 with a fixed interest rate of 4.97% and $75 million maturing on June 8, 2011 with a fixed interest rate of 5.31%. Interest will be payable semiannually. The senior notes contain financial covenants similar to those in our $175 million senior notes issued in 2002 and our $250.0 million senior revolving credit facility.

      We have used community development district (“CDD”) bonds to finance the construction of on-site infrastructure improvements at four of our projects. The principal and interest payments on the bonds are paid by assessments on, or from sales proceeds of, the properties benefited by the improvements financed by the bonds. We record a liability for future assessments which are fixed or determinable and will be levied against our properties. At September 30, 2004, CDD bonds totaling $99.5 million had been issued, of which $86.5 million had been expended. At December 31, 2003, CDD bonds totaling $99.5 million had been issued, of which $79.0 million had been expended. In accordance with Emerging Issues Task Force Issue 91-10, Accounting for Special Assessments and Tax Increment Financing, we have recorded $35.0 and $30.0 million of this obligation as of September 30, 2004 and December 31, 2003, respectively.

      Through September 30, 2004, our Board of Directors had authorized, through a series of five specific authorizations ranging from $150 million to $200 million, a total of $800.0 million for the repurchase of our outstanding common stock from time to time on the open market (the “Stock Repurchase Program”), of which $142.2 million remained available at September 30, 2004.

      The Alfred I. duPont Testamentary Trust and its beneficiary, The Nemours Foundation (collectively, the “Trust”) participated in the Stock Repurchase Program from time to time through August 6, 2004, by selling weekly to us shares equal to a share multiplier (0.31 from May 8, 2004 through August 6, 2004) times the number of shares we purchased from the public during the previous week (the “public shares”) at a price equal to the volume weighted average price, excluding commissions, paid by us for the public shares, subject

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      From the inception of the Stock Repurchase Program through September 30, 2004, we repurchased from shareholders 24,952,711 shares (17,016,366 shares on the open market and 7,936,345 shares from the Trust), and executives surrendered 2,022,229 shares of our stock in payment of strike prices and taxes due on exercised stock options and taxes due on vested restricted stock, for a total of 26,974,940 acquired shares. During the first nine months of 2004, we repurchased from shareholders 1,221,865 shares (958,500 shares on the open market and 263,365 shares from the Trust), and 870,368 shares were surrendered by our executives as payment of the strike prices and taxes due on exercised stock options and taxes due on vested restricted stock. During the first nine months of 2003, we repurchased from shareholders 2,017,170 shares (1,140,300 shares on the open market and 876,870 shares from the Trust), and executives surrendered 341,884 shares of our stock in payment of the strike prices and taxes due on exercised stock options and taxes due on vested restricted stock. Through September 30, 2004, a total of $657.8 million had been expended as part of the Stock Repurchase Program, including $51.0 million in the first nine months of 2004 and $59.0 million in the first nine months of 2003.

	Off-Balance Sheet Debt

      At September 30, 2004, we were not liable as guarantor on any credit obligations that relate to unconsolidated affiliates in accordance with Financial Accounting Standards Board Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.

	Contractual Obligations and Commercial Commitments

      There have been no material changes to contractual obligations and commercial commitments during the first nine months of 2004.

Item 3.	Quantitative and Qualitative Disclosures About Market Risk

      There have been no material changes to quantitative and qualitative disclosures about market risk during the first nine months of 2004.

Item 4.	Controls and Procedures

      (a) Evaluation of Disclosure Controls and Procedures. Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective in bringing to their attention on a timely basis material information relating to the Company (including our consolidated subsidiaries) required to be included in our periodic filings under the Exchange Act.

      (b) Changes in Internal Controls. During the quarter ended September 30, 2004, there have not been any changes in our internal controls that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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PART II — OTHER INFORMATION

Item 1.	Legal Proceedings

      See Part I, Item 1, Note 7.

Item 2(c).	Unregistered Sales of Equity Securities and Use of Proceeds

										(c)				(d)
										Total Number of				Maximum Dollar
		(a)								Shares Purchased				Amount that
		Total Number				(b)				as Part of Publicly				May Yet Be
		of Shares				Average				Announced Plans				Purchased Under
		Purchased				Price Paid				or Programs				the Plans or
Period		(1)(2)				per Share				(1)(3)				Programs
														(In thousands)
Month Ended July 31, 2004			41,750			$	41.66				41,750			$	160,337
Month Ended August 31, 2004			309,399			$	45.18				240,840			$	149,533
Month Ended September 30, 2004			179,081			$	47.69				154,500			$	142,178

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(1)	Includes shares purchased from The Alfred I. duPont Testamentary Trust and The Nemours Foundation equal in aggregate to 7,750 in July 2004, 19,840 in August 2004, and zero in September 2004.
(2)	Includes shares surrendered to the Company by executives as payment for the strike prices and taxes due on exercised stock options and/or taxes due on vested restricted stock equal in the aggregate to 68,559 in August 2004 and 24,581 in September 2004.
(3)	For a description of our Stock Repurchase Program, see note 2, “Summary of Significant Accounting Policies — Earnings Per Share,” of the notes to our consolidated financial statements.

Item 6.	Exhibits

      Exhibits

	3.1			Restated and Amended Articles of Incorporation dated May 12, 1998 (incorporated by reference to Exhibit 3.1 of the registrant’s registration statement on Form S-3 (File 333-116017)).
	3.2			Amended and Restated By-laws of the registrant (incorporated by reference to Exhibit 3.01 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2002 (File No. 1-10466)).
	4.1			Registration Rights Agreement between the registrant and the Alfred I. duPont Testamentary Trust, dated December 16, 1997 (incorporated by reference to Exhibit 4.01 to the registrant’s Amendment No. 1 to the registration statement on Form S-3 (File No. 333-42397)).
	4.2			Amendment No. 1 to the Registration Rights Agreement between the Alfred I. duPont Testamentary Trust and the registrant, dated January 26, 1998 (incorporated by reference to Exhibit 4.2 of the registrant’s registration statement on Form S-1 (File 333-89146)).
	4.3			Amendment No. 2 to the Registration Rights Agreement between the Alfred I. duPont Testamentary Trust and the registrant, dated May 24, 2002 (incorporated by reference to Exhibit 4.3 of the registrant’s registration statement on Form S-1 (File 333-89146)).
	4.4			Amendment No. 3 to the Registration Rights Agreement between the Alfred I. duPont Testamentary Trust and the registrant dated September 5, 2003 (incorporated by reference to Exhibit 4.4 of the registrant’s registration statement on Form S-3 (File No. 333-108292)).
	4.5			Amendment No. 4 to the Registration Rights Agreement between the Alfred I. duPont Testamentary Trust and the registrant dated December 30, 2003 (incorporated by reference to Exhibit 4.5 of the registrant’s registration statement on Form S-3 (File No. 333-111658)).
	10.1			Form of Restricted Stock Agreement (incorporated by reference to Exhibit 10 to the registrant’s Current Report on Form 8-K filed on September 23, 2004).
	10.2			Retirement Agreement dated as of August 24, 2004 between the registrant and Robert M. Rhodes.
	31.1			Certification by Chief Executive Officer.

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	31.2			Certification by Chief Financial Officer.
	32.1			Certification by Chief Executive Officer.
	32.2			Certification by Chief Financial Officer.

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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: November 8, 2004		/s/ KEVIN M. TWOMEY --------------------------------------------------- Kevin M. Twomey President, Chief Operating Officer, and Chief Financial Officer
Date: November 8, 2004		/s/ MICHAEL N. REGAN --------------------------------------------------- Michael N. Regan Senior Vice President — Finance and Planning (Principal Accounting Officer)

42

                                                                    EXHIBIT 10.2

                                                                  EXECUTION COPY

                              RETIREMENT AGREEMENT

         This Retirement Agreement (the "Agreement") is made as of the 24th day
of August, 2004, by and between Robert M. Rhodes ("Executive") and THE ST. JOE
COMPANY (the "Employer").

         WHEREAS, Executive has been employed by the Employer since February
1997, most recently as Executive Vice President;

         WHEREAS, Executive has completed his succession plan and other
responsibilities prior to the expected date of December 31, 2005 and, as a
result, the Executive and the Employer desire and intend to terminate the
employment relationship on the date set forth below; and

         WHEREAS, all references to the Employer herein shall include all
entities affiliated with the Employer.

         NOW, THEREFORE, Executive and Employer desire, and by this Agreement
     intend to be legally bound, in consideration of the mutual promises set
     forth herein, by the following terms:

I.       RETIREMENT

         Executive shall retire and his employment with the Employer shall
         terminate effective March 1, 2005 ("Retirement Date").

         As set forth on Exhibit A attached hereto, Executive will resign from
         all officer and director positions of the Employer effective the
         Retirement Date.

II.      BENEFITS

         A.       As consideration for Executive signing this Agreement, the
                  Employer shall pay to Executive in a lump sum payment on the
                  Retirement Date an amount equal to the long term incentive
                  compensation award ("LTIC") set forth in the Long-term
                  Incentive Compensation Agreement between Executive and
                  Employer, dated as of August 21, 2001, such award to be
                  calculated based on the formula set forth in such agreement
                  but without pro-ration. Executive shall also be paid regular
                  salary, bonuses (computed based on past practices), SERP and
                  DCAP benefits, and car allowances through the Retirement Date,
                  and any unused paid time off, in accordance with his existing
                  employment agreement. Executive shall receive full pension
                  credit for the LTIC award. However, Executive shall not be
                  entitled to receive any grants or awards of stock options or
                  restricted stock after the date of this Agreement.

         B.       Executive shall be eligible for continued participation in the
                  Employer's health plan as provided by law in accordance with
                  the consolidated Omnibus Budget Reconciliation Act (COBRA)
                  Public Law No. 99-972. Participation and coverage in the
                  benefit plans not subject to COBRA provisions shall cease on
                  the Retirement Date.

         C.       As consideration for Employer signing this Agreement,
                  Executive has agreed to provide consulting services to
                  Employer through December 31, 2005. Executive and Employer
                  agree to enter into a consulting agreement in the form set
                  forth as Exhibit B.

III.     NON-COMPETITION; NON-SOLICITATION

         A.       Executive agrees that after the Retirement Date through
                  December 31, 2005 he will not accept any employment or engage
                  in any representation or consultation that does or may
                  directly or indirectly conflict with or be adverse to any
                  interest of the Employer.

         B.       Unless waived in writing by the Employer, the Executive agrees
                  that he will not, directly or indirectly, solicit for
                  employment or attempt to entice away from the Employer any
                  officer, director or employee of the Employer from the date
                  hereof through March 1, 2006.

IV.      RELEASE

         Executive, for Executive and Executive's predecessors, successors,
         assigns, and heirs, hereby agrees to discharge and release the Employer
         and, as applicable, each of its direct and indirect parent, subsidiary
         or affiliated corporations, organizations, representatives, its present
         or former owners, employees and partners, shareholders, insurers,
         successors, assigns, clients and counsel from all claims or demands
         Executive may have based on Executive's employment with the Employer or
         the termination of that employment. This includes a release of any
         rights or claims Executive may have based on any facts or events,
         whether known or unknown by the Executive, that occurred on or before
         the date of this Agreement, including, without limitation, a release of
         any rights or claims Executive may have based on:

         A.       the Federal Civil Rights Acts of 1966, 1970, 1971, 1964 and
                  1991, as amended; the Age Discrimination in Employment Act of
                  1967, as amended; the Americans with Disabilities Act of 1990;
                  the Rehabilitation Act of 1973; the Equal Pay Act of 1963; the
                  Worker Adjustment Retraining and Notification Act;

                                       2

         B.       the laws of the State of Florida concerning wages, employment
                  and discharge; any local, county or city employment laws; or
                  any other law, rule, regulation or ordinance pertaining to
                  employment, or termination of employment;

         C.       claims arising out of any legal restrictions of the right to
                  terminate the Employer's employees such as wrongful or
                  unlawful discharge or related causes of action;

         D.       intentional infliction of emotional distress; or

         E.       violations of any contract express or implied, except for
                  violations of this Agreement as excepted in Section V.

V.       NO FUTURE LAWSUITS, COMPLAINTS OR CLAIMS

         Except for legal action to enforce Executive's rights granted in
         Section II and to obtain an interpretation of any provision of this
         Agreement, Executive promises never to file any petitions, charges,
         complaints, grievances, lawsuits, or related documents with any
         judicial or administrative agency or union relating to any matter
         released herein concerning the Employer, Executive's employment with
         the Employer, or Executive's retirement therefrom. If any such actions
         are filed on his behalf, Executive shall not accept any relief or
         recovery from such action.

         In the event that the Employer performs its obligations under this
         Agreement and is required to defend a discrimination lawsuit or charge
         of discrimination filed by Executive or on his behalf that is in breach
         of this Agreement, Executive shall be liable for all reasonable
         expenses (including reasonable discovery and other court costs and
         reasonable attorneys' fees) incurred in defending the same, regardless
         of the outcome. In the event that the Employer takes appropriate action
         pursuant to Executive's breach of any provision of this Agreement, all
         of his other obligations under this Agreement shall remain in full
         force.

VI.      PERIOD FOR REVIEW AND CONSIDERATION OF AGREEMENT

         If Executive is over the age of 40, Executive confirms that Executive
         has been given twenty-one (21) days to review and consider this
         Agreement before signing it. Executive understands that Executive may
         use as much or as little of this period as Executive wishes prior to
         signing.

VII.     EXECUTIVE'S RIGHT TO REVOKE AGREEMENT

         If this Agreement is signed by Executive and returned to the Employer
         within the time specified in Section VI, Executive may revoke this
         Agreement within seven (7) calendar days of the date of the Executive's
         signature. Revocation can be made by delivering a written notice of
         revocation to the Employer, attention

                                       3

         Rachelle Gottlieb. For this revocation to be effective, written notice
         must be received no later than close of business on the seventh (7th)
         calendar day (or next business day thereafter) after Executive signs
         this Agreement. If Executive revokes this Agreement, it shall not be
         effective or enforceable and Executive will not receive the payments
         described in Section II.

IX.      TAXES

         Executive is responsible for any tax liability associated with payments
         provided under this Agreement. The Employer has the right to withhold
         taxes from such payments to the extent required by law.

X.       RETURN OF EMPLOYER PROPERTY; BUSINESS EXPENSES

         Executive shall return to the Employer all Employer property,
         including, but not limited to, keys, credit cards, badges, files,
         records, computer access codes, computer programs, instruction manuals,
         documents, business plans, financial projections and other property
         which he received or prepared or helped to prepare in connection with
         his employment with the Employer, and also agrees to assign to the
         Employer all right, title and interest in such property, and any other
         inventions, discoveries, or works of authorship created by him during
         (but not after) the course of his employment with the Employer.
         Executive shall cooperate with any reasonable request of the Employer
         to perfect the Employer's right, title and interest in such property.

         Executive agrees that he will timely submit all requests for business
         expense reimbursements and pay all balances on his corporate credit
         card incurred prior to the Retirement Date.

XI.      SEVERABILITY AND JUDICIAL RESTATEMENT

         Executive and the Employer agree that the provisions of this Agreement
         are severable and divisible. In the event any portion of this Agreement
         is determined to be illegal or unenforceable, the remaining provision
         of this Agreement shall remain in full force and effect.

XII.     MISCELLANEOUS

         This Agreement supercedes and terminates all prior employment,
         severance and long-term incentive compensation agreements between
         Executive and Employer effective the Retirement Date. This Agreement
         and the Consulting Agreement constitute the entire agreement between
         Executive and Employer with respect to Executive's retirement.
         Executive's option agreements shall remain in full force and effect on
         and after the Retirement Date.

                                       4

         This Agreement shall be governed by and construed in accordance with
         the laws of the State of Florida, without reference to principles of
         conflict of laws thereunder.

         The captions of this Agreement are not part of the provisions hereof
         and shall not have any force or effect.

         This Agreement may not be amended or modified otherwise than by a
         written agreement executed by the parties hereto or their respective
         successors and legal representatives.

         Nothing contained in this Agreement is intended to be, or shall be
         construed to be, an admission of any liability by any party or an
         admission of the existence of any facts upon which liability could be
         based.

         Executive acknowledges and represents that Executive has voluntarily
         executed this Agreement.

         The parties agree to indemnify one another for any costs, losses,
         damages, or expenses, including attorneys fees, which arise from the
         breach of this Agreement.

PLEASE READ CAREFULLY. THIS AGREEMENT INCLUDES A RELEASE OF CERTAIN KNOWN AND
UNKNOWN CLAIMS INCLUDING THOSE PURSUANT TO THE AGE DISCRIMINATION IN EMPLOYMENT
ACT, AS AMENDED, AND OTHER LAWS PROHIBITING DISCRIMINATION IN EMPLOYMENT.

EXECUTIVE ACKNOWLEDGES THAT EXECUTIVE HAS READ THIS AGREEMENT, UNDERSTANDS IT
AND IS VOLUNTARILY ENTERING INTO IT.

                                      THE ST. JOE COMPANY


                                      By: _______________________________
                                               Rachelle Gottlieb
                                               Vice President
                                               Human Resources


                                      ----------------------------------
                                               Robert M. Rhodes

                                        5

                                                                       EXHIBIT A

                                   RESIGNATION

         The undersigned hereby resigns from all positions, including without
limitation those of officer and director, of The St. Joe Company and of all
corporations, limited partnerships, limited liability companies and other
entities affiliated with The St. Joe Company, effective March 1, 2005.

                                             ----------------------
                                             Robert M. Rhodes

                                       6

                                                                       EXHIBIT B

AGREEMENT NO. _______________

                       AGREEMENT FOR PROFESSIONAL SERVICES
                              [CORPORATE SERVICES]

     THIS AGREEMENT (this "Agreement") shall be effective as of March 1, 2005,
between THE ST. JOE COMPANY, a Florida corporation, with an address of 245
Riverside Avenue, Suite 500, Jacksonville, Florida 32202 ("Company"), and Robert
M. Rhodes, with an address of ______________ ("Consultant").

- -        Company Contacts:

         Peter Rummell
         Kevin Twomey
         Christine M. Marx
         Chris Corr

- -        Telephone Number:

         (904) 301-4200

                                   WITNESSETH:

         WHEREAS, Company and Consultant have entered into a Retirement
Agreement, dated as of August 24, 2004 (the "Retirement Agreement") which was
signed by Company in consideration for Consultant entering into this Agreement
with Company; and

         WHEREAS, Company desires to retain consultant to perform the services
described herein, and Consultant desires to be retained to perform such
services.

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants and obligations herein contained, the receipt and sufficiency of which
is hereby acknowledged, the parties agree as follows:

         1.       TERM. This Agreement shall commence March 2, 2005 and
                  terminate December 31, 2005.

         2.       SCOPE OF SERVICES. Consultant shall promptly and
                  professionally perform legal and public affairs services as
                  requested by any of the Company Contacts identified above from
                  time to time for up to 10 hours per month through December 31,
                  2005 (the "Services").

         3.       COMPENSATION. As set forth above, Consultant is providing the
                  Services in consideration for Company entering into the
                  Retirement Agreement. No

                                       7

                  additional compensation will be paid to Consultant for the
                  performance of the Services. Notwithstanding the foregoing, it
                  is understood that Consultant will be compensated for other
                  services not covered by this Agreement for which he may be
                  hired by the Company pursuant to a separate agreement.

         4.       REIMBURSABLE EXPENSES. Reimbursable Expenses will be
                  reimbursed by Company. For purposes of this Agreement,
                  "Reimbursable Expenses" are defined as reasonable actual
                  expenditures incurred by Consultant in connection with the
                  performance of the Services. All Reimbursable Expenses shall
                  be reimbursed at actual cost, without mark-up by Consultant.
                  All Reimbursable Expenses incurred externally by Consultant
                  shall be documented to Company by original invoices or
                  receipts. All Reimbursable Expenses incurred internally by
                  Consultant shall be documented in a manner acceptable to
                  Company (i.e. copy logs, etc.)

         5.       CONFIDENTIALITY OF MATERIAL.


                  a.       Confidentiality Obligation. Consultant may, during
                           the course of providing the Services, have access to
                           and acquire knowledge regarding Company's assets,
                           business, plans, strategies, customers, materials,
                           data, systems and other information of or with
                           respect to Company, its direct and indirect
                           subsidiaries and affiliated companies and officers,
                           directors, employees or agents of Company and such
                           subsidiaries and affiliates, which may not be
                           accessible or known to the general public. Any
                           knowledge regarding the foregoing acquired by
                           Consultant through his engagement hereunder, and any
                           product or material produced for or in connection
                           with this Agreement, shall not be used, published or
                           divulged by Consultant to any other person, firm or
                           corporation in any manner or connection whatsoever
                           without Consultant first having obtained written
                           permission of the Company, which permission Company
                           may withhold in its sole discretion. Consultant
                           specifically agrees that the foregoing
                           confidentiality obligation applies to any information
                           acquired by or disclosed to Consultant in any
                           document provided to Consultant by Company.

                  b.       Return of Materials. At Company's request, Consultant
                           shall promptly deliver to Company all materials
                           provided to Consultant prior to and during the term
                           of this Agreement.

                  c.       Survival. The provisions of this Section shall
                           survive the expiration or earlier termination of this
                           Agreement.

         6.       CONFLICT OF INTEREST.

                  a.       During the term of this Agreement, Consultant agrees
                           not to accept any employment or engage in any
                           representation or consultation that does or may
                           directly or indirectly conflict with or be adverse to
                           any interest of

                                       8

                           Company, including without limitation, any employment
                           by or representation of a government entity or agency
                           that regulates Company or in which any of Company's
                           land is located.

         7.       PROMOTION.

                  a.       No Use of Name. Consultant shall acquire no right
                           under this Agreement to use, and without Company's
                           prior written consent Consultant shall not use, the
                           name of Company or any of its related, affiliated or
                           subsidiary companies (i) in any of Consultant's
                           advertising, publicity or promotional materials, (ii)
                           to express or imply any endorsement by Company of
                           Consultant's services, or (iii) in any other manner
                           whatsoever, whether or not similar to the uses
                           specifically prohibited herein.

                  b.       Ownership of Work Product. Title to all tangible work
                           product produced by Consultant pursuant to this
                           Agreement shall become and remain the sole and
                           exclusive property of Company. To the extent the
                           Services performed under this Agreement produce or
                           include copyrightable materials or designs, such
                           deliverables are work made for hire for Company as
                           the author, creator, or inventor thereof upon
                           creation, and Company shall have all rights therein
                           pertaining, including, without limitation, rights of
                           reproduction. This provision shall be construed as
                           and constitute a complete assignment to Company of
                           any and all rights Consultant may have (if any) in
                           this regard. The Consultant acknowledges that Company
                           is the motivating force and factor, and for purposes
                           of copyright or patent, has the right to such
                           copyrightable or patentable deliverables produced by
                           Consultant under this Agreement.

                  c.       Deliverables. Consultant shall submit all
                           deliverables to Company upon completion thereof
                           unless it is necessary for Consultant, in Company's
                           sole discretion, to retain possession for a longer
                           period of time. If Consultant's services are
                           terminated prior to the expiration of this Agreement,
                           Consultant shall immediately deliver to Company all
                           deliverables, regardless of the stage of completion.
                           Company shall have and retain all rights to use any
                           and all deliverables. Consultant may retain copies of
                           such deliverables for her permanent records, provided
                           such documents are not used by Consultant for any
                           purpose or shown or given to any third party without
                           Company's express prior written consent, which
                           consent may be withheld at Company's sole discretion.

                  d.       Survival. The provisions of this Section 7 shall
                           survive the expiration or earlier termination of this
                           Agreement.

         8.       WARRANTY. Consultant hereby represents that he shall comply
                  with applicable laws, including professional registration for
                  all required basic disciplines; and that he shall perform said
                  services in accordance with generally accepted professional

                                       9

                  standards and in expeditious and economical manner consistent
                  with the best interests of the Company.

         9.       ASSIGNMENT & AGENCY.

                  a.       No Assignment. This Agreement is for the personal
                           services of Consultant and may not be assigned by
                           Consultant, and it shall not be assignable by
                           operation of law without the prior written consent of
                           Company, which consent Company may withhold in its
                           sole discretion. All work shall be performed by
                           Consultant.

                  b.       Independent Contractor. It is the express intention
                           of the parties that Consultant is an independent
                           contractor and not an employee, agent, joint venturer
                           or partner of Company. Nothing in this Agreement
                           shall be interpreted or construed as creating or
                           establishing the relationship of employer and
                           employee between Company and Consultant. Both parties
                           acknowledge that Consultant is not an employee for
                           state or federal tax purposes. Subject to Section 6
                           of this Agreement, Consultant shall retain the right
                           to perform services for others during the term of
                           this Agreement. Since Consultant is not Company's
                           employee, Consultant is responsible for paying all
                           required state and federal taxes. In particular:

                           i.       Company shall not withhold FICA (Social
                                    Security) from Consultant's payments;

                           ii.      Company will not make state or federal
                                    unemployment insurance contributions on
                                    Consultant's behalf;

                           iii.     Company will not withhold state or federal
                                    income tax from payments to Consultant;

                           iv.      Company will not make disability insurance
                                    contributions on behalf of Consultant; and

                           v.       Company will not obtain workers'
                                    compensation insurance on behalf of
                                    Consultant.

                  c.       W-9. Consultant shall complete, execute and deliver
                           to Company, a Request for Taxpayer Identification and
                           Certification Form (W-9) no later than March 2, 2005.

         10.      TERMINATION. Notwithstanding anything to the contrary herein,
                  Company shall have the right, in its sole discretion and with
                  or without cause, to terminate this Agreement upon three (3)
                  days' prior written notice to Consultant. In the event of such
                  termination, Company's sole obligation and liability to
                  Consultant shall be to pay for authorized Reimbursable
                  Expenses incurred through the date of

                                       10

                  such termination for which Consultant shall invoice Company in
                  accordance with the terms of this Agreement.

         11.      NO THIRD PARTY BENEFICIARIES. It is the intention of the
                  parties hereto that no person or entity other than a party
                  hereto shall be entitled to bring any action to enforce any
                  provision of this Agreement against the other party hereto,
                  and that the covenants, undertakings, and agreements set forth
                  in this Agreement shall, unless provided otherwise, be solely
                  for the benefit of, and shall be enforceable only by the
                  parties hereto and their respective successors and permitted
                  assigns.

         12.      ATTORNEYS' FEES. In the event that either party brings an
                  action at law or any other proceeding against the other party
                  to enforce any of the terms, covenants or conditions hereof,
                  or by reason of any breach or default hereunder, the party
                  prevailing in any such action or proceeding shall be paid all
                  costs and reasonable attorneys' fees by the other party in
                  such amounts as shall be set by the court, at trial and on
                  appeal.

         13.      DETERMINATION OF DISPUTES. Any disputes, differences, claims
                  or counterclaims between Company and Consultant shall be
                  submitted to the appropriate court in the County of Duval,
                  State of Florida, having jurisdiction over the subject matter,
                  it being specifically agreed that venue shall be Duval County
                  for all disputes. In any such dispute, Consultant agrees to
                  out-of-state service in accordance with the applicable rules
                  of civil procedure and state law. This Agreement shall be
                  governed by, and be construed in accordance with, the laws of
                  the State of Florida without regard to principles of conflicts
                  of law. COMPANY AND CONSULTANT EXPRESSLY WAIVE ANY RIGHT TO A
                  TRIAL BY JURY WITH RESPECT TO ANY LITIGATION ARISING
                  HEREUNDER.

         14.      NOTICES. Any notice, demand, consent, authorization, request,
                  approval or other communication that any party is required, or
                  may desire, to give to or make upon the other party pursuant
                  to this Agreement ("Notice") shall be effective only if in
                  writing, signed by the party giving Notice and delivered
                  personally to the other parties or sent by express 24-hour
                  guaranteed courier or delivery service or by certified mail of
                  the United States Postal Service, postage prepaid and return
                  receipt requested, addressed to the other party as follows (or
                  to such other place as any party may by Notice to the others
                  specify):

                  TO COMPANY:

                  The St. Joe Company
                  Attn: Christine M. Marx
                  245 Riverside Avenue, Suite 500
                  Jacksonville, Florida 32202
                  Telephone Number: 904-301-4450

                                       11

                  TO CONSULTANT: At the address shown on the front page of this
                  agreement

                  Notice shall be deemed given when received, except that if
                  delivery is not accepted, Notice shall be deemed given on the
                  date of such non-acceptance.

         15.      PARTIAL INVALIDITY. If any provision in this Agreement is held
                  by a court of competent jurisdiction to be invalid, void, or
                  unenforceable, the remaining provisions will nevertheless
                  continue in full force without being impaired or invalidated
                  in any way.

         16.      CAPTIONS. The captions contained in this Agreement are
                  inserted for convenience of reference only and shall not be
                  construed in any manner for the purpose of interpreting the
                  provisions hereof.

         17.      ENTIRE AGREEMENT. This Agreement supersedes any and all
                  agreements, either oral or written, between the parties hereto
                  with respect to the rendering of services by Consultant for
                  Company, and contains all the covenants and agreements between
                  the parties with respect to the rendering of such services.
                  Any modification of this Agreement will be effective only if
                  in writing signed by both parties.

         IN WITNESS WHEREOF, Company and Consultant have caused this Agreement
to be duly executed on the date set forth below.

"COMPANY"

                                       "CONSULTANT"

THE ST. JOE COMPANY,
a Florida corporation                  Robert M. Rhodes

______________________________         _____________________________
Authorized Signature                   Authorized Signature

______________________________         _____________________________
Printed Name                           Printed Name

______________________________         _____________________________
Title                                  Date
______________________________         _____________________________
Date                                   FEIN/SS #

                                       12

                                  Exhibit 31.1

I, Peter S. Rummell, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended
September 30, 2004 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 registrant's 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)) 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) Evaluated the effectiveness of the registrant's 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

(c) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of registrant's board of
directors:

(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 registrant's 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 registrant's internal control over
financial reporting.

Date:  November 8, 2004

                               /s/ Peter S. Rummell
                             ------------------------
                                Peter S. Rummell
                             Chief Executive Officer

                                  Exhibit 31.2

I, Kevin M. Twomey, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended
September 30, 2004 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 registrant's 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)) 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) Evaluated the effectiveness of the registrant's 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

 (c) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of registrant's board of
directors:

(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 registrant's 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 registrant's internal control over
financial reporting.

Date:  November 8, 2004

                                /s/ Kevin M. Twomey
                              ------------------------
                                 Kevin M. Twomey
                             Chief Financial Officer

                                  Exhibit 32.1

         Pursuant to 18 USC Section 1350, the undersigned officer of The St. Joe
Company (the "Company") hereby certifies that the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 2004 (the "Report") fully complies
with the requirements of Section 13(a) or 15(d), as applicable, 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.

                                             /s/ Peter S. Rummell
                                            ----------------------
                                            Peter S. Rummell
                                            Chief Executive Officer

Dated: November 8, 2004

         The foregoing certificate is being furnished solely pursuant to 18 USC
Section 1350 and is not being filed as part of the Report or as a separate
disclosure document.

                                  Exhibit 32.2

         Pursuant to 18 USC Section 1350, the undersigned officer of The St. Joe
Company (the "Company") hereby certifies that the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 2004 (the "Report") fully complies
with the requirements of Section 13(a) or 15(d), as applicable, 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.

                                             /s/ Kevin M. Twomey
                                            ----------------------
                                            Kevin M. Twomey
                                            Chief Financial Officer

Dated:  November 8, 2004

         The foregoing certificate is being furnished solely pursuant to 18 USC
Section 1350 and is not being filed as part of the Report or as a separate
disclosure document.