The St. Joe Company Form 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
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(Mark One)
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
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For the quarterly period ended March 31, 2005 |
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period
from to . |
Commission file number 1-10466
The St. Joe Company
(Exact name of registrant as specified in its charter)
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Florida |
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59-0432511 |
(State or other jurisdiction of
incorporation or organization) |
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(I.R.S. Employer
Identification No.) |
|
Suite 500, 245 Riverside Avenue,
Jacksonville, Florida
(Address of principal executive offices)
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32202
(Zip Code) |
(904) 301-4200
(Registrants telephone number, including area code)
None.
(Former name, former address and former fiscal year, if
changed since last report)
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 May 2, 2005, there were 103,504,636 shares of
common stock, no par value, issued and 75,978,166 outstanding,
with 27,526,470 shares of treasury stock.
THE ST. JOE COMPANY
INDEX
1
PART I. FINANCIAL INFORMATION
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Item 1. |
Financial Statements |
THE ST. JOE COMPANY
CONSOLIDATED BALANCE SHEETS
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March 31, 2005 | |
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December 31, 2004 | |
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(Unaudited) | |
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(Dollars in thousands) | |
ASSETS
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|
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|
|
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|
Investment in real estate
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|
$ |
989,728 |
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|
$ |
942,630 |
|
Cash and cash equivalents
|
|
|
43,418 |
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|
|
94,816 |
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Accounts receivable, net
|
|
|
112,441 |
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|
|
89,813 |
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Prepaid pension asset
|
|
|
94,979 |
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|
94,079 |
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Property, plant and equipment, net
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|
34,456 |
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33,562 |
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Goodwill, net
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|
51,679 |
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|
51,679 |
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Other intangible assets, net
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44,739 |
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|
47,415 |
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Other assets
|
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|
57,288 |
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|
49,635 |
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$ |
1,428,728 |
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$ |
1,403,629 |
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LIABILITIES AND STOCKHOLDERS EQUITY
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LIABILITIES:
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Debt
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$ |
444,806 |
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$ |
421,110 |
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Accounts payable
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|
90,119 |
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|
76,916 |
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Accrued liabilities
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114,260 |
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|
135,425 |
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Deferred income taxes
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|
267,615 |
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264,374 |
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Total liabilities
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916,800 |
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897,825 |
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Minority interest in consolidated subsidiaries
|
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|
11,911 |
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|
10,393 |
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STOCKHOLDERS EQUITY:
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Common stock, no par value; 180,000,000 shares authorized;
103,486,066 and 103,123,017 issued at March 31, 2005 and
December 31, 2004, respectively
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|
279,254 |
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|
|
263,044 |
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Retained earnings
|
|
|
998,795 |
|
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|
994,172 |
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|
Restricted stock deferred compensation
|
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|
(19,232 |
) |
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|
(19,649 |
) |
|
Treasury stock at cost, 27,462,170 and 27,229,767 shares
held at March 31, 2005 and December 31, 2004,
respectively
|
|
|
(758,800 |
) |
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|
(742,156 |
) |
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Total stockholders equity
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|
500,017 |
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|
495,411 |
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$ |
1,428,728 |
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$ |
1,403,629 |
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See notes to consolidated financial statements.
2
THE ST. JOE COMPANY
CONSOLIDATED STATEMENTS OF INCOME
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Three Months Ended | |
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March 31, | |
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2005 | |
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2004 | |
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(Unaudited) | |
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|
(Dollars in thousands | |
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except per share | |
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amounts) | |
Revenues:
|
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|
|
|
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Real estate sales
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$ |
158,529 |
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$ |
135,694 |
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Realty revenues
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25,498 |
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|
19,074 |
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Timber sales
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|
8,038 |
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|
9,875 |
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Rental revenues
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12,260 |
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9,464 |
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Other revenues
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8,175 |
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7,432 |
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Total revenues
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212,500 |
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181,539 |
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Expenses:
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Cost of real estate sales
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104,847 |
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90,532 |
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Cost of realty revenues
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17,883 |
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|
10,692 |
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Cost of timber sales
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5,207 |
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6,025 |
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Cost of rental revenues
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4,497 |
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3,859 |
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Cost of other revenues
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8,019 |
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6,526 |
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Other operating expenses
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24,053 |
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23,969 |
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Corporate expense, net
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11,937 |
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|
9,165 |
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Depreciation and amortization
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|
10,362 |
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|
8,427 |
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|
|
|
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Total expenses
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186,805 |
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|
159,195 |
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Operating profit
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25,695 |
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|
22,344 |
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Other income (expense):
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|
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Investment income, net
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|
308 |
|
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|
111 |
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Interest expense
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(3,136 |
) |
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|
(2,931 |
) |
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Other, net
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|
982 |
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|
691 |
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Total other income (expense)
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|
(1,846 |
) |
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(2,129 |
) |
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Income from continuing operations before equity in income of
unconsolidated affiliates, income taxes, and minority interest
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23,849 |
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|
20,215 |
|
Equity in income of unconsolidated affiliates
|
|
|
1,904 |
|
|
|
708 |
|
Income tax expense
|
|
|
9,473 |
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|
|
8,066 |
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|
|
|
|
|
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|
Income from continuing operations before minority interest
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|
|
16,280 |
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|
|
12,857 |
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Minority interest
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|
|
868 |
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|
83 |
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|
|
|
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Income from continuing operations
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|
15,412 |
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|
12,774 |
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|
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Discontinued operations:
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Income from discontinued operations (net of income taxes of $111)
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|
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|
187 |
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Total income from discontinued operations
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|
187 |
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|
|
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Net income
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|
$ |
15,412 |
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|
$ |
12,961 |
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EARNINGS PER SHARE
|
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|
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Basic
|
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|
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|
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Income from continuing operations
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|
$ |
0.21 |
|
|
$ |
0.17 |
|
Earnings from discontinued operations
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|
|
|
|
|
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|
|
|
|
|
|
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|
|
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Net income
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|
$ |
0.21 |
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|
$ |
0.17 |
|
|
|
|
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|
|
|
Diluted
|
|
|
|
|
|
|
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|
Income from continuing operations
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|
$ |
0.20 |
|
|
$ |
0.17 |
|
Earnings from discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$ |
0.20 |
|
|
$ |
0.17 |
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|
|
|
|
|
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|
See notes to consolidated financial statements.
3
THE ST. JOE COMPANY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS
EQUITY
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Common Stock | |
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Restricted Stock | |
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|
Outstanding | |
|
|
|
Retained | |
|
Deferred | |
|
Treasury | |
|
|
|
|
Shares | |
|
Amount | |
|
Earnings | |
|
Compensation | |
|
Stock | |
|
Total | |
|
|
| |
|
| |
|
| |
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| |
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| |
|
| |
|
|
(Dollars in thousands, except per share amounts) | |
Balance at December 31, 2004
|
|
|
75,893,250 |
|
|
$ |
263,044 |
|
|
$ |
994,172 |
|
|
$ |
(19,649 |
) |
|
$ |
(742,156 |
) |
|
$ |
495,411 |
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Net income
|
|
|
|
|
|
|
|
|
|
|
15,412 |
|
|
|
|
|
|
|
|
|
|
|
15,412 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,412 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuances of restricted stock
|
|
|
28,217 |
|
|
|
2,052 |
|
|
|
|
|
|
|
(2,052 |
) |
|
|
|
|
|
|
|
|
Forfeitures of restricted stock
|
|
|
(9,758 |
) |
|
|
(455 |
) |
|
|
|
|
|
|
455 |
|
|
|
|
|
|
|
|
|
Dividends ($0.14 per share) and other distributions
|
|
|
|
|
|
|
|
|
|
|
(10,789 |
) |
|
|
|
|
|
|
|
|
|
|
(10,789 |
) |
Issuances of common stock
|
|
|
344,590 |
|
|
|
8,551 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,551 |
|
Tax benefit on exercises of stock options
|
|
|
|
|
|
|
6,062 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,062 |
|
Amortization of restricted stock deferred compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,014 |
|
|
|
|
|
|
|
2,014 |
|
Purchases of treasury shares
|
|
|
(232,403 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(16,644 |
) |
|
|
(16,644 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2005
|
|
|
76,023,896 |
|
|
$ |
279,254 |
|
|
$ |
998,795 |
|
|
$ |
(19,232 |
) |
|
$ |
(758,800 |
) |
|
$ |
500,017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
See notes to consolidated financial statements.
4
THE ST. JOE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOW
|
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|
|
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|
|
|
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|
Three Months Ended | |
|
|
March 31, | |
|
|
| |
|
|
2005 | |
|
2004 | |
|
|
| |
|
| |
|
|
(Dollars in thousands) | |
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$ |
15,412 |
|
|
$ |
12,961 |
|
|
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
10,362 |
|
|
|
9,151 |
|
|
|
Deferred compensation
|
|
|
2,014 |
|
|
|
1,527 |
|
|
|
Minority interest in income
|
|
|
868 |
|
|
|
83 |
|
|
|
Equity in income of unconsolidated joint ventures
|
|
|
(1,904 |
) |
|
|
(708 |
) |
|
|
Deferred income tax expense
|
|
|
1,265 |
|
|
|
5,930 |
|
|
|
Tax benefit on exercise of stock options
|
|
|
6,062 |
|
|
|
2,711 |
|
|
|
Cost of operating properties sold
|
|
|
103,994 |
|
|
|
76,082 |
|
|
|
Expenditures for operating properties
|
|
|
(121,480 |
) |
|
|
(101,137 |
) |
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(24,511 |
) |
|
|
51,228 |
|
|
|
|
Other assets
|
|
|
(12,870 |
) |
|
|
(11,975 |
) |
|
|
|
Accounts payable and accrued liabilities
|
|
|
(7,029 |
) |
|
|
(7,983 |
) |
|
|
|
Income taxes payable
|
|
|
(1,144 |
) |
|
|
(1,716 |
) |
|
|
|
|
|
|
|
Net cash (used in) provided by operating activities
|
|
$ |
(28,961 |
) |
|
$ |
36,154 |
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment
|
|
|
(3,673 |
) |
|
|
(2,545 |
) |
|
Purchases of investments in real estate
|
|
|
(30,214 |
) |
|
|
(10,943 |
) |
|
Investments in joint ventures and purchase business acquisitions
|
|
|
|
|
|
|
(247 |
) |
|
Proceeds from dispositions of assets
|
|
|
10 |
|
|
|
11,877 |
|
|
Distributions from unconsolidated affiliates
|
|
|
4,093 |
|
|
|
1,800 |
|
|
Distributions from affiliates
|
|
|
650 |
|
|
|
468 |
|
|
|
|
|
|
|
|
Net cash (used in) provided by investing activities
|
|
$ |
(29,134 |
) |
|
$ |
410 |
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Proceeds from revolving credit agreements, net of repayments
|
|
|
50,000 |
|
|
|
5,000 |
|
|
Proceeds from other long-term debt
|
|
|
1,211 |
|
|
|
|
|
|
Repayments of other long-term debt
|
|
|
(27,515 |
) |
|
|
(19,496 |
) |
|
Proceeds from exercises of stock options
|
|
|
6,119 |
|
|
|
4,400 |
|
|
Dividends paid to stockholders and other distributions
|
|
|
(10,789 |
) |
|
|
(9,209 |
) |
|
Treasury stock purchases
|
|
|
(12,329 |
) |
|
|
(23,351 |
) |
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
$ |
6,697 |
|
|
$ |
(42,656 |
) |
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
|
(51,398 |
) |
|
|
(6,092 |
) |
Cash and cash equivalents at beginning of period
|
|
|
94,816 |
|
|
|
57,403 |
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$ |
43,418 |
|
|
$ |
51,311 |
|
|
|
|
|
|
|
|
See notes to consolidated financial statements.
5
THE ST. JOE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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 Companys 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
March 31, 2005 and December 31, 2004 and the results
of operations and cash flows for the three month periods ended
March 31, 2005 and 2004. The results of operations and cash
flows for the three month periods ended March 31, 2005 and
2004 are not necessarily indicative of the results that may be
expected for the full year.
|
|
2. |
Summary of Significant Accounting Policies |
|
|
|
Principles of Consolidation |
In May 2003, the FASB issued Statement of 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 owners 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
Companys Consolidated Statements of Income for the three
months ended March 31, 2005 or 2004. The Company has one
consolidated entity with a specified termination date: Artisan
Park, L.L.C. (Artisan Park). At March 31, 2005,
the carrying amount of the minority interest in Artisan Park was
$11.8 million and its fair value was $20.1 million.
The Company has no other material financial instruments that are
affected currently by FAS 150.
In April 2005, the Securities and Exchange Commission
(SEC) adopted a final rule regarding the compliance
date for FASB Statement of Financial Accounting Standards
No. 123(R), Share-Based Payment
(FAS 123(R)), for public companies. Prior
to the new SEC rule, calendar year-end companies that are not
small business issuers, like the Company, would have been
required to implement FAS 123(R) in the first interim
period beginning after June 15, 2005. The new rule changes
the required date of implementation for such companies to the
beginning of the first full fiscal year beginning after
June 15, 2005. As a result, the Company plans to adopt
FAS 123(R) as of January 1, 2006. FAS 123(R)
requires a public entity to measure the cost of employee
services received in exchange for an award of equity instruments
based on the grant date fair value of the award (with limited
exceptions), eliminating the alternative previously allowed to
use the intrinsic value method of accounting. The grant date
fair value will be estimated using option-pricing models
adjusted for the unique characteristics of the instruments using
methods similar to those required previously and currently used
by the Company to calculate pro forma net income and earnings
per share disclosures. The cost will be recognized ratably over
the period during which the employee is required to provide
services in exchange for the award. Upon implementation of
FAS 123(R), the Company will recognize as compensation cost
in its financial statements the unvested portion of existing
options granted prior to the compliance date and the cost of
stock options granted to employees after the compliance date
based on the fair value of the stock options at grant date.
6
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
For periods prior to January 1, 2006, as permitted by
existing accounting standards, the Company has elected to not
recognize compensation cost for its stock options in the
consolidated financial statements and instead to provide pro
forma disclosure of stock-based compensation. Had the Company
determined compensation costs based on the fair value at the
grant date for its stock options, the Companys net income
would have been reduced to the pro forma amounts indicated below
(in thousands except per share amounts):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended | |
|
Three Months Ended | |
|
|
March 31, 2005 | |
|
March 31, 2004 | |
|
|
| |
|
| |
Net income:
|
|
|
|
|
|
|
|
|
Net income as reported
|
|
$ |
15,412 |
|
|
$ |
12,961 |
|
Add: stock-based employee compensation expense included in
reported net income, net of related tax effects
|
|
|
1,194 |
|
|
|
970 |
|
Deduct: total stock-based employee compensation expense
determined under fair value based methods for all awards, net of
related tax effects
|
|
|
(1,833 |
) |
|
|
(2,142 |
) |
|
|
|
|
|
|
|
Net income pro forma
|
|
$ |
14,773 |
|
|
$ |
11,789 |
|
|
|
|
|
|
|
|
Per share Basic:
|
|
|
|
|
|
|
|
|
Earnings per share as reported
|
|
$ |
0.21 |
|
|
$ |
0.17 |
|
Earnings per share pro forma
|
|
$ |
0.20 |
|
|
$ |
0.16 |
|
Per share Diluted:
|
|
|
|
|
|
|
|
|
Earnings per share as reported
|
|
$ |
0.20 |
|
|
$ |
0.17 |
|
Earnings per share pro forma
|
|
$ |
0.19 |
|
|
$ |
0.15 |
|
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 1,015,372 and 1,791,475 shares of common
stock in the three months ended March 31, 2005 and 2004,
respectively, and that 527,620 shares of unvested
restricted stock were issued as of March 31, 2005, each net
of assumed repurchases using the treasury stock method.
From August 1998 through March 31, 2005, the Board of
Directors authorized a total of $800.0 million for the
repurchase of the Companys outstanding common stock from
shareholders from time to time (the Stock Repurchase
Program), of which a total of approximately
$688.8 million had been expended through March 31,
2005. From the inception of the Stock Repurchase Program to
March 31, 2005, the Company repurchased from shareholders
25,463,611 shares. During the three month periods ended
March 31, 2005 and 2004, the Company repurchased from
shareholders 171,200 and 585,955 shares, respectively.
Executives have surrendered a total of 2,097,697 shares of
our stock since 1998 in payment of strike prices and taxes due
on exercised stock options and taxes due on vested restricted
stock, including 61,203 and 91,205 shares surrendered by
executives in the three month periods ended March 31, 2005
and 2004, respectively.
Shares of Company stock issued upon the exercise of stock
options for the three months ended March 31, 2005 and 2004
were 344,590 shares and 330,863 shares, respectively.
7
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
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 | |
|
|
March 31, | |
|
|
| |
|
|
2005 | |
|
2004 | |
|
|
| |
|
| |
Basic
|
|
|
75,158,745 |
|
|
|
75,939,613 |
|
Diluted
|
|
|
76,701,737 |
|
|
|
77,731,088 |
|
Certain prior year amounts have been reclassified to conform
with the current years presentation.
|
|
|
Supplemental Cash Flow Information |
The Company paid $8.2 million and $8.3 million for
interest in the first three months of 2005 and 2004,
respectively. The Company paid state income taxes, net of
refunds, of $4.0 million and $1.3 million in the first
three months of 2005 and 2004, respectively. The Company
capitalized interest expense of $3.2 million and
$1.9 million during the first three months of 2005 and
2004, respectively.
The Companys non-cash activities included the surrender of
shares of Company stock by executives of the Company as payment
for the exercise of stock options, the tax benefit on exercises
of stock options, and the execution of a debt agreement in
payment for an interest in an unconsolidated affiliate. During
the three months ended March 31, 2005 and 2004, executives
surrendered Company stock worth $2.4 million and
$1.9 million, respectively, as payment for strike prices of
stock options. In addition, during the first three months of
2004, the Company executed a debt agreement in the amount of
$11.4 million as payment for its interest in an
unconsolidated affiliate.
Cash flows related to Towns & Resorts development and
related amenities, sales of undeveloped and developed land by
the land sales segment, the Companys timberlands, and land
and buildings developed by the Company and used for commercial
rental purposes are included in operating activities on the
statements of cash flows. Cash flows related to the
Companys assets purchased with tax-deferred proceeds are
included in investment activities on the statements of cash
flows.
8
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
3. |
Investment in Real Estate |
Real estate investments by segment include the following (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2005 | |
|
December 31, 2004 | |
|
|
| |
|
| |
Operating property:
|
|
|
|
|
|
|
|
|
|
Towns & Resorts development
|
|
$ |
76,742 |
|
|
$ |
76,644 |
|
|
Commercial real estate development and services
|
|
|
13,171 |
|
|
|
11,762 |
|
|
Land sales
|
|
|
942 |
|
|
|
1,095 |
|
|
Forestry
|
|
|
76,034 |
|
|
|
77,431 |
|
|
Other
|
|
|
161 |
|
|
|
164 |
|
|
|
|
|
|
|
|
Total operating property
|
|
|
167,050 |
|
|
|
167,096 |
|
|
|
|
|
|
|
|
Development property:
|
|
|
|
|
|
|
|
|
|
Towns & Resorts development
|
|
|
352,952 |
|
|
|
323,925 |
|
|
Land sales
|
|
|
10,175 |
|
|
|
9,247 |
|
|
|
|
|
|
|
|
Total development property
|
|
|
363,127 |
|
|
|
333,172 |
|
|
|
|
|
|
|
|
Investment property:
|
|
|
|
|
|
|
|
|
|
Towns & Resorts development
|
|
|
25,503 |
|
|
|
7,394 |
|
|
Commercial real estate development and services
|
|
|
413,632 |
|
|
|
420,778 |
|
|
Land sales
|
|
|
259 |
|
|
|
182 |
|
|
Forestry
|
|
|
13,216 |
|
|
|
973 |
|
|
Other
|
|
|
6,880 |
|
|
|
6,883 |
|
|
|
|
|
|
|
|
Total investment property
|
|
|
459,490 |
|
|
|
436,210 |
|
|
|
|
|
|
|
|
Investment in unconsolidated affiliates:
|
|
|
|
|
|
|
|
|
|
Towns & Resorts development
|
|
|
27,264 |
|
|
|
29,461 |
|
|
Commercial real estate development and services
|
|
|
11,569 |
|
|
|
11,579 |
|
|
|
|
|
|
|
|
Total investment in unconsolidated affiliates
|
|
|
38,833 |
|
|
|
41,040 |
|
|
|
|
|
|
|
|
Total real estate investments
|
|
|
1,028,500 |
|
|
|
977,518 |
|
Less: Accumulated depreciation
|
|
|
38,772 |
|
|
|
34,888 |
|
|
|
|
|
|
|
|
Net real estate investments
|
|
$ |
989,728 |
|
|
$ |
942,630 |
|
|
|
|
|
|
|
|
Included in operating property are Company-owned amenities
related to Towns & Resorts, the Companys
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 Companys commercial buildings and land
purchased with tax-deferred proceeds and land held for future
use.
Depreciation expense reported on real estate was
$4.8 million and $4.0 million in the three months
ended March 31, 2005 and 2004, respectively.
9
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Debt consists of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2005 | |
|
December 31, 2004 | |
|
|
| |
|
| |
Medium-term notes
|
|
$ |
257,000 |
|
|
$ |
275,000 |
|
Debt secured by certain commercial and residential property
|
|
|
121,337 |
|
|
|
129,835 |
|
Senior revolving credit agreement
|
|
|
50,000 |
|
|
|
|
|
Various secured and unsecured notes payable
|
|
|
16,469 |
|
|
|
16,275 |
|
|
|
|
|
|
|
|
|
Total debt
|
|
$ |
444,806 |
|
|
$ |
421,110 |
|
|
|
|
|
|
|
|
The aggregate maturities of debt subsequent to March 31,
2005 are as follows (in millions):
|
|
|
|
|
2005
|
|
$ |
53.6 |
|
2006
|
|
|
4.2 |
|
2007
|
|
|
70.4 |
|
2008
|
|
|
86.1 |
|
2009
|
|
|
42.8 |
|
Thereafter
|
|
|
187.7 |
|
The medium-term notes and the senior revolving credit agreement
contain financial covenants, including a net worth requirement
of $425.0 million, maximum debt ratios, and fixed charge
coverage requirements, plus some restrictions on prepayment. At
March 31, 2005, the Company was in compliance with the
covenants.
|
|
5. |
Employee Benefit Plans |
A summary of the net periodic pension credit follows (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended | |
|
Three Months Ended | |
|
|
March 31, 2005 | |
|
March 31, 2004 | |
|
|
| |
|
| |
Service cost
|
|
$ |
1,090 |
|
|
$ |
1,200 |
|
Interest cost
|
|
|
1,660 |
|
|
|
2,100 |
|
Expected return on assets
|
|
|
(3,802 |
) |
|
|
(4,900 |
) |
Prior service costs
|
|
|
152 |
|
|
|
200 |
|
|
|
|
|
|
|
|
|
Total pension income
|
|
$ |
(900 |
) |
|
$ |
(1,400 |
) |
|
|
|
|
|
|
|
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 home
sites and manages residential 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 Companys holdings of timberlands. The
forestry segment produces and sells pine pulpwood and timber and
cypress products.
The Company uses income from continuing operations before equity
in income of unconsolidated affiliates, income taxes and
minority interest for purposes of making decisions about
allocating resources to each segment and assessing each
segments performance, which we believe accurately
represents current performance measures. We have presented prior
period segments consistent with the current performance
10
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
measure. The Company no longer uses earnings before interest,
taxes, depreciation and amortization as a performance measure.
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 Companys consolidated income
statements. All intercompany transactions have been eliminated.
The caption entitled Other consists of general and
administrative expenses, net of investment income, and
operations of the Companys former transportation segment.
The Companys 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.
Information by business segment follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended | |
|
|
March 31, | |
|
|
| |
|
|
2005 | |
|
2004 | |
|
|
| |
|
| |
Operating Revenues:
|
|
|
|
|
|
|
|
|
|
Towns & Resorts development
|
|
$ |
137,168 |
|
|
$ |
105,672 |
|
|
Commercial real estate development and services
|
|
|
49,516 |
|
|
|
43,280 |
|
|
Land sales
|
|
|
17,807 |
|
|
|
22,735 |
|
|
Forestry
|
|
|
8,014 |
|
|
|
9,860 |
|
|
Other
|
|
|
(5 |
) |
|
|
(8 |
) |
|
|
|
|
|
|
|
|
|
Total revenues
|
|
$ |
212,500 |
|
|
$ |
181,539 |
|
|
|
|
|
|
|
|
Income from continuing operations before equity in income of
unconsolidated affiliates, income taxes and minority interest:
|
|
|
|
|
|
|
|
|
|
Towns & Resorts development
|
|
$ |
23,083 |
|
|
$ |
9,089 |
|
|
Commercial real estate development and services
|
|
|
445 |
|
|
|
1,134 |
|
|
Land sales
|
|
|
12,141 |
|
|
|
18,816 |
|
|
Forestry
|
|
|
2,016 |
|
|
|
2,694 |
|
|
Other
|
|
|
(13,836 |
) |
|
|
(11,518 |
) |
|
|
|
|
|
|
|
|
|
Consolidated income from continuing operations before equity in
income of unconsolidated affiliates, income taxes and minority
interest
|
|
$ |
23,849 |
|
|
$ |
20,215 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2005 | |
|
December 31, 2004 | |
|
|
| |
|
| |
Total Assets:
|
|
|
|
|
|
|
|
|
|
Towns & Resorts development
|
|
$ |
651,449 |
|
|
$ |
584,256 |
|
|
Commercial real estate development and services
|
|
|
512,242 |
|
|
|
534,113 |
|
|
Land sales
|
|
|
18,522 |
|
|
|
32,150 |
|
|
Forestry
|
|
|
103,651 |
|
|
|
90,169 |
|
|
Corporate
|
|
|
142,864 |
|
|
|
162,941 |
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$ |
1,428,728 |
|
|
$ |
1,403,629 |
|
|
|
|
|
|
|
|
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
11
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
to have a material adverse effect on the Companys
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.
The Company has retained certain self-insurance risks with
respect to losses for third party liability, workers
compensation, property damage, group health insurance provided
to employees and other types of insurance.
At March 31, 2005, the Company was party to surety bonds
and standby letters of credit in the amounts of
$42.6 million and $7.8 million, respectively, which
may potentially result in liability to the Company if certain
obligations of the Company are not met.
The Company is subject to costs arising out of environmental
laws and regulations, which include obligations to remove or
limit the effects on the environment of the disposal or release
of certain wastes or substances at various sites, including
sites which have been previously sold. It is the Companys
policy to accrue and charge against earnings environmental
cleanup costs when it is probable that a liability has been
incurred and an amount can be reasonably estimated. As
assessments and cleanups proceed, these accruals 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 complete 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 managements 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 Companys 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 as of both
March 31, 2005 and December 31, 2004.
12
|
|
Item 2. |
Managements Discussion and Analysis of Financial
Condition and Results of Operations |
Overview
The St. Joe Company is one of Floridas largest real estate
operating companies. We believe we have one of the largest
inventories of private land suitable for development in the
State of Florida, with a 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, home sites, and homes, or through the direct
sale of unimproved land. In addition, we reinvest the proceeds
of qualifying asset sales 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 home sites; |
|
|
|
rental income; |
|
|
|
club operations; |
|
|
|
investments in limited partnerships and joint ventures; |
|
|
|
brokerage, title issuance and mortgage origination fees on
certain transactions within our Towns & Resorts
developments; and |
|
|
|
management fees. |
Our commercial real estate development and services segment
generates revenues from:
|
|
|
|
|
the rental and/or sale of commercial buildings owned and/or
developed by us; |
|
|
|
the sale of developed and undeveloped land for retail,
apartment, office, and industrial properties; |
|
|
|
realty revenues, consisting of property and asset management
fees, construction revenues and lease and sales brokerage
commissions; and |
|
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investments in limited partnerships and joint ventures. |
Our land sales segment generates revenues from:
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the sale of parcels of undeveloped land; and |
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the sale of developed home sites primarily within rural settings. |
Our forestry segment generates revenues from:
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the sale of pulpwood and timber; |
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the sale of cypress lumber and mulch; and |
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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 and other factors affecting us and the real
estate industry in general. Additionally, increases in interest
rates could reduce the demand for homes we build and home sites
we develop, particularly primary housing and
13
home sites and commercial properties we develop or sell.
However, we believe our secondary resort housing markets are
less sensitive to changes in interest rates. We have the ability
to mitigate these risks by building to contract as well as
building in phases.
Management periodically conducts market research in the early
stages of a projects development to ensure our product
meets expected customer demand. We also continuously and
actively monitor competitors product offerings to evaluate
the competitive position of our products. We are disciplined
about the release of new product in Northwest Florida. Our goal
is to ensure that as much of our land as possible benefits from
the appreciation that we are building with the regions
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 near term horizon.
Forward-Looking Statements
This report includes forward-looking statements, particularly in
the Managements Discussion and Analysis Section. The
Private Securities Litigation Reform Act of 1995 provides a
safe-harbor for forward-looking information to encourage
companies to provide prospective information about themselves
without fear of litigation so long as that information is
identified as forward-looking and is accompanied by meaningful
cautionary statements identifying important factors that could
cause actual results to differ, possibly materially, from those
in the forward-looking information. Any statements in this
report that are not historical facts are forward-looking
statements. You can find many of these forward-looking
statements by looking for words such as intend,
anticipate, believe,
estimate, expect, plan,
should, forecast, or similar expressions. In
particular, forward-looking statements include, among others,
statements about the following:
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the size and number of residential units and commercial
buildings; |
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expected development timetables, development approvals and the
ability to obtain such approvals, including possible legal
challenges; |
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the anticipated price ranges of developments; |
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the number of units that can be supported upon full build-out of
a development; |
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the number, price and timing of anticipated land sales or
acquisitions; |
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estimated land holdings for a particular use within a specific
time frame; |
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absorption rates and expected gains on land and home site sales; |
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the pace at which we release new product for sale; |
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future operating performance, cash flows, and short and
long-term revenue and earnings growth rates; |
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comparisons to historical projects; |
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the amount of dividends we pay; and |
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the number of shares of Company stock which may be purchased
under the Companys existing or future share-repurchase
program. |
Forward-looking statements are not guarantees of future
performance. You are cautioned not to place undue reliance on
any of these forward-looking statements. These statements are
made as of the date hereof based on current expectations, and we
undertake no obligation to update the information contained in
this Form 10-Q.
14
Forward-looking statements are subject to numerous assumptions,
risks and uncertainties. Factors that could cause actual results
to differ materially from those contemplated by a
forward-looking statement include the risk factors described in
our annual report on Form 10-K for the year ended
December 31, 2004, as well as, among others, the following:
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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; |
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changes in the demographics affecting projected population
growth in Florida, including demographic migration of Baby
Boomers; |
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whether our developments receive all land-use entitlements or
other permits necessary for development and/or full build-out or
are subject to legal challenge; |
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local conditions such as the supply of homes and home sites and
residential or resort properties or a change in the demand for
real estate in an area; |
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timing and costs associated with property developments and
rentals; |
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the pace of commercial development in Northwest Florida; |
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competition from other real estate developers; |
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whether potential residents or tenants consider our properties
attractive; |
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changes in operating costs, including real estate taxes and the
cost of construction materials; |
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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; |
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how well we manage our properties; |
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changes in interest rates and the performance of the financial
markets; |
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changes in market rental rates for our commercial and resort
properties; |
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changes in the prices of wood products; |
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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, various
permits, and the availability of adequate funding; |
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potential liability under environmental laws or other laws or
regulations; |
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changes in laws, regulations or the regulatory environment
affecting the development of real estate; |
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fluctuations in the size and number of transactions from period
to period; |
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weather conditions or natural disasters and the impact on future
demand in Florida; |
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changes in insurance rates and deductibles for property in
Florida; |
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changes in gasoline prices; and |
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acts of war, terrorism, or other geopolitical events. |
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
15
various other assumptions that management believes are
reasonable under the circumstances. Additionally, we evaluate
the results of these estimates on an on-going basis.
Managements estimates form the basis for making judgments
about the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ
from these estimates under different assumptions or conditions.
The critical accounting policies that we believe reflect our
more significant judgments and estimates used in the preparation
of our consolidated financial statements are set forth in
Item 7 of our annual report on Form 10-K for the year
ended December 31, 2004. There have been no significant
changes in these policies during the first three months of 2005.
Recently Issued Accounting Standards
In April 2005, the Securities and Exchange Commission
(SEC) adopted a final rule regarding the compliance
date for FASB Statement of Financial Accounting Standards
No. 123(R), Share-Based Payment
(FAS 123(R)), for public companies. Prior
to the new SEC rule, calendar year-end companies that are not
small business issuers, like the Company, would have been
required to implement FAS 123(R) in the first interim
period beginning after June 15, 2005. The new rule changes
the required date of compliance to the beginning of the first
full fiscal year beginning after June 15, 2005. As a
result, the Company plans to adopt FAS 123(R) as of
January 1, 2006. FAS 123(R) requires a public entity
to measure the cost of employee services received in exchange
for an award of equity instruments based on the grant date fair
value of the award (with limited exceptions), eliminating the
alternative previously allowed to use the intrinsic value method
of accounting. The grant date fair value will be estimated using
option-pricing models adjusted for the unique characteristics of
the instruments using methods similar to those required
previously and currently used by the Company to calculate pro
forma net income and earnings per share disclosures. The cost
will be recognized ratably over the period during which the
employee is required to provide services in exchange for the
award. Upon implementation of FAS 123(R), the Company will
recognize as compensation cost in its consolidated financial
statements the unvested portion of existing options granted
prior to the compliance date and the cost of stock options
granted to employees after the compliance date based on the fair
value of the stock options at grant date.
Results of Operations
Net income for the first quarter of 2005 was $15.4 million,
or $0.20 per diluted share, compared with
$13.0 million, or $0.17 per diluted share, for the
first quarter of 2004.
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
home sites in our Towns & Resorts development segment,
developed and undeveloped land and in-service buildings in our
commercial real estate development and services segment that are
not reported as discontinued operations, parcels of undeveloped
land and developed home sites in rural settings 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 revenues, 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.
Revenues generated during the first quarter of each year by our
largest segment, Towns & Resorts development, are
typically lower than other quarters of the year, particularly in
Northwest Florida, where visitation levels and, consequently,
sales are lowest during this period.
16
Consolidated Results
Revenues and expenses. The following table sets forth a
comparison of the revenues and expenses for the three month
periods ended March 31, 2005 and 2004.
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Three Months | |
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Ended | |
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March 31, | |
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| |
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2005 | |
|
2004 | |
|
Difference | |
|
% Change | |
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| |
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| |
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| |
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| |
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(Dollars in millions) | |
Revenues:
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|
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Real estate sales
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$ |
158.5 |
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$ |
135.7 |
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|
$ |
22.8 |
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|
|
17 |
% |
|
Realty
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|
25.5 |
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|
|
19.1 |
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6.4 |
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|
34 |
|
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Timber sales
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|
8.0 |
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|
9.9 |
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(1.9 |
) |
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|
(19 |
) |
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Rental
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12.3 |
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9.4 |
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2.9 |
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31 |
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Other
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8.2 |
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|
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7.4 |
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0.8 |
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11 |
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Total
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|
212.5 |
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|
|
181.5 |
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|
31.0 |
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|
17 |
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Expenses:
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of real estate sales
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|
|
104.8 |
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|
|
90.5 |
|
|
|
14.3 |
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|
|
16 |
|
|
Cost of realty revenues
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|
|
17.9 |
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|
|
10.7 |
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|
|
7.2 |
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|
|
67 |
|
|
Cost of timber sales
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|
|
5.2 |
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|
|
6.0 |
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|
|
(0.8 |
) |
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|
(13 |
) |
|
Cost of rental revenues
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|
|
4.5 |
|
|
|
3.9 |
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|
|
0.6 |
|
|
|
15 |
|
|
Cost of other revenues
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|
|
8.0 |
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|
|
6.5 |
|
|
|
1.5 |
|
|
|
23 |
|
|
Other operating expenses
|
|
|
24.1 |
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|
|
24.0 |
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|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
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Total
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|
$ |
164.5 |
|
|
$ |
141.6 |
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|
$ |
22.9 |
|
|
|
16 |
% |
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|
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|
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The increases in revenues from real estate sales and cost of
real estate sales for the three month period ended
March 31, 2005 compared to 2004 were in each case primarily
due to increased revenues in the Towns & Resorts
development segment and land sales in the commercial real estate
development and services segment, partially offset by the sale
of a commercial building in the first quarter of 2004. The
increases in realty revenues and cost of realty revenues were in
each case due to an increase in construction activity, partially
offset by a decrease in brokerage activity. The increases in
rental revenues and cost of rental revenues were in each case
primarily due to the purchases of commercial buildings and
improved leased percentages of rental property in the commercial
real estate development and services segment. Timber revenue
decreased primarily due to a reduction in volume harvested from
Company-owned lands. Cost of timber revenues decreased due to
increased efficiencies in the cypress mill operation, partially
offset by an increase in transportation costs for timber. Other
revenues and cost of other revenues increased primarily due an
increase in volume for WaterColor vacation rentals. For further
discussion of revenues and expenses, see Segment Results below.
Corporate expense. Corporate expense, representing
corporate general and administrative expenses, increased
$2.7 million, or 29%, to $11.9 million in the first
quarter of 2005, from $9.2 million in the first quarter of
2004. The increase was primarily due to increases of
$1.3 million in salaries and employee benefits,
$0.5 million in professional fees, and $0.9 million in
miscellaneous corporate expenses.
Depreciation and amortization. Depreciation and
amortization increased $2.0 million, or 24%, to
$10.4 million in the first quarter of 2005, from
$8.4 million in the first quarter of 2004. The increase was
primarily due to increases in the commercial real estate
development and services segment consisting of $1.0 million
in depreciation resulting primarily from additional investments
in commercial investment property and property, plant and
equipment and a $0.9 million increase in amortization
resulting from an increase in intangible assets associated with
our commercial operating properties.
17
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 $(1.8) million in the first
quarter of 2005 and $(2.1) million in the first quarter of
2004.
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 of unconsolidated
affiliates totaled $1.9 million in the first quarter of
2005 and $0.7 million in the first quarter of 2004.
The Towns & Resorts development segment recorded equity
in the income of unconsolidated affiliates of $1.9 million
for the first quarter of 2005, compared to $1.1 million for
the first quarter of 2004. The increase was primarily due to an
increase in closings at Rivercrest and increased pricing at
Rivercrest and Paseos, two 50% owned unconsolidated affiliates.
The commercial real estate development and services segment
recorded equity in the income (loss) of unconsolidated
affiliates of less than $0.1 million in the first quarter
of 2005, compared to $(0.4) million in the first quarter of
2004. In the first quarter of 2004, $(0.3) million of the
loss was related to our 50% interest in the Codina Group, Inc.
(Codina), a commercial services company in Coral
Gables, Florida. Codinas results of operations were
substantially break-even for the first quarter of 2005.
Income tax expense. Income tax expense totaled
$9.5 million in the first quarter of 2005 and
$8.1 million in the first quarter of 2004. Our effective
tax rate was 38% in the first quarter of 2005 and 39% in the
first quarter of 2004. The decrease in the effective tax rate
was primarily due to a large number of shares of restricted
stock which vested in the first quarter of 2005, creating a
larger tax deduction, and a change in the tax law which allows a
new deduction for domestic manufacturing costs, including
construction, beginning in 2005.
Segment Results
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Towns & Resorts Development |
Our Towns & Resorts development segment develops
large-scale, mixed-use communities primarily on land we have
owned for a long period of time. We own large tracts of land in
Northwest Florida, including large tracts near Tallahassee, the
state capital, and significant Gulf of Mexico beach frontage and
waterfront properties, which we believe are suited for primary
housing, resort and second-home communities. Our residential
homebuilding in North Carolina and South Carolina is conducted
through Saussy Burbank, Inc. (Saussy Burbank), a
wholly owned subsidiary. The table below sets forth the results
of operations of our Towns & Resorts development
segment for the three month periods ended March 31, 2005
and 2004.
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|
Three Months | |
|
|
Ended | |
|
|
March 31, | |
|
|
| |
|
|
2005 | |
|
2004 | |
|
|
| |
|
| |
|
|
(In millions) | |
Revenues:
|
|
|
|
|
|
|
|
|
|
Real estate sales
|
|
$ |
129.0 |
|
|
$ |
98.5 |
|
|
Rental revenues
|
|
|
0.2 |
|
|
|
0.2 |
|
|
Other revenues
|
|
|
8.0 |
|
|
|
7.0 |
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
137.2 |
|
|
|
105.7 |
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
Cost of real estate sales
|
|
|
93.3 |
|
|
|
76.4 |
|
|
Cost of rental revenues
|
|
|
0.2 |
|
|
|
0.4 |
|
|
Cost of other revenues
|
|
|
7.7 |
|
|
|
6.4 |
|
|
Other operating expenses
|
|
|
10.5 |
|
|
|
10.9 |
|
|
Depreciation and amortization
|
|
|
2.4 |
|
|
|
2.5 |
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
114.1 |
|
|
|
96.6 |
|
|
|
|
|
|
|
|
Pretax income from continuing operations
|
|
$ |
23.1 |
|
|
$ |
9.1 |
|
|
|
|
|
|
|
|
18
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 home sites in WaterColor. The community is planned to
include approximately 1,140 units, including a private
residence club (PRC) with fractional ownership.
Amenities include a beach club, tennis center, boat house,
restaurant on an inland freshwater lake, a 60-room inn and
restaurant and commercial space and parks. From
WaterColors inception through March 31, 2005, total
contracts accepted or closed totaled 810 homes and home sites
and 88 PRC shares. Each PRC interest is treated as one-eighth of
a unit.
WaterSound Beach is located approximately five miles east of
WaterColor. Situated on approximately 256 acres, WaterSound
Beach includes over one mile of beachfront on the Gulf of
Mexico. This community is currently entitled to include
approximately 511 units. From WaterSound Beachs
inception through March 31, 2005, contracts for
372 units were accepted or closed.
WaterSound West Beach, located over one half mile west of
WaterSound Beach on the beach side of County Road 30A, is being
designed as a gated, high-end community with 199 units on
approximately 62 acres. Beach access is through the
adjacent Deer Lake State Park. Sales are expected to begin in
the third quarter of 2005.
Infrastructure development continued during the first quarter at
WaterSound, a resort community located approximately three miles
from WaterSound Beach. WaterSound is set between
U.S. Highway 98 and the Intracoastal Waterway in Walton
County. Sales are expected to begin in 2006.
Palmetto Trace is a primary home community in Panama City Beach
planned for 480 units on 138 acres. As of
March 31, 2005, 349 units were sold or under contract
and 131 units remained to be released and sold.
Hawks Landing is an 88-acre primary home community in Lynn
Haven, in Bay County, Florida. We plan to develop and sell 167
home sites at Hawks Landing to local and national home builders.
Development is expected to start later in the second quarter of
2005.
At WindMark Beach, a proposed mixed-use development on
approximately 2,080 acres in Gulf County, all challenge
periods for state environmental permits expired on
March 31, 2005. Upon receipt of remaining permits,
infrastructure development is expected to begin in the summer of
2005, including the WindMark Beach town center, the initial
portion of a 3.5-mile public beachfront trail system, and the
relocation of U.S. Highway 98. From WindMark Beachs
inception through March 31, 2005, contracts for 104 home
sites in the first 80-acre phase were accepted or closed. The
remaining five retail lots and one home in the first phase have
not yet been offered for sale.
Bridgeport is a new primary neighborhood in Port St. Joe
designed to provide this market with additional housing choices
at moderate prices for local working families. A local builder
will deliver finished homes to customers. Bridgeport consists of
36 units on 13 acres with home prices expected to
start under $100,000. Contracts for 10 home sites have been
accepted or closed as of March 31, 2005.
Plans for SouthWood, situated on approximately 3,770 acres
in southeast Tallahassee, include approximately 4,770
residential units and a traditional town center with
restaurants, retail shops, and offices. From SouthWoods
inception through March 31, 2005, contracts for
922 units were accepted or closed. Certain regulatory
approvals are required prior to commencing development on future
phases of construction that are scheduled to begin in the
2006-2007 timeframe.
SummerCamp is a 499-unit development on 782 acres located
approximately 45 miles south of Tallahassee on the Gulf of
Mexico. Current plans include a beach club, community dock, and
nature trails. Sales of 52 home sites are expected to close in
late 2005, pending the receipt of environmental permits and the
successful resolution of a legal challenge to one of them.
19
Environmental permitting and predevelopment planning continue at
RiverTown, which is planned for 4,500 units 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. Infrastructure development is expected to begin
in 2005, with sales beginning in 2006.
St. Johns Golf & Country Club is a primary residential
community located on approximately 820 acres we acquired in
St. Johns County. The community is planned to include a total of
approximately 799 housing units and an 18-hole golf course. From
its inception through March 31, 2005, contracts for
680 units were accepted or closed at St. Johns
Golf & Country Club.
Victoria Park is situated on 1,859 acres we acquired in
Deland between Daytona Beach and Orlando. Plans include
approximately 4,000 single and multi-family residences built
among parks, lakes and conservation areas with a traditional
town center and an 18-hole golf course. From Victoria
Parks inception through March 31, 2005, contracts for
791 units were accepted or closed.
Artisan Park, located in Celebration, near Orlando, is being
developed through a joint venture in which we own 74%. Artisan
Park is situated on approximately 160 acres which we
acquired. Current plans include approximately 616 units
comprised of single-family residences, townhomes, and
condominiums, as well as parks, trails, and a community
clubhouse with a pool and educational and recreational
programming. From Artisan Parks inception through
March 31, 2005, contracts for 367 units were accepted
or closed.
The Company manages and owns 50% of the joint ventures
developing Rivercrest and Paseos, two primary residential
communities. Rivercrest is a 1,382-unit primary residential
community located on 413 acres near Tampa. At
March 31, 2005, there were 102 units remaining to be
released for sale at Rivercrest. Paseos is a 325-unit primary
residential community situated on 175 acres in Jupiter. At
March 31, 2005, two units remained for sale at Paseos.
Perico Island is situated in the City of Bradenton in Manatee
County with views of the Gulf of Mexico and Tampa Bay. Planned
as an upscale 686-unit condominium community on 352 acres,
it is being designed as an environmentally sensitive community.
Sales activity at Perico Island is expected to begin in late
2006.
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|
|
Three Months Ended March 31 |
Real estate sales include sales of homes and home sites and
sales of land. Cost of real estate sales for homes and home
sites includes direct costs, selling costs and other indirect
costs. In the first quarter of 2005, the components of cost of
real estate sales for homes and home sites were
$79.4 million in direct costs, $6.1 million in selling
costs, and $7.7 million in other indirect costs. In the
first quarter of 2004, the components of cost of real estate
sales were $64.1 million in direct costs, $5.1 million
in selling costs, and $7.2 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 on multi-family residences using the
percentage-of-completion method of accounting and increased
prices on home sites in our resort communities, partially offset
by a decrease in the number of home sites sold at WaterColor as
the current phase winds down. We are carefully managing releases
at our resort communities in order to capture increasing values
at these communities.
Sales of homes in the first quarter of 2005 totaled
$105.1 million, with related cost of sales of
$87.4 million, resulting in a gross profit percentage of
17%, compared to sales of homes in the first quarter of 2004 of
$74.6 million, with cost of sales of $67.1 million,
resulting in a gross profit percentage of 10%. The increase in
gross profit percentage was primarily due to increased revenues
recorded on multi-family residences using the percentage of
completion method of accounting, which have produced higher
margins than single-family homes.
20
Cost of real estate sales for homes in the first quarter of 2005
consisted of $74.8 million in direct costs,
$5.4 million in selling costs, and $7.2 million in
indirect costs. Cost of real estate sales for homes in the first
quarter of 2004 consisted of $56.9 million in direct costs,
$4.0 million in selling costs, and $6.2 million in
indirect costs.
Sales of home sites in the first quarter of 2005 totaled
$23.8 million, with related cost of sales of
$5.8 million, resulting in a gross profit percentage of
76%, compared to sales of home sites in the first quarter of
2004 of $23.7 million, with related cost of sales of
$9.3 million, resulting in a gross profit percentage of
61%. The increase in gross profit percentage was primarily due
to increased prices at WaterColor and WaterSound Beach.
Cost of real estate sales for home sites in the first quarter of
2005 consisted of $4.6 million in direct costs,
$0.7 million in selling costs, and $0.5 million in
indirect costs. Cost of real estate sales for home sites in the
first quarter of 2004 consisted of $7.2 million in direct
costs, $1.1 million in selling costs, and $1.0 million
in indirect costs.
The following table sets forth home and home site sales activity
by individual developments, excluding Rivercrest and Paseos, two
50% owned affiliates accounted for using the equity method of
accounting:
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended | |
|
Three Months Ended | |
|
|
March 31, 2005 | |
|
March 31, 2004 | |
|
|
| |
|
| |
|
|
Closed | |
|
|
|
Cost of | |
|
Gross | |
|
Closed | |
|
|
|
Cost of | |
|
Gross | |
|
|
Units | |
|
Revenues | |
|
Sales | |
|
Profit | |
|
Units | |
|
Revenues | |
|
Sales | |
|
Profit | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
(Dollars in millions) | |
Northwest Florida:
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|
|
|
|
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|
|
|
|
|
Walton County:
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|
|
|
|
|
|
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|
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|
WaterColor:
|
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|
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|
|
|
|
|
|
|
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|
|
|
|
|
|
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|
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|
|
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|
Homes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Single-family
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
5 |
|
|
$ |
3.9 |
|
|
$ |
2.7 |
|
|
$ |
1.2 |
|
|
|
|
|
Private Residence Club
|
|
|
1 |
|
|
|
0.3 |
|
|
|
0.1 |
|
|
|
0.2 |
|
|
|
|
|
|
|
1.9 |
|
|
|
1.1 |
|
|
|
0.8 |
|
|
|
|
Home sites
|
|
|
8 |
|
|
|
8.6 |
|
|
|
2.0 |
|
|
|
6.6 |
|
|
|
60 |
|
|
|
16.5 |
|
|
|
6.6 |
|
|
|
9.9 |
|
|
|
WaterSound Beach:
|
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|
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|
|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
Multi-family homes
|
|
|
|
|
|
|
11.5 |
|
|
|
6.4 |
|
|
|
5.1 |
|
|
|
50 |
|
|
|
1.0 |
|
|
|
3.3 |
|
|
|
(2.3 |
) |
|
|
|
Home sites
|
|
|
12 |
|
|
|
11.2 |
|
|
|
1.8 |
|
|
|
9.4 |
|
|
|
11 |
|
|
|
4.1 |
|
|
|
1.2 |
|
|
|
2.9 |
|
|
Bay County:
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The Hammocks:
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
Single-family homes
|
|
|
14 |
|
|
|
2.6 |
|
|
|
2.5 |
|
|
|
0.1 |
|
|
|
21 |
|
|
|
3.3 |
|
|
|
3.1 |
|
|
|
0.2 |
|
|
|
|
Townhomes
|
|
|
8 |
|
|
|
0.9 |
|
|
|
0.8 |
|
|
|
0.1 |
|
|
|
|
|
|
|
|
|
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|
Palmetto Trace:
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Single-family homes
|
|
|
14 |
|
|
|
2.6 |
|
|
|
2.4 |
|
|
|
0.2 |
|
|
|
10 |
|
|
|
1.8 |
|
|
|
1.6 |
|
|
|
0.2 |
|
|
|
|
Townhomes
|
|
|
22 |
|
|
|
2.9 |
|
|
|
2.6 |
|
|
|
0.3 |
|
|
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|
Leon County:
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SouthWood:
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|
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|
|
Single-family homes
|
|
|
45 |
|
|
|
10.7 |
|
|
|
9.4 |
|
|
|
1.3 |
|
|
|
53 |
|
|
|
11.7 |
|
|
|
9.7 |
|
|
|
2.0 |
|
|
|
|
Townhomes
|
|
|
6 |
|
|
|
1.1 |
|
|
|
1.0 |
|
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home sites
|
|
|
10 |
|
|
|
1.4 |
|
|
|
0.6 |
|
|
|
0.8 |
|
|
|
10 |
|
|
|
0.8 |
|
|
|
0.3 |
|
|
|
0.5 |
|
|
Gulf County:
|
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|
|
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|
|
Bridgeport: Home sites
|
|
|
10 |
|
|
|
0.1 |
|
|
|
0.1 |
|
|
|
|
|
|
|
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|
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|
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21
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|
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|
|
|
|
|
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|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended | |
|
Three Months Ended | |
|
|
March 31, 2005 | |
|
March 31, 2004 | |
|
|
| |
|
| |
|
|
Closed | |
|
|
|
Cost of | |
|
Gross | |
|
Closed | |
|
|
|
Cost of | |
|
Gross | |
|
|
Units | |
|
Revenues | |
|
Sales | |
|
Profit | |
|
Units | |
|
Revenues | |
|
Sales | |
|
Profit | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
(Dollars in millions) | |
Northeast Florida:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
St. Johns County:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
St. Johns Golf &
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Country Club:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homes
|
|
|
24 |
|
|
|
8.9 |
|
|
|
7.1 |
|
|
|
1.8 |
|
|
|
22 |
|
|
|
7.1 |
|
|
|
6.0 |
|
|
|
1.1 |
|
|
|
|
Home sites
|
|
|
8 |
|
|
|
0.5 |
|
|
|
0.2 |
|
|
|
0.3 |
|
|
|
12 |
|
|
|
0.9 |
|
|
|
0.4 |
|
|
|
0.5 |
|
|
Duval County:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James Island: Homes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4 |
|
|
|
1.4 |
|
|
|
1.2 |
|
|
|
0.2 |
|
|
|
Hampton Park: Homes
|
|
|
7 |
|
|
|
2.7 |
|
|
|
2.1 |
|
|
|
0.6 |
|
|
|
13 |
|
|
|
4.4 |
|
|
|
3.8 |
|
|
|
0.6 |
|
Central Florida:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Osceola County:
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Artisan Park:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Single-family
|
|
|
5 |
|
|
|
2.3 |
|
|
|
2.1 |
|
|
|
0.2 |
|
|
|
4 |
|
|
|
1.5 |
|
|
|
1.1 |
|
|
|
0.4 |
|
|
|
|
|
Multi-family
|
|
|
|
|
|
|
11.1 |
|
|
|
8.3 |
|
|
|
2.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Townhomes
|
|
|
1 |
|
|
|
0.5 |
|
|
|
0.4 |
|
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home sites
|
|
|
3 |
|
|
|
0.9 |
|
|
|
0.4 |
|
|
|
0.5 |
|
|
|
6 |
|
|
|
0.9 |
|
|
|
0.5 |
|
|
|
0.4 |
|
|
Volusia County:
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
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|
|
|
|
Victoria Park:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homes
|
|
|
64 |
|
|
|
15.3 |
|
|
|
13.7 |
|
|
|
1.6 |
|
|
|
31 |
|
|
|
6.5 |
|
|
|
5.6 |
|
|
|
0.9 |
|
|
|
|
Home sites
|
|
|
11 |
|
|
|
1.1 |
|
|
|
0.7 |
|
|
|
0.4 |
|
|
|
6 |
|
|
|
0.5 |
|
|
|
0.3 |
|
|
|
0.2 |
|
North and South Carolina:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Saussy Burbank:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homes
|
|
|
132 |
|
|
|
31.7 |
|
|
|
28.5 |
|
|
|
3.2 |
|
|
|
138 |
|
|
|
28.7 |
|
|
|
26.7 |
|
|
|
2.0 |
|
|
|
|
Townhomes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9 |
|
|
|
1.4 |
|
|
|
1.2 |
|
|
|
0.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
405 |
|
|
$ |
128.9 |
|
|
$ |
93.2 |
|
|
$ |
35.7 |
|
|
|
465 |
|
|
$ |
98.3 |
|
|
$ |
76.4 |
|
|
$ |
21.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue and cost 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. Additional deposits may be collected at other
locations depending on the specifics of the contract. 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.
Our townhomes are attached housing units sold individually along
with a parcel of land. Revenues and cost of sales for our
townhomes are accounted for using the full accrual method. These
units differ from multi-family and PRC units, in which buyers
hold title to a unit or fractional share of a unit,
respectively, within a building and an interest in the
underlying land held in common with other building association
members.
22
At WaterColor, the gross profit percentage from home site sales
increased to 77% in the first quarter of 2005 from 60% in the
first quarter of 2004 due to an increase in average price and
the mix of locations of the closed home sites. The average price
of a home site sold in the first quarter of 2005 was
approximately $1,075,000 compared to approximately $273,000 in
the first quarter of 2004.
At WaterSound Beach, in the first quarter of 2004, we incurred
$2.0 million in construction costs for contract adjustments
related to multi-family residences which were completed and sold
in 2003. The gross profit percentage on home sites increased to
84% in the first quarter of 2005 from 71% in the first quarter
of 2004, primarily due to pricing increases and the mix of size
and locations of the home sites closed in each period. The
average price for a home site sold in the first quarter of 2005
was approximately $942,000, compared to approximately $375,000
in the first quarter of 2004.
At SouthWood, the gross profit percentage on homes decreased to
12% in the first quarter of 2005 from 17% in the first quarter
of 2004, and the gross profit percentage on home sites decreased
to 57% in the first quarter of 2005 from 63% in the first
quarter of 2004. Both decreases were due to increased
development costs on a per unit basis.
At St. Johns Golf & Country Club, the gross profit
percentage on homes increased to 20% in the first quarter of
2005 from 15% in the first quarter of 2004, primarily due to an
increase in prices. The average price of a home sold in the
first quarter of 2005 was approximately $372,000, compared to
approximately $321,000 in the first quarter of 2004. The gross
profit percentage on home sites increased to 60% in the first
quarter of 2005 from 56% in the first quarter of 2004, primarily
due to the mix of sizes and locations of the home sites sold
during each period.
At Artisan Park, the gross profit percentage on single-family
homes decreased to 9% in the first quarter of 2005 from 27% in
the first quarter of 2004, due primarily to increased
construction materials and labor costs resulting from
2004s hurricane season for homes closed in the first
quarter of 2005. The gross profit percentage on home site sales
increased to 56% in the first quarter of 2005 from 44% in the
first quarter of 2004, primarily due to increased prices. The
average price of a home site sold in the first quarter of 2005
was approximately $290,000 compared to approximately $150,000 in
the first quarter of 2004.
At Victoria Park, the gross profit percentage on home sales
decreased to 10% in the first quarter of 2005 from 14% in the
first quarter of 2004, primarily due to the mix of sizes and
locations of the homes sold in each period.
At Saussy Burbank, the gross profit percentage on homes
increased to 10% in the first quarter of 2005 compared to 7% in
the first quarter of 2004, primarily due to the mix of relative
size and location of homes sold and a decrease in construction
costs as a percentage of sales price.
Other revenues, which include revenues from the WaterColor Inn,
other resort operations, and management fees, were
$8.0 million in the first quarter of 2005 with
$7.7 million in related costs, compared to revenues
totaling $7.0 million in the first quarter of 2004 with
$6.4 million in related costs. The increases in other
revenues and cost of other revenues were primarily due to
increased leisure and resort activity. The decrease in the gross
profit percentage was primarily due to an increase in realty
costs.
During the quarter ended March 31, 2005, Rivercrest and Paseos,
two 50% owned affiliates accounted for using the equity method
of accounting, recorded revenues of $16.1 million and
$11.3 million and cost of sales of $13.2 million and
$9.1 million on sales of 96 and 26 homes, respectively.
During the quarter ended March 31, 2004, Rivercrest and
Paseos recorded revenues of $8.1 million and
$12.1 million and cost of sales of $6.8 million and
$9.8 million on sales of 55 and 32 homes, respectively.
23
|
|
|
Commercial Real Estate Development and Services |
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. The table below sets forth the results of operations
of our commercial real estate development and services segment
for the three month periods ended March 31, 2005 and 2004.
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months | |
|
|
Ended | |
|
|
March 31, | |
|
|
| |
|
|
2005 | |
|
2004 | |
|
|
| |
|
| |
|
|
(In millions) | |
Revenues:
|
|
|
|
|
|
|
|
|
|
Real estate sales
|
|
$ |
11.7 |
|
|
$ |
14.6 |
|
|
Realty revenues
|
|
|
25.5 |
|
|
|
19.1 |
|
|
Rental revenues
|
|
|
12.1 |
|
|
|
9.2 |
|
|
Other revenues
|
|
|
0.2 |
|
|
|
0.4 |
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
49.5 |
|
|
|
43.3 |
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
Cost of real estate sales
|
|
|
8.4 |
|
|
|
12.2 |
|
|
Cost of realty revenues
|
|
|
17.9 |
|
|
|
10.7 |
|
|
Cost of rental revenues
|
|
|
4.3 |
|
|
|
3.5 |
|
|
Other operating expenses
|
|
|
10.8 |
|
|
|
10.4 |
|
|
Depreciation and amortization
|
|
|
5.8 |
|
|
|
3.9 |
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
47.2 |
|
|
|
40.7 |
|
Other income (expense)
|
|
|
(1.9 |
) |
|
|
(1.5 |
) |
|
|
|
|
|
|
|
Pretax income from continuing operations
|
|
$ |
0.4 |
|
|
$ |
1.1 |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31 |
Real estate sales. Total proceeds from land sales in the
first quarter of 2005 were $11.7 million, with a pre-tax
gain of $3.3 million. Land sales included the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of | |
|
Number of | |
|
Average | |
|
Gross | |
|
Gross | |
Land |
|
Sales | |
|
Acres | |
|
Price/Acre | |
|
Sales Price | |
|
Profit | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
|
|
|
|
(In thousands) | |
|
(In millions) | |
|
(In millions) | |
Florida:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unimproved
|
|
|
1 |
|
|
|
15 |
|
|
$ |
55 |
|
|
$ |
0.8 |
|
|
|
0.7 |
|
|
Improved
|
|
|
7 |
|
|
|
26 |
|
|
|
147 |
|
|
|
3.8 |
|
|
|
2.5 |
|
Virginia
|
|
|
1 |
|
|
|
19 |
|
|
|
372 |
|
|
|
7.1 |
|
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total/ Average
|
|
|
9 |
|
|
|
60 |
|
|
$ |
196 |
|
|
$ |
11.7 |
|
|
$ |
3.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24
During the first quarter of 2004, total proceeds from land sales
were $2.6 million, with a pre-tax gain of
$2.4 million. Land sales included the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of | |
|
Number of | |
|
Average | |
|
Gross | |
|
Gross | |
Land |
|
Sales | |
|
Acres | |
|
Price/Acre | |
|
Sales Price | |
|
Profit | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
|
|
|
|
(In thousands) | |
|
(In millions) | |
|
(In millions) | |
Florida:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unimproved
|
|
|
5 |
|
|
|
74 |
|
|
$ |
32 |
|
|
$ |
2.4 |
|
|
|
2.3 |
|
|
Improved
|
|
|
2 |
|
|
|
8 |
|
|
|
31 |
|
|
|
0.2 |
|
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total/ Average
|
|
|
7 |
|
|
|
82 |
|
|
$ |
32 |
|
|
$ |
2.6 |
|
|
$ |
2.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The increase in average per-acre prices reflects general pricing
increases in our commerce and business parks as well as a change
in the mix of commercial land sold in each period, with varying
compositions of retail, light industrial, multi-family and other
commercial uses.
On February 12, 2004, the Company sold the
100,000-square-foot Westside Corporate Center building in
Plantation, Florida, for $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 an
affiliate of the Company continues to provide brokerage and
leasing services for the building.
Realty revenues. Advantis realty revenues in the
first quarter of 2005 increased $6.4 million, or 34%, over
the first quarter of 2004 due to an increase in construction
activity, partially offset by a decrease in brokerage activity.
Cost of Advantis realty revenue increased
$7.2 million, or 67%, primarily due to the increased
construction activity. The gross profit percentage decreased to
30% for the first quarter of 2005 compared to 44% in the first
quarter of 2004, due to a change in mix as lower margin
construction activity increased while higher margin brokerage
activity decreased. Advantis other operating expenses,
consisting of office administration expenses, were
$8.3 million in the first quarter of 2005, compared to
$8.1 million in the first quarter of 2004. Advantis
recorded a pre-tax loss of $(0.9) million for the first
quarter of 2005 and $(0.1) million in the first quarter of
2004, after eliminations of intercompany profits of
$0.3 million and $0.4 million, respectively.
Rental revenues. Rental revenues generated by our
commercial real estate development and services segment on owned
operating properties increased $2.9 million, or 32%, in the
first quarter of 2005 compared to the first quarter of 2004.
Since March 31, 2004, six buildings with an aggregate of
583,000 rentable square feet were placed in service or
acquired and three buildings with an aggregate of 435,000 of
rentable square feet were sold, including two buildings with an
aggregate of 336,000 rentable square feet that have been
reported as discontinued operations in 2004. In addition, the
overall leased percentage increased to 85% at March 31,
2005 from 83% at March 31, 2004, excluding buildings
accounted for using the equity method of accounting.
Operating expenses related to rental revenues increased
$0.8 million, or 23%, primarily due to the buildings placed
in service since March 31, 2004. This segments
results from continuing operations include rental revenue and
cost of rental revenue from 24 rental properties with
2.8 million total rentable square feet in service at
March 31, 2005 and 19 rental properties with
2.3 million total rentable square feet in service at
March 31, 2004. Additionally, this segment had an interest
in one building totaling approximately 0.1 million square
feet and two buildings totaling approximately 0.2 million
square feet at March 31, 2005 and 2004, respectively, that
were owned by partnerships and accounted for using the equity
method of accounting. Further information about commercial
income producing properties majority owned or managed, along
with results of operations for the three month periods ended
March 31, 2005 and 2004, is presented in the tables below.
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Rentable | |
|
Percentage | |
|
Net Rentable | |
|
Percentage | |
|
|
|
|
Square Feet at | |
|
Leased at | |
|
Square Feet at | |
|
Leased at | |
|
|
|
|
March 31, | |
|
March 31, | |
|
March 31, | |
|
March 31, | |
|
|
Location |
|
2005 | |
|
2005 | |
|
2004 | |
|
2004 | |
|
|
|
|
| |
|
| |
|
| |
|
| |
Buildings purchased with tax-deferred proceeds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Harbourside
|
|
Clearwater, FL |
|
|
153,000 |
|
|
|
76 |
% |
|
|
147,000 |
|
|
|
93 |
% |
Prestige Place I and II
|
|
Clearwater, FL |
|
|
147,000 |
|
|
|
89 |
|
|
|
144,000 |
|
|
|
86 |
|
Lakeview
|
|
Tampa, FL |
|
|
127,000 |
|
|
|
92 |
|
|
|
125,000 |
|
|
|
79 |
|
Palm Court
|
|
Tampa, FL |
|
|
62,000 |
|
|
|
76 |
|
|
|
60,000 |
|
|
|
68 |
|
280 Interstate North
|
|
Atlanta, GA |
|
|
127,000 |
|
|
|
60 |
|
|
|
126,000 |
|
|
|
71 |
|
Southhall Center
|
|
Orlando, FL |
|
|
159,000 |
|
|
|
43 |
|
|
|
155,000 |
|
|
|
49 |
|
1133 20th Street
|
|
Washington, DC |
|
|
119,000 |
|
|
|
97 |
|
|
|
119,000 |
|
|
|
99 |
|
1750 K Street(c)
|
|
Washington, DC |
|
|
|
(c) |
|
|
|
(c) |
|
|
152,000 |
|
|
|
90 |
|
Millenia Park One
|
|
Orlando, FL |
|
|
158,000 |
|
|
|
93 |
|
|
|
158,000 |
|
|
|
81 |
|
Beckrich Office I
|
|
Panama City Beach, FL |
|
|
34,000 |
|
|
|
100 |
|
|
|
34,000 |
|
|
|
96 |
|
Beckrich Office II
|
|
Panama City Beach, FL |
|
|
33,000 |
|
|
|
58 |
|
|
|
33,000 |
|
|
|
23 |
|
5660 New Northside
|
|
Atlanta, GA |
|
|
273,000 |
|
|
|
96 |
|
|
|
272,000 |
|
|
|
91 |
|
SouthWood Office One
|
|
Tallahassee, FL |
|
|
89,000 |
|
|
|
92 |
|
|
|
88,000 |
|
|
|
74 |
|
Crescent Ridge
|
|
Charlotte, NC |
|
|
158,000 |
|
|
|
100 |
|
|
|
158,000 |
|
|
|
100 |
|
Windward Plaza Portfolio
|
|
Atlanta, GA |
|
|
465,000 |
|
|
|
89 |
|
|
|
465,000 |
|
|
|
89 |
|
245 Riverside
|
|
Jacksonville, FL |
|
|
136,000 |
|
|
|
57 |
|
|
|
136,000 |
|
|
|
46 |
|
Overlook I and II
|
|
Richmond, VA |
|
|
129,000 |
|
|
|
96 |
|
|
|
|
(b) |
|
|
|
(b) |
Deerfield Point I and II
|
|
Atlanta, GA |
|
|
204,000 |
|
|
|
89 |
|
|
|
|
(b) |
|
|
|
(b) |
Parkwood Point
|
|
Atlanta, GA |
|
|
220,000 |
|
|
|
96 |
|
|
|
|
(b) |
|
|
|
(b) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal/ Average
|
|
|
|
|
2,793,000 |
|
|
|
85 |
% |
|
|
2,372,000 |
|
|
|
82 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development property:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Westchase Corporate Center(c)
|
|
Houston, TX |
|
|
|
(c) |
|
|
|
(c) |
|
|
184,000 |
|
|
|
94 |
% |
Nextel II
|
|
Panama City Beach, FL |
|
|
30,000 |
|
|
|
100 |
% |
|
|
|
(b) |
|
|
|
(b) |
TNT Logistics
|
|
Jacksonville, FL |
|
|
|
(a) |
|
|
|
(a) |
|
|
99,000 |
|
|
|
95 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal/ Average
|
|
|
|
|
30,000 |
|
|
|
100 |
|
|
|
283,000 |
|
|
|
94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total/ Average
|
|
|
|
|
2,823,000 |
|
|
|
85 |
% |
|
|
2,655,000 |
|
|
|
83 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
TNT Logistics was sold during 2004. |
|
|
|
(b) |
|
These properties were acquired or completed after the date
reported. |
|
(c) |
|
1750 K Street and Westchase Corporate Center were both sold in
the third quarter of 2004. The results of operations of these
buildings prior to sale have been reflected in discontinued
operations in the consolidated financial statements and
footnotes to the consolidated financial statements. |
26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2005 | |
|
Three Months Ended March 31, 2004 | |
|
|
| |
|
| |
|
|
|
|
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
|
|
$ |
0.6 |
|
|
$ |
0.3 |
|
|
$ |
0.3 |
|
|
$ |
(0.4 |
) |
|
$ |
(0.1 |
) |
|
$ |
0.7 |
|
|
$ |
0.2 |
|
|
$ |
0.5 |
|
|
$ |
(0.4 |
) |
|
$ |
0.1 |
|
Prestige Place I and II
|
|
|
0.5 |
|
|
|
0.2 |
|
|
|
0.3 |
|
|
|
(0.3 |
) |
|
|
|
|
|
|
0.5 |
|
|
|
0.2 |
|
|
|
0.3 |
|
|
|
(0.3 |
) |
|
|
|
|
Lakeview
|
|
|
0.5 |
|
|
|
0.2 |
|
|
|
0.3 |
|
|
|
(0.3 |
) |
|
|
|
|
|
|
0.5 |
|
|
|
0.2 |
|
|
|
0.3 |
|
|
|
(0.3 |
) |
|
|
|
|
Palm Court
|
|
|
0.1 |
|
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.2 |
|
|
|
0.1 |
|
|
|
0.1 |
|
|
|
(0.1 |
) |
|
|
|
|
Westside Corporate Center
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.2 |
|
|
|
(0.2 |
) |
|
|
(0.2 |
) |
|
|
(0.4 |
) |
280 Interstate North
|
|
|
0.4 |
|
|
|
0.2 |
|
|
|
0.2 |
|
|
|
(0.3 |
) |
|
|
(0.1 |
) |
|
|
0.4 |
|
|
|
0.2 |
|
|
|
0.2 |
|
|
|
(0.2 |
) |
|
|
|
|
Southhall Center
|
|
|
0.3 |
|
|
|
0.2 |
|
|
|
0.1 |
|
|
|
(0.4 |
) |
|
|
(0.3 |
) |
|
|
0.5 |
|
|
|
0.2 |
|
|
|
0.3 |
|
|
|
(0.5 |
) |
|
|
(0.2 |
) |
1133 20th Street
|
|
|
1.1 |
|
|
|
0.4 |
|
|
|
0.7 |
|
|
|
(0.7 |
) |
|
|
|
|
|
|
1.0 |
|
|
|
0.4 |
|
|
|
0.6 |
|
|
|
(0.4 |
) |
|
|
0.2 |
|
Millenia Park One
|
|
|
0.7 |
|
|
|
0.3 |
|
|
|
0.4 |
|
|
|
(0.3 |
) |
|
|
0.1 |
|
|
|
0.6 |
|
|
|
0.2 |
|
|
|
0.4 |
|
|
|
(0.4 |
) |
|
|
|
|
Beckrich Office I
|
|
|
0.1 |
|
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.1 |
|
|
|
0.1 |
|
|
|
|
|
|
|
(0.2 |
) |
|
|
(0.2 |
) |
Beckrich Office II
|
|
|
0.1 |
|
|
|
|
|
|
|
0.1 |
|
|
|
(0.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5660 New Northside
|
|
|
1.4 |
|
|
|
0.5 |
|
|
|
0.9 |
|
|
|
(0.7 |
) |
|
|
0.2 |
|
|
|
1.5 |
|
|
|
0.4 |
|
|
|
1.1 |
|
|
|
(0.5 |
) |
|
|
0.6 |
|
SouthWood Office One
|
|
|
0.3 |
|
|
|
0.1 |
|
|
|
0.2 |
|
|
|
(0.1 |
) |
|
|
0.1 |
|
|
|
0.1 |
|
|
|
0.1 |
|
|
|
|
|
|
|
(0.1 |
) |
|
|
(0.1 |
) |
Crescent Ridge
|
|
|
0.8 |
|
|
|
0.2 |
|
|
|
0.6 |
|
|
|
(0.5 |
) |
|
|
0.1 |
|
|
|
0.8 |
|
|
|
0.2 |
|
|
|
0.6 |
|
|
|
(0.3 |
) |
|
|
0.3 |
|
Windward Plaza
|
|
|
1.9 |
|
|
|
0.5 |
|
|
|
1.4 |
|
|
|
(0.9 |
) |
|
|
0.5 |
|
|
|
1.8 |
|
|
|
0.5 |
|
|
|
1.3 |
|
|
|
(0.7 |
) |
|
|
0.6 |
|
245 Riverside
|
|
|
0.3 |
|
|
|
0.2 |
|
|
|
0.1 |
|
|
|
(0.1 |
) |
|
|
|
|
|
|
0.1 |
|
|
|
0.2 |
|
|
|
(0.1 |
) |
|
|
(0.3 |
) |
|
|
(0.4 |
) |
Overlook I and II
|
|
|
0.6 |
|
|
|
0.2 |
|
|
|
0.4 |
|
|
|
(0.2 |
) |
|
|
0.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deerfield Point I and II
|
|
|
0.9 |
|
|
|
0.3 |
|
|
|
0.6 |
|
|
|
(0.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parkwood Point
|
|
|
1.3 |
|
|
|
0.3 |
|
|
|
1.0 |
|
|
|
(1.1 |
) |
|
|
(0.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
0.1 |
|
|
|
|
|
|
|
0.1 |
|
|
|
|
|
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
$ |
12.0 |
|
|
$ |
4.3 |
|
|
$ |
7.7 |
|
|
$ |
(7.0 |
) |
|
$ |
0.7 |
|
|
$ |
8.8 |
|
|
$ |
3.4 |
|
|
$ |
5.4 |
|
|
$ |
(4.9 |
) |
|
$ |
0.5 |
|
Development property:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TNT Logistics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.4 |
|
|
|
0.1 |
|
|
|
0.3 |
|
|
|
(0.2 |
) |
|
|
0.1 |
|
Nextel II
|
|
|
0.1 |
|
|
|
|
|
|
|
0.1 |
|
|
|
(0.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
$ |
0.1 |
|
|
$ |
|
|
|
$ |
0.1 |
|
|
$ |
(0.1 |
) |
|
$ |
|
|
|
$ |
0.4 |
|
|
$ |
0.1 |
|
|
$ |
0.3 |
|
|
$ |
(0.2 |
) |
|
$ |
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
12.1 |
|
|
$ |
4.3 |
|
|
$ |
7.8 |
|
|
$ |
(7.1 |
) |
|
$ |
0.7 |
|
|
$ |
9.2 |
|
|
$ |
3.5 |
|
|
$ |
5.7 |
|
|
$ |
(5.1 |
) |
|
$ |
0.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
NOI is Net Operating Income. |
|
|
|
(b) |
|
Adjustments include interest expense, depreciation and
amortization. |
At Harbourside and 280 Interstate North, the loss of tenants
caused a decrease in the leased percentages and rental revenues.
We are now marketing these spaces. At Millenia Park One,
SouthWood Office One, 245 Riverside, and Beckrich
Office II, leased percentages and revenues increased due to
the addition of new tenants.
Depreciation and amortization, primarily consisting of
depreciation on income producing properties and amortization of
lease intangibles, increased to $5.8 million in the first
quarter of 2005 compared to $3.9 million in the first
quarter of 2004, due to the buildings placed in service since
March 31, 2004, and increased amortization on lease-related
intangible assets.
27
Our Land sales segment markets parcels for a variety of rural
residential and recreational uses on a portion of our long-held
timberlands in Northwest Florida. We are developing a range of
innovative products for rural settings including RiverCamps, St.
Joe Ranches, St. Joe Farmsteads, and St. Joe Woodlands. The
table below sets forth the results of operations of our land
sales segment for the three month periods ended March 31,
2005 and 2004.
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months | |
|
|
Ended | |
|
|
March 31, | |
|
|
| |
|
|
2005 | |
|
2004 | |
|
|
| |
|
| |
|
|
(In millions) | |
Real estate sales
|
|
$ |
17.8 |
|
|
$ |
22.7 |
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
Cost of real estate sales
|
|
|
3.2 |
|
|
|
2.0 |
|
|
Cost of other revenues
|
|
|
0.3 |
|
|
|
0.2 |
|
|
Other operating expenses
|
|
|
2.2 |
|
|
|
1.6 |
|
|
Depreciation and amortization
|
|
|
0.1 |
|
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
5.8 |
|
|
|
3.9 |
|
|
|
|
|
|
|
|
Other income
|
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
Pretax income from continuing operations
|
|
$ |
12.1 |
|
|
$ |
18.8 |
|
|
|
|
|
|
|
|
The gross profit percentage on real estate sales decreased to
82% for the first quarter of 2005 from 91% in the first quarter
of 2004, primarily as a result of RiverCamps sales which have a
lower margin due to development costs.
Land sales activity for the three month periods ended
March 31, 2005 and 2004 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of | |
|
Number of | |
|
Average Price | |
|
Gross | |
|
|
Three Months Ended March 31: |
|
Sales | |
|
Acres | |
|
Per Acre | |
|
Sales Price | |
|
Gross Profit | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
|
|
|
|
|
|
(In millions) | |
|
(In millions) | |
2005
|
|
|
29 |
|
|
|
6,930 |
|
|
$ |
1,942 |
|
|
$ |
13.5 |
|
|
$ |
11.7 |
|
2004
|
|
|
47 |
|
|
|
7,968 |
|
|
$ |
2,836 |
|
|
$ |
22.6 |
|
|
$ |
20.4 |
|
Land sales in the first quarter of 2005 included a 2,900-acre
parcel which was sold to the City of Panama City Beach for use
as a sprayfield for $3.8 million, or approximately
$1,310 per acre. Land sales for the first quarter of 2004
included an 866-acre parcel with some bay frontage in Bay County
which sold for $10.0 million, or approximately
$11,550 per acre. Average sales prices per acre and the
number of sales can vary significantly from one period to
another based on the characteristics of each parcel being sold
and the number and size of parcels offered for sale.
There were no conservation land sales in either of the periods
presented.
During the first quarter of 2005, we released 37 home sites at
RiverCamps on Crooked Creek, of which 22 were sold during the
quarter and the remaining 15 closed in April 2005. In addition,
one home site that was released for sale late in 2004 was closed
during the quarter. In the first quarter of 2005, proceeds from
the sales of RiverCamps totaled $7.5 million. Due to
required development not being complete at the time of sale,
percentage of completion accounting is used. Gross profit is
recognized based on construction completed in relation to total
construction costs. As a result of using percentage of
completion accounting, the land sales segment recognized
$4.3 million in revenue related to RiverCamps, with related
costs of $1.4 million. During the first quarter of 2004, no
revenues or cost of revenues were recognized related to
RiverCamps. Since its inception, a total of 102 home sites have
been released for sale at RiverCamps on Crooked Creek, all of
which have been sold or were under contract as of March 31,
2005. Work also continues on other potential RiverCamps
locations in Northwest Florida.
28
The table below sets forth the results of operations of our
forestry segment for the three month periods ended
March 31, 2005 and 2004.
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months | |
|
|
Ended | |
|
|
March 31, | |
|
|
| |
|
|
2005 | |
|
2004 | |
|
|
| |
|
| |
|
|
(In millions) | |
Revenues:
|
|
|
|
|
|
|
|
|
|
Timber sales
|
|
$ |
8.0 |
|
|
$ |
9.9 |
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
Cost of timber sales
|
|
|
5.2 |
|
|
|
6.0 |
|
|
Other operating expenses
|
|
|
0.5 |
|
|
|
0.8 |
|
|
Depreciation and amortization
|
|
|
1.0 |
|
|
|
1.1 |
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
6.7 |
|
|
|
7.9 |
|
|
|
|
|
|
|
|
Other income
|
|
|
0.7 |
|
|
|
0.7 |
|
|
|
|
|
|
|
|
Pretax income from continuing operations
|
|
$ |
2.0 |
|
|
$ |
2.7 |
|
|
|
|
|
|
|
|
Revenues for the forestry segment in the first quarter 2005
decreased 19% compared to the first quarter of 2004. Total sales
under our fiber agreement with Smurfit-Stone Container
Corporation were $3.2 million (177,000 tons) in the first
quarter of 2005, compared to $3.1 million (165,000 tons) in
the first quarter of 2004. A decrease in prices under the terms
of the agreement was partially offset by an increase in volume.
Sales to other customers totaled $2.8 million (135,000
tons) in the first quarter of 2005, compared to
$4.5 million (209,000 tons) in the first quarter of 2004.
Sales to other customers decreased as we reduced the volume
harvested from Company-owned lands. Revenues from our cypress
mill operation decreased to $2.0 million in the first
quarter of 2005 from $2.3 million in the first quarter of
2004 due to the loss of a customer. We are currently marketing
our cypress products to other potential customers.
Cost of timber sales decreased $0.8 million for the first
quarter of 2005 compared to the first quarter of 2004. Cost of
sales as a percentage of revenue was 65% for the first quarter
of 2005 compared to 61% for the first quarter of 2004. Cost of
sales for timber as a percentage of revenue increased to 63% for
the first quarter of 2005 from 57% for the first quarter of
2004; fixed costs remained constant as revenue decreased and
transportation costs increased as a result of increasing fuel
costs. Cost of sales for the cypress mill operation decreased to
$1.4 million, or 70% of revenue, for the first quarter of
2005 from $1.7 million, or 74% of revenue, for the first
quarter of 2004 due to increased efficiencies.
Liquidity and Capital Resources
We generate cash from:
|
|
|
|
|
operations; |
|
|
|
sales of land holdings and other assets; |
|
|
|
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; |
29
|
|
|
|
|
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 were 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 (used in) provided by operations was
$(29.0) million and $36.2 million in the first three
months of 2005 and 2004, respectively. During such periods,
expenditures relating to our Towns & Resorts
development segment were $116.9 million and
$97.4 million, respectively. Expenditures for operating
properties in the first three months of 2005 and 2004 totaled
$4.6 million and $3.7 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 that generally takes
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 also slow. We
expect this general expenditure level and relationship between
expenditures and housing contracts to continue in the future.
While we do not believe that federal taxable income will exceed
our net operating loss and other carryforwards for 2004, it is
possible that we may be required to make a cash payment for
federal income taxes for that year. For 2005, it is highly
likely that we will be obligated to make cash payments of
federal income taxes.
|
|
|
Cash Flows from Investing Activities |
Net cash used in investing activities in the first three months
of 2005 was $29.1 million and included the purchases of
352 acres of property in Manatee County, Florida, for
$18.0 million and 10,018 acres of land in southwest
Georgia for $12.2 million, in tax-deferred like-kind
exchanges. In April 2005, we purchased another 37,285 acres
of land in southwest Georgia for $45.3 million, also in a
tax-deferred like-kind exchange. In the first three months of
2004, net cash provided by investing activities was
$0.4 million and included proceeds of $12.0 million
for the sale of a commercial building and $2.8 million for
the purchase of the remaining interests in two commercial
buildings of which we already owned a majority interest.
We have an equity investment in Arvida/ JMB Partners, L.P. As of
March 31, 2005, the book value of this investment was
$9.1 million, which reflected a reduction from the
December 31, 2004 book value due to a $2.6 million
distribution to JOE in February, 2005. The partnership is
expected to make another distribution of cash this year which
should further reduce the book value of this investment. The
partnership completed the sale of its final homes and home sites
in 2003 and has been in the process of winding up its business
since that time. We expect the partnership to convert to a
liquidating trust later in 2005. Pending final termination, the
partnership will be required to retain funds in reserve to
provide for its obligations, liabilities and current and
possible future claims, which could potentially take several
years to resolve. As a result, it is not clear when and if any
of the cash remaining in the partnership after the expected 2005
distribution will be
30
distributed. A charge against our remaining book value in the
partnership is possible if and when estimates are made by the
general partners relating to these potential future uses of cash
in the partnership.
|
|
|
Cash Flows from Financing Activities |
Net cash provided by (used in) financing activities was
$6.7 million and $(42.7) million in the first three
months of 2005 and 2004, respectively.
We have approximately $53.6 million of debt maturing in the
remainder of 2005. For the full year ended December 31,
2005, we expect to spend $125 million to $175 million
for the repurchase of shares, including 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. During the first quarter of 2005, we borrowed
$50.0 million on the credit facility, net of repayments. At
March 31, 2005, the outstanding balance on the credit
facility was $50.0 million. At December 31, 2004,
there was no outstanding balance. 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.
We have issued senior notes (senior notes) in two
private placements with aggregate principal amounts at issuance
of $275.0 million. During the first quarter of 2005, one of
the senior notes matured and we paid the principal amount of
$18.0 million. The remaining balance on these notes at
March 31, 2005 is $257.0 million. These senior notes
include financial performance covenants relating to our leverage
position, fixed charge coverage, and a minimum net worth
requirement. Management believes that we are currently in
compliance with the covenants of the senior notes.
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. In the first quarter of 2005, we paid
$7.6 million in principal and $0.4 million in interest
to one of the community development districts to pay off a
portion of the CDD bonds. In accordance with Emerging Issues
Task Force Issue 91-10, Accounting for Special Assessments
and Tax Increment Financing, we have recorded as debt
$18.4 million and $26.4 million of this obligation as
of March 31, 2005 and December 31, 2004, respectively.
Through March 31, 2005, our Board of Directors had
authorized a total of $800.0 million for the repurchase of
our outstanding common stock from shareholders from time to time
(the Stock Repurchase Program), of which
$111.2 million remained available at March 31, 2005.
From the inception of the Stock Repurchase Program through
March 31, 2005, we have repurchased from shareholders
25,463,611 shares. During the three month periods ended
March 31, 2005 and 2004, we repurchased from shareholders
171,200 and 585,955 shares, respectively. Through March 31,
2005, a total of $688.8 million had been expended as part
of the Stock Repurchase Program, including $12.3 million in
the first three months of 2005 and $23.3 million in the
first three months of 2004. There is no expiration date for the
Stock Repurchase Program, and the specific timing and amount of
repurchases will vary based on market conditions, securities law
limitations and other factors.
Executives have surrendered a total of 2,097,697 shares of our
stock since 1998 in payment of strike prices and taxes due on
exercised stock options and taxes due on vested restricted
stock. For the three month periods ended March 31, 2005 and
2004, 61,203 shares worth $4.3 million and
91,205 shares worth $3.6 million, respectively, were
surrendered by executives, of which $1.9 million and
$1.7 million, respectively, were for the cash payment of
taxes due on exercised stock options and vested restricted stock.
|
|
|
Off-Balance Sheet Arrangements |
We are not currently a party to any material off-balance sheet
arrangements as defined in Item 303 of Regulation S-K.
31
|
|
|
Contractual Obligations and Commercial Commitments |
There have been no material changes to our contractual
obligations and commercial commitments presented in our
Form 10-K for the year ended December 31, 2004, during
the first three months of 2005, with the following exception:
During the first quarter of 2005, we borrowed
$50.0 million, net of repayments, on our credit facility.
At March 31, 2005, the balance outstanding on the credit
facility was $50.0 million with a weighted average interest
rate of 3.6%. As of March 31, 2005, our total amount of
debt outstanding was $444.8 million, of which
$53.6 million is due in less than one year, and the total
amount of interest to be paid on debt until maturity was
$28.1 million, of which $3.0 million is due in less
than one year.
|
|
Item 3. |
Quantitative and Qualitative Disclosures About Market
Risk |
There have been no material changes to the quantitative and
qualitative disclosures about market risk set forth in our
Form 10-K for the year ended December 31, 2004, during
the first three months of 2005, with the exception of certain
information set forth under the heading Expected
Contractual Maturities, which is presented below.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
|
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|
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Expected Contractual Maturities | |
|
|
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|
|
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|
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| |
|
|
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|
|
Fair | |
|
|
2005 | |
|
2006 | |
|
2007 | |
|
2008 | |
|
2009 | |
|
Thereafter | |
|
Total | |
|
Value | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
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$ In millions | |
Fixed rate
|
|
|
3.6 |
|
|
|
4.2 |
|
|
|
69.2 |
|
|
|
69.3 |
|
|
|
40.6 |
|
|
|
187.7 |
|
|
|
374.6 |
|
|
|
392.3 |
|
|
Wtd. Avg. Interest Rate
|
|
|
3.9 |
% |
|
|
6.4 |
% |
|
|
6.6 |
% |
|
|
7.3 |
% |
|
|
5.7 |
% |
|
|
6.3 |
% |
|
|
6.4 |
% |
|
|
|
|
Variable rate
|
|
|
50.0 |
|
|
|
|
|
|
|
1.2 |
|
|
|
16.8 |
|
|
|
2.2 |
|
|
|
|
|
|
|
70.2 |
|
|
|
70.2 |
|
|
Wtd. Avg. Interest Rate
|
|
|
3.6 |
% |
|
|
|
|
|
|
2.7 |
% |
|
|
3.1 |
% |
|
|
2.7 |
% |
|
|
|
|
|
|
3.4 |
% |
|
|
|
|
|
|
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 the Companys
disclosure controls and procedures (as such term is defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange
Act of 1934, as amended (the Exchange Act)) as of
the end of the period covered by this report. Based on this
evaluation, our Chief Executive Officer and Chief Financial
Officer have concluded that, as of the end of the period covered
by this report, our disclosure controls and procedures are
effective in bringing to their attention on a timely basis
material information relating to the Company (including its
consolidated subsidiaries) required to be included in the
Companys periodic filings under the Exchange Act.
(b) Changes in Internal Controls. During the quarter
ended March 31, 2005, 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.
32
PART II OTHER INFORMATION
|
|
Item 1. |
Legal Proceedings |
See Part I, Item 1, Note 7, Contingencies.
|
|
Item 2. |
Unregistered Sales of Equity Securities and Use of
Proceeds |
Issuer Purchases of Equity Securities
|
|
|
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|
|
|
|
|
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|
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(c) | |
|
(d) | |
|
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|
Total Number of | |
|
Maximum Dollar | |
|
|
|
|
|
|
Shares Purchased | |
|
Amount that | |
|
|
(a) | |
|
(b) | |
|
as Part of Publicly | |
|
May Yet Be | |
|
|
Total Number | |
|
Average | |
|
Announced Plans | |
|
Purchased Under | |
|
|
of Shares | |
|
Price Paid | |
|
or Programs | |
|
the Plans or | |
Period |
|
Purchased | |
|
per Share | |
|
(1) | |
|
Programs | |
|
|
| |
|
| |
|
| |
|
| |
|
|
|
|
|
|
|
|
(In thousands) | |
Month Ended January 31, 2005
|
|
|
17,000 |
|
|
$ |
63.47 |
|
|
|
17,000 |
|
|
$ |
122,419 |
|
Month Ended February 28, 2005
|
|
|
141,203 |
(2) |
|
$ |
72.18 |
|
|
|
80,000 |
|
|
$ |
116,538 |
|
Month Ended March 31, 2005
|
|
|
74,200 |
|
|
$ |
72.31 |
|
|
|
74,200 |
|
|
$ |
111,169 |
|
|
|
(1) |
For a description of our Stock Repurchase Program, see
Part I, Item 2, Liquidity and Capital
Resources Cash Flows from Financing Activities. |
|
(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 61,203. |
|
|
Item 3. |
Defaults Upon Senior Securities |
None.
|
|
Item 4. |
Submission of Matters to a Vote of Security Holders |
None.
|
|
Item 5. |
Other Information |
None.
Exhibits
|
|
|
|
|
|
3.1 |
|
|
Restated and Amended Articles of Incorporation, as amended
(incorporated by reference to Exhibit 3.1 of the
registrants 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 to the registrants Current
Report on Form 8-K dated December 14, 2004). |
|
|
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
registrants 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 registrants
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 registrants registration
statement on Form S-1 (File 333-89146)). |
33
|
|
|
|
|
|
|
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 registrants
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 registrants
registration statement on Form S-3 (File
No. 333-111658)). |
|
|
10.1 |
|
|
Severance Agreement between Wm. Britton Greene and the
registrant, dated January 5, 2005 (incorporated by
reference to Exhibit 10.26 of the registrants annual
report on Form 10-K for the year ended December 31,
2004). |
|
|
10.2 |
|
|
Summary of Non-Employee Director Compensation (incorporated by
reference to the registrants Current Report on
Form 8-K dated January 5, 2005). |
|
|
10.3 |
|
|
Form of Non-Employee Director Stock Agreement (incorporated by
reference to Exhibit 10.1 to the registrants Current
Report on Form 8-K dated January 5, 2005). |
|
|
10.4 |
|
|
Form of 2005 Director Investment Election Form (incorporated by
reference to Exhibit 10.2 to the registrants Current
Report on Form 8-K dated January 5, 2005). |
|
|
10.5 |
|
|
Summary of 2005 Executive Officer Salaries (incorporated by
reference to the information set forth under the caption
Approval of 2005 Base Salaries contained in the
registrants Current Report on Form 8-K dated
March 1, 2005). |
|
|
10.6 |
|
|
Summary of the 2005 Annual Incentive Plan (incorporated by
reference to the information set forth under the caption
Approval of the 2005 Annual Incentive Plan contained
in the registrants Current Report on Form 8-K dated
March 1, 2005). |
|
|
10.7 |
|
|
Summary of Awards to Executive Officers Under the 2004 Annual
Incentive Plan (incorporated by reference to the information set
forth under the caption Awards Under the 2004 Annual
Incentive Plan contained in the registrants Current
Report on Form 8-K dated March 1, 2005). |
|
|
10.8 |
|
|
Severance Agreement between Anthony M. Corriggio and the
registrant, dated March 14, 2005 (incorporated by reference
to Exhibit 10.1 to the registrants Current Report on
Form 8-K dated March 18, 2005). |
|
|
31.1 |
|
|
Certification by Chief Executive Officer. |
|
|
31.2 |
|
|
Certification by Chief Financial Officer. |
|
|
32.1 |
|
|
Certification by Chief Executive Officer. |
|
|
32.2 |
|
|
Certification by Chief Financial Officer. |
34
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: May 10, 2005
|
|
/s/ Anthony M.
Corriggio
---------------------------------------------------
Anthony M. Corriggio
Chief Financial Officer |
|
Date: May 10, 2005
|
|
/s/ Michael N. Regan
---------------------------------------------------
Michael N. Regan
Senior Vice President Finance and Planning
(Principal Accounting Officer) |
35
Exhibit 31.1
I, Peter S. Rummell, certify that:
1. I have reviewed this quarterly report on Form 10-Q for the quarter ended
March 31, 2005 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)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the 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
(d) 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 the 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: May 10, 2005
/s/ Peter S. Rummell
-----------------------
Peter S. Rummell
Chief Executive Officer
Exhibit 31.2
I, Anthony M. Corriggio, certify that:
1. I have reviewed this quarterly report on Form 10-Q for the quarter ended
March 31, 2005 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)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the 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
(d) 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 the 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: May 10, 2005
/s/ Anthony M. Corriggio
---------------------------
Anthony M. Corriggio
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 March 31, 2005 (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: May 10, 2005
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 March 31, 2005 (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/ Anthony M. Corriggio
------------------------
Anthony M. Corriggio
Chief Financial Officer
Dated: May 10, 2005
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.