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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) July 22, 2003
-----------------------------
The St. Joe Company
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(Exact Name of Registrant as Specified in Its Charter)
Florida
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(State or Other Jurisdiction of Incorporation)
1-10466 59-0432511
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(Commission File Number) (IRS Employer Identification No.)
245 Riverside Drive, Suite 500, Jacksonville, FL 32202
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(Address of Principal Executive Offices) (Zip Code)
(904) 301-4200
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(Registrant's Telephone Number, Including Area Code)
N/A
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(Former Name or Former Address, if Changed Since Last Report)
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
---------------------------------
99.1. A Press Release dated July 22, 2003.
ITEM 9. REGULATION FD DISCLOSURE
------------------------
The information required by Item 12, "Disclosure of Results of Operations
and Financial Condition" is being provided under Item 9, in accordance with
guidance issued by the Securities and Exchange Commission on March 27, 2003 in
Release No. 33-8216. The information contained in this Form 8-K and attached
Exhibit shall not be deemed "filed" for purposes of Section 18 of the Securities
Act of 1933 nor shall it be deemed incorporated by reference in any filing under
the Securities Exchange Act of 1934 except as specifically set forth by express
reference in such filing.
The Company issued a Press Release dated July 22, 2003, announcing the
Company's financial results for the second quarter 2003. A copy is furnished
with this Form 8-K as Exhibit 99.1 and is incorporated reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE ST. JOE COMPANY
Dated: July 22, 2003 By: /s/ Michael N. Regan
------------------------
Name: Michael N. Regan
Title: Senior Vice President
Exhibit 99.1
The St. Joe Company Reports Second Quarter Net
Income of $9.9 Million or $0.13 Per Share Including a
Non-Cash Charge of $8.8 Million or $0.11 Per Share
JACKSONVILLE, Fla.--(BUSINESS WIRE)--July 22, 2003--
JOE Expects Strong Second Half 2003 Results; WaterColor's Phase
Three Opens Strongly; WaterSound Beach Multi-Family Units Sell-Out;
Commercial Pipeline Strengthens
The St. Joe Company (NYSE:JOE) today announced that Net Income for
the second quarter of 2003 was $9.9 million, or $0.13 per diluted
share, compared with $33.0 million, or $0.40 per diluted share, in the
second quarter of 2002. Second quarter 2003 Net Income and Net Income
per share include a non-cash charge of $8.8 million net of tax, or
$0.11 per share, to reduce the carrying value of Advantis Real Estate
Services, the company's commercial real estate services unit, and a
net gain from conservation land sales of $3.2 million, or $0.04 per
share. Second quarter 2002 Net Income and Net Income per share include
a net gain from conservation land sales of $0.7 million, or $0.01 per
share, and a net gain of $20.6 million, or $0.25 per share, from the
April 17, 2002 sale of Arvida Realty Services (ARS).
"A side-by-side comparison of the second quarters this year and
last year shows JOE's building momentum in Northwest Florida," said
Peter S. Rummell, chairman and CEO of St. Joe. "Setting aside the gain
last year on the sale of ARS, and the non-cash charge this year on
Advantis, a more `apples-to-apples' comparison reveals the strength of
our performance."
"Our resort and primary residential real estate sales have been
very strong across our markets," said Rummell, "and commercial land
sales in Northwest Florida continue to build momentum.
"Sales and pricing at our key Northwest Florida developments
continue to exceed earlier expectations," said Rummell. "During the
second quarter, phase three at WaterColor opened with a strong showing
and WaterSound Beach's beachfront multi-family units sold-out. In
addition, sales at many of our primary residential developments are
ahead of our current projections. Meanwhile, in Northwest Florida, St.
Joe Commercial land sales are performing well ahead of last year's
pace and St. Joe Land Company turned in a steady quarter with a broad
base of business.
"We are particularly pleased with both pricing and sales velocity
at our Northwest Florida resort communities," said Rummell. "For
example, at WaterColor and WaterSound Beach, we've increased pricing
while maintaining sales velocity. Our strategy of pushing value away
from the beach is clearly working. Our focus continues to deliver
value to shareholders as demonstrated by our second quarter results.
"We also made excellent progress on a number of strategic fronts
during the second quarter," said Rummell. "We continue to move forward
on entitlements for the next phase of WaterSound, the next phase of
WindMark Beach, SummerCamp, RiverTown and the South Walton Commerce
Center.
"Our 'place-making' efforts reflect JOE's value creation
potential," said Rummell. "JOE has many advantages, starting with the
overall strength of Florida's real estate market and the unprecedented
demographic shift driven by transitioning Baby Boomers that is gaining
momentum. These factors, combined with JOE's concentrated,
high-quality, low-basis land and broad-based place-making expertise,
position us well for the future."
Earnings before interest, taxes, depreciation and amortization
(EBITDA) was $27.7 million, or $0.36 per diluted share, for the second
quarter of 2003, compared with $66.4 million, or $0.80 per diluted
share, for the same quarter in 2002. EBITDA includes gains from
conservation land sales of $5.1 million, or $0.07 per share, in the
second quarter of 2003, compared with $1.1 million, or $0.01 per
share, for the same quarter in 2002. The second quarter of 2003 EBITDA
also includes the non-cash pretax charge of $14.1 million, or $0.18
per share, to reduce the carrying value of Advantis. The second
quarter of 2002 EBITDA includes the net gain of $20.6 million, or
$0.25 per share, on the sale of ARS. Table 10 below provides a
reconciliation of EBITDA to Net Income.
OUTLOOK
JOE Expects Strong Second Half 2003 Results
"Based on good year to date results and a strong pipeline of
business, we are very optimistic about the remainder of 2003," said
Kevin M. Twomey, president, COO and CFO of St. Joe.
"In February, we made comparisons to 2002 excluding three large
items in that year: conservation land sale transactions ($30.1 million
pretax; $18.5 million net income), gain on the sale of ARS ($33.7
million pretax; $20.7 million net income), and gain on the forward
sale of equity securities ($132.9 million pretax; $86.4 million net
income)," said Twomey. "Excluding those three items, St. Joe's 2002
earnings per share were $0.60. In February we expected the full year
2003 per share income, before conservation land transactions, to
increase by 5 to 15 percent over that adjusted 2002 total.
"We are pleased to state new expectations," said Twomey. "We now
expect full year 2003 per share income, before conservation land gains
and the non-cash Advantis charge, to exceed the top of the 5 to 15
percent range over the adjusted 2002 total. However, we once again
caution that our business is 'lumpy' and some transactions we expect
to close in 2003 may slip into 2004."
Table 1
Guidance Baseline
2002 2002
($ in millions) Per Share
--------------- ---------------
Reported Net Income $174.4 $2.14
--------------- ---------------
Less
ARS gain (20.7) ( 0.25)
--------------- ---------------
Forward sale of equity securities (86.4) (1.06)
--------------- ---------------
Conservation gains (18.5) (0.23)
--------------- ---------------
2002 baseline $48.8 $0.60
=============== ===============
"Results from Arvida Community Development continue to accelerate
during this buying season in 2003," said Twomey. "These results
reflect solid progress, particularly at WaterColor, as additional
phases come to market, and at WaterSound as that community takes
shape. Contributions from our primary home communities, including
James Island, St. Johns Golf & Country Club, Victoria Park and
SouthWood in Florida and Saussy Burbank in North and South Carolina,
are significant factors in our performance. We're seeing continued
strength in both our resort and our primary residential communities.
"During 2003, St. Joe Commercial is continuing to focus on the
development and sale of retail and commercial land parcels in
Northwest Florida," said Twomey. "We expect St. Joe Commercial pretax
income from continuing operations to be up considerably compared with
2002. The first two quarters were a good start. We are now beginning
to see St. Joe Commercial come into its own. We have a strong
commercial pipeline and are optimistic about its prospects.
"We also expect continued good results from the St. Joe Land
Company at or near the same level as in 2002," said Twomey. "Although
St. Joe Land produced lower income in the first two quarters than it
did last year, the pipeline is strong for the remainder of the year.
"We expect pretax income from conservation land sales to be well
above 2002's $30.1 million, with a relatively large amount expected in
late 2003," said Twomey. "As always, the timing of such transactions
is difficult to predict. Also, there is one JOE Land sale that has
drawn interest from both private and conservation buyers. It may
become part of a larger conservation transaction; however, our
guidance currently includes this potential sale as a JOE Land
transaction.
"In discussing our third quarter 2003 expectations, we will make
comparisons to the third quarter a year ago, excluding conservation
land sales in both periods," said Twomey.
"For the third quarter of 2003, the company expects earnings per
share, before conservation land sales, to exceed that of the third
quarter 2002," said Twomey. "During the third quarter, we expect
continued strong sales at our resort communities, WaterColor and
WaterSound, as well as in our other residential communities. We have
no major commercial sales scheduled in the third quarter. St. Joe Land
sales are projected to be strong, but a number of large sales with
uncertain closing times could reduce their third quarter results.
"We anticipate having sufficient resources available to fund
development efforts, repurchase shares and acquire surrendered
shares," said Twomey. "The timing of our repurchase activity will
reflect the magnitude and timing of cash flows and earnings.
"JOE has continued to build momentum despite the challenging
economic conditions that exist today," said Twomey. "We believe we can
continue to make steady progress for the remainder of 2003, and feel
we are well positioned to make future gains as uncertainty in the
financial markets abate. Our flexibility remains an important
strength. Because of our phasing strategy for horizontal development
and inventory of low-basis land, we believe we can quickly respond to
market conditions as they change."
STOCK REPURCHASE PROGRAM
During the second quarter of 2003, the company acquired 1,141,840
of its shares at a cost of $33.4 million, or an average price of
$29.20 per share. Of these amounts, 430,400 shares were acquired
through open market purchases for $12.6 million, an average of $29.23
per share; 412,740 shares were purchased from the Alfred I. duPont
Testamentary Trust (the "Trust") and the Nemours Foundation (the
"Foundation") for $12.0 million, an average of $29.07 per share; and
298,700 shares of stock were surrendered by company executives with a
value of $8.8 million as payment for the strike price and taxes due on
stock options that were exercised.
On May 21, 2003, the Trust and the Foundation agreed to
participate in the St. Joe Stock Repurchase Program for an additional
90-day period. The agreement calls for the Trust and the Foundation to
sell, under certain conditions, a portion of their shares to St. Joe
as part of the company's ongoing stock repurchase program.
Table 2
Stock Repurchase Activity
Through June 30, 2003
Shares
--------------------------------------------------
Purchased Purchased
Year From Public From Trust Surrendered Total
- ------------------- ------------- ----------- ------------ -----------
1998 2,574,200 -- 11,890 2,586,090
1999 2,843,200 -- 11,890 2,855,090
2000 3,101,566 415,500 -- 3,517,066
2001 3,485,400 3,585,900 58,550 7,129,850
2002 2,583,700 2,586,206 256,729 5,426,635
2003 (1st Qtr.) 494,000 266,220 43,184 803,404
2003 (2nd Qtr.) 430,400 412,740 298,700 1,141,840
------------- ----------- ------------ -----------
Total/Weighted
Average 15,512,466 7,266,566 680,943 23,459,975
============= =========== ============ ===========
Total Cost Average
Year (in millions) Price
- ------------------- -------------- ------------
1998 $55.5 $21.41
1999 69.5 24.31
2000 80.2 22.78
2001 176.0 24.67
2002 157.6 29.03
2003 (1st Qtr.) 22.3 27.78
2003 (2nd Qtr.) 33.4 29.20
============== ============
Total/Weighted
Average $594.6 $25.32
============== ============
Since January 1, 1998, 23,459,975 shares have been acquired
through the repurchase and surrender of shares for $594.6 million.
At June 30, 2003, the company had 75,816,953 shares outstanding.
The number of weighted-average diluted shares in the second quarter of
2003 was 77,735,916. At June 30, 2003, $74.7 million remained of the
company's fourth stock repurchase authorization of $150 million.
NORTHWEST FLORIDA INFRASTRUCTURE
"JOE continues to make significant progress in its efforts to help
Northwest Florida improve its regional infrastructure," said Rummell.
"Working with local communities to improve roads, air service, health
care, affordable housing, education and economic development, our
efforts will benefit both JOE shareholders and the people who call
Northwest Florida home."
Economic Development: The Paper Mill at Port St. Joe
In the second quarter, St. Joe and Smurfit-Stone Container
Corporation agreed in principle to form a joint venture to develop the
126-acre paper mill site at Port St. Joe. A community planning process
is well underway for the waterfront area which includes the mill site.
The mill was previously owned by St. Joe and was sold in 1996.
Demolition of the mill continued during the second quarter. The
demolition work is scheduled to conclude by the end of 2003, clearing
the way for the economic redevelopment of this strategically located
waterfront site.
Improved Roads: Gulf to Bay Highway (Bay and Gulf Counties)
During the second quarter, Opportunity Florida, a regional
economic development organization, continued preliminary design and
engineering work on the proposed Gulf to Bay Highway, a proposed new
two-lane roadway that would extend approximately 9 miles from Mexico
Beach to St. Joe Beach area. St. Joe has committed to donate the
right-of-way for the construction of the proposed new roadway.
Opportunity Florida is dedicated to creating jobs and economic
opportunity in Northwest Florida's rural areas of economic concern. It
received State grants in 2001 and 2002 to undertake the
pre-construction studies, permitting and design of the proposed road.
Engineering design on the first segment of the road is scheduled
to be completed in early 2005. Construction could commence in 2006 if
funding is received.
Work on an additional 3.3 miles at WindMark Beach of the proposed
Gulf to Bay Highway was previously approved and moved into the design
and engineering phase. St. Joe is funding 100 percent of the design
and construction costs of this segment.
Improved Roads: The West Bay Bridge and State Road 79
During the second quarter, the State of Florida appropriated $20
million to expand the West Bay Bridge over the Intracoastal Waterway
in Bay County to four lanes. The bridge on State Road 79 is near the
proposed site of the relocated Panama City - Bay County Airport and
RiverCamps on Crooked Creek. The new bridge is expected to improve
travel time and conditions from Panama City Beach and the Walton
County beaches to the airport site and to Interstate 10.
Construction is also underway to four-lane the 4.6 miles of State
Road 79 south from the West Bay Bridge to Panama City Beach. This $11
million project funded by the State of Florida is expected to require
about two years to complete. Since the highway passes through St. Joe
timberland for 3.9 miles of the route, St. Joe provided much of the
right-of-way for this project.
Better Air Service: Bay County Airport and West Bay Area Plan
On June 23, 2003, the Bay County Commission voted to seek state
review for a land-use plan for the proposed relocated Panama City -
Bay County International Airport. On July 10, 2003, the county
commission also voted to seek state review of a land-use plan for
commercial, industrial, residential and conservation uses on
approximately 16,000 acres of St. Joe land near the proposed airport
site.
The land-use plans, known as Detailed Specific Area Plans (DSAPs),
would help implement the West Bay Sector Plan, a blueprint for the
future development of approximately 75,000 acres in northwestern Bay
County owned by JOE. The proposed airport relocation was the stimulus
for the sector plan overlay, which the county commission and the state
approved late last year. After a state review, both proposals come
back to the County Commission for final adoption.
The airport authority and the Federal Aviation Administration
continue to work on an Environmental Impact Statement for the airport.
Numerous steps remain before a decision regarding the relocation of
the airport is made.
More Housing Choices: Franklin County
During the second quarter, land-use approvals were finalized for
the first 10-acre phase of a new 90-unit community near Carrabelle in
Franklin County.
Prices for the 25 home sites in phase one are expected to start
under $20,000 and are being designed with full city services. The St.
Joe Land Company plans to team with local builders to provide a choice
of housing options. St. Joe had earlier provided land at a reduced
price for recreational fields nearby where facilities are being
planned for a variety of sports. A number of regulatory steps remain
and the approval of services by the City of Carrabelle must be
resolved before construction can begin on either the housing or
recreation field projects.
"St. Joe believes that homeownership is an important element of
the civic infrastructure necessary for healthy, thriving communities,"
said Rummell. "Our goal is to provide a wide range of options for
those who live and work in the community and call Northwest Florida
home."
Work is also underway in Gulf County for a second 90-unit primary
housing development designed for the local market. Also in Bay County,
the Hammocks in Lynn Haven and Palmetto Trace in Panama City Beach are
planned for over 900 units with prices starting under $100,000.
COMMERCE PARKS: AN EXAMPLE OF THE VALUE CREATION PROCESS
"During the second quarter, JOE continued to make solid progress
on long-term efforts to create value for shareholders through our
process of turning timberland into a higher and better use," said
Rummell. "For example, JOE has more than 740 acres across Northwest
Florida being converted from timberland into commerce parks designed
to create value for JOE shareholders and jobs for the community.
"These projects represent a pipeline of future value," said
Rummell. "It is important to note that these projects use a very small
percentage of JOE's land holdings, and that they are distributed
across Northwest Florida."
St. Joe Commerce Parks
St. Joe Commercial has commerce parks operating or under
development in five Northwest Florida counties. With master plans that
transfer value from the frontage of major highways inland, St. Joe
Commercial is adding value to interior timberland, and at the same
time improving traffic flows. Below is a summary of our commerce park
status.
Table 3
St. Joe Commercial - Commerce Parks
Net Saleable Current Asking
Commerce Parks County Acres Price Per Acre
- ----------------------- ----------- ------------- --------------------
Existing
Beach Commerce Bay 154.8 $60,000 - 435,000
Port St. Joe Gulf 57.0 $30,000 - 35,000
Airport Commerce Leon 39.8 $75,000 - 260,000
Predevelopment
Beach Commerce II Bay 140.0 $65,000 - 80,000
Port St. Joe II Gulf 44.9 $35,000 - 45,000
Hammock Creek Gadsden 113.8 $40,000 - 150,000
South Walton County Walton 42.0 $100,000 - 435,000
Cedar Grove Bay 150.0 $35,000 - 45,000
Beach Commerce Center
Since 2000, St. Joe Commercial has sold 52.9 acres for a total of
$3.0 million at Beach Commerce Center in Panama City Beach, at an
average sales price of $57,000 per acre. In the first half of 2003,
St. Joe Commercial accepted five additional contracts on 19.5 acres at
an average price of $61,000 per acre.
There are a total of 82.4 net saleable acres remaining for light
industrial and warehouse users at prices from $60,000 to $100,000 per
acre for interior lots and up to $435,000 per acre for lots fronting
on US 98. Interior lot pricing originally started at $45,000 per acre
when the park opened.
Due to strong demand, a second phase of the Beach Commerce Center,
with 140 net saleable acres, is being planned with prices of $65,000
to $80,000 per acre.
Port St. Joe Commerce Center
In the fourth quarter of 2002, St. Joe Commercial broke ground on
Port St. Joe Commerce Center. By the end of the second quarter,
approximately 50 percent of the acreage in the park, representing 29
acres on 9 parcels, was either sold or under contract for sale at an
average price per acre of $24,000. The park, designed for small- and
mid-sized businesses, has 57 net saleable acres. Horizontal
construction was completed in the second quarter.
"This new commerce center is a part of JOE's long standing efforts
to support economic development in Gulf County and stimulate the
creation of a more diverse employment base," said Twomey. "We are very
pleased with the value that is being created at this commerce park for
shareholders, as well as for the Port St. Joe community."
Demand at Port St. Joe Commerce Center has been strong. A second
phase of approximately 45 net saleable acres is being planned.
Airport Commerce Center
Construction is nearing completion on the Airport Commerce Center
in Tallahassee with approximately 26 parcels with approximately 40 net
saleable acres. Prices start at $75,000 per acre. The park is well
located on Tallahassee's Capital Circle near the airport in one of the
city's premier industrial districts.
Hammock Creek Commerce Center
Planning and entitlements continued in the second quarter on
Hammock Creek Commerce Center in Gadsden County just west of
Tallahassee. A contract was accepted from Tri-Eagle, a distribution
company owned by Anheuser-Busch, for a 24-acre site in the new park at
approximately $33,000 per acre. Tri-Eagle has announced plans to build
and operate a 125,000 square foot office and distribution facility
with approximately 90 employees. Hammock Creek provides an excellent
distribution location with its proximity to I-10.
Hammock Creek is being planned for 17 parcels with approximately
114 net saleable acres. Remaining parcels are expected to be priced at
$40,000 to $150,000 per acre.
South Walton Commerce Center
Work continued in the second quarter on planning and entitlements
for the South Walton Commerce Center. The park is located in a high
growth area of south Walton County with approximately 42 net saleable
acres.
Cedar Grove Commerce Center
Planning and entitlements got underway in the second quarter on
the Cedar Grove Commerce Center in east Bay County near Tyndall Air
Force Base. Plans call for 150 net saleable acres. The commerce center
is well located for use by contractors supporting U.S. Air Force
operations in the region. Sales are expected to get underway in early
2005.
Future Commerce Centers
In addition to the commerce parks discussed above, St. Joe
Commercial has commenced predevelopment activities for 3 additional
commerce parks totaling approximately 320 acres.
SEGMENT RESULTS
ARVIDA
Arvida Community Development's pretax income from continuing
operations for the second quarter of 2003 was $22.8 million, compared
with $22.2 million in last year's second quarter. This level of
contribution is noteworthy given that results for the second quarter
of 2002 include a $5.1 million positive contribution from the
Arvida/JMB Partnership.
"Florida continues to show real strength," said Rummell. "The
state's housing market continues to benefit from historically low
interest rates and continued strong migration into Florida. Customers
appear to be coming to JOE developments from a variety of sources and
a wide range of feeder markets.
"The strong sales pace has continued into July," said Rummell. "We
are very pleased with the quality and quantity of traffic we are
seeing in our sales centers during this prime-buying season. In the
first two weeks of the third quarter, we closed contracts on
12 additional units at WaterColor and WaterSound.
"We are pleased with better than expected sales pace in our
primary housing communities," said Rummell. "One of the best
performers in the second quarter was Victoria Park, which started much
slower than expected in 2002, but turned in excellent second quarter
sales."
Table 4
Arvida Community Development
($ in millions)
For the Three Months
Ended June 30
Closings
2003 2002
--------------------------- ---------------------------
Units Revenue Gross Profit Units Revenue Gross Profit
------ ------- ------------ ------ ------- ------------
Home Sites 108 $21.6 $13.5 98 $22.8 $16.0
Homes 291 $94.8 $20.1 268 $65.8 $12.4
------ ------- ------------ ------ ------- ------------
Total 399 $116.4 $33.6 366 $88.6 $28.4
====== ======= ============ ====== ======= ============
Units Placed Under Contract
2nd Quarter
2003 2002 Percentage Change
------- ------- ------------------------
Home Sites 176 142 24%
Homes 367 317 16%
------- ------- ------------------------
Total 543 459 18%
======= ======= ========================
Northwest Florida
WaterColor
In the second quarter of 2003, contracts closed on 27 home sites
and one housing unit at WaterColor. During the quarter, contracts for
41 home sites and 8 housing units were accepted at average prices of
$331,000 and $761,000, respectively.
"With demand high, WaterColor's phase three opened strongly near
the end of the second quarter, ahead of our original schedule," said
Rummell. "Thus far, the quality and values of the previous phases are
being transferred to this new section of the community. Already,
WaterColor's phase three has established a strong sales momentum, and
it is building momentum quickly as an exciting and interesting part of
the community."
In the last two weeks of the second quarter, reservations were
accepted on 30 homes sites in phase three of WaterColor. Thus far in
the third quarter, reservations have been accepted on 13 additional
units in phase three. Another release of approximately 20 home sites
is planned later this month.
Infrastructure construction in phase three continued in the second
quarter, including a pedestrian bridge that spans Western Lake,
connecting phase three of the community to the BoatHouse and BaitHouse
area. The phase three master plan also features a third community
pool, along with a large garden park that can be used for a variety of
functions.
"WaterColor has become a wonderful resort community," said
Rummell. "As we had planned, WaterColor is a key marketing force for
our real estate products throughout Northwest Florida. This year the
community, along with the WaterColor Inn, has been the subject of a
steady stream of national recognition and coverage from newspapers,
magazines and television. This high visibility is helping to drive
demand.
"Meanwhile, WaterColor's phase two, with a different mix of
product and price points, continued to be a good performer," said
Rummell. "At the end of the second quarter of 2003, contracts had been
accepted or closed on 163 home sites and 3 homes in WaterColor's phase
two."
Several key amenities opened during the second quarter, including
the BaitHouse restaurant, serving casual food in an atmosphere that
recalls the fish camps found along the bays and backwaters of
Northwest Florida, and the WaterColor Tennis Center.
Since WaterColor's inception through June 30, 2003, contracts,
pending or closed, totaled 485 units. WaterColor is expected to have
1,140 units at full build-out.
Sales at WaterColor are expected to be completed by 2007 or 2008.
WaterColor Inn
During the second quarter, the WaterColor Inn was selected to join
the exclusive Small Luxury Hotels of the World Association, an
organization that's membership is limited to less than 300 of the
world's finest-hotels. The Small Luxury Hotels of the World guide is
used by sophisticated travelers to make vacation plans. It is expected
to bring guests to the area from a broader geographic base.
In addition, the WaterColor Inn was placed on The Robb Report's
Best of the Best Hotels. "These excellent reviews are important to
us," said Rummell. "These designations draw new visitors to the
region. Real estate buyers from outside the region are typically
visitors first."
Private Residence Clubs - A New Concept at WaterColor
Also during the second quarter, Arvida introduced a new concept in
vacation home ownership called the Private Residence Club (PRC). A PRC
is being planned for WaterColor adjacent to the WaterColor Inn and
BeachClub. The PRC consists of 88 ownership interests in 11
two-bedroom, two-bath fully furnished luxury vacation multi-family
units.
Each owner receives a deed to 1/8 interest in a specific residence
for approximately $200,000. Each PRC owner is entitled to a minimum of
five weeks a year in the PRC, plus additional reservations throughout
the year, based on availability. Construction is expected to start in
this year's fourth quarter and continue for approximately 12 months.
To date 22 reservations have been accepted at the WaterColor sales
office. Sales are expected to continue into 2004.
"Initial indications suggest the PRC at WaterColor will be
substantially more profitable than the construction of traditional
multi-family product," said Rummell. "Based on our experience with the
PRC at WaterColor, we will consider introducing them at WaterSound and
other future resorts as well."
WaterSound Beach
In the second quarter of 2003, contracts were closed on 21 home
sites at WaterSound Beach. During the quarter, contracts were accepted
for 55 home sites at an average price of $393,000 and 20 multi-family
units at an average price of $1,224,000.
WaterSound Beach is a gated beachfront community south of County
Road 30A in south Walton County planned to include single family home
sites, multi-family units and resort commercial space. WaterSound
Beach is expected to have 499 residential units at full build-out.
Of the 81 beachfront multi-family units designed by Graham Gund
now under construction, contracts have been accepted on all but one.
The single remaining unit has not been released for sale since it is
slated to serve as a model for the next phase of multi-family units.
Prices for these residences ranged from $895,000 to $1.5 million, with
an average that exceeded $1.1 million. The units are expected to be
completed and delivered to their owners later this year.
Based on the rapid sale of the 80 multi-family units, additional
phases of multi-family units are being planned with construction and
sales slated to begin early next year on 49 units, followed by an
additional 42 units planned for later years.
The pool house in the Bridges neighborhood of WaterSound Beach has
been completed. In addition, a system of boardwalks across the dunes
to WaterSound's spectacular beach is complete.
Since WaterSound Beach's inception through June 30, 2003,
contracts pending or closed totaled 250 units.
We expect the bulk of the sales at WaterSound Beach will be
completed by the end of 2005.
WaterSound, Next Phase
Arvida has started predevelopment planning for a future phase of
WaterSound on approximately 1,443 acres of timberland between U.S. 98
and the Intracoastal Waterway. Planned for approximately 1,100 units,
a Development of Regional Impact (DRI) for this next phase of
WaterSound is expected to be completed in 9 to 15 months.
"This next phase of WaterSound is being designed to provide a wide
range of housing choices for transitioning Baby Boomers," said
Rummell. "The proposed master plan for the future development of
WaterSound calls for a full package of amenities including golf,
tennis and access to Lake Powell, along with the opportunity to become
a member of the beach club at WaterSound Beach."
This phase of WaterSound is being planned with a nine-hole
regulation golf course along with a six-hole 'family' course, both
designed by Davis Love, III. Residents will also have access to the
adjacent championship Camp Creek Golf Course designed by Tom Fazio.
While the build-out of this phase of WaterSound is a number of
years away, St. Joe owns enough adjacent land for significant
additional development.
WindMark Beach
In the second quarter of 2003, contracts for five home sites at
Windmark Beach were accepted at an average price of $516,000. This
phase of this community includes 110 home sites, a pool club and
several community docks, as well as an extensive conservation area
accessible by boardwalks and trails.
The WindMark pool club opened on the July 4th weekend. A 3,000
square foot "Design Home" to be used as a model for future phases of
WindMark Beach, was completed during the second quarter.
"Pricing and sales velocity for this first phase of WindMark Beach
has been a real success," said Rummell. "We believe values will
continue to increase at WindMark Beach, and we are carefully managing
the release of additional home sites there. Recently, beachfront home
sites on the resale market are being priced above $900,000. St. Joe
has 5 unsold beachfront home sites, although none are currently
released for sale."
Since WindMark Beach's inception through June 30, 2003, contracts
for 98 home sites have been accepted or closed at an average price of
$329,000.
Sales at the current phase of WindMark Beach are expected to be
completed late 2004 or 2005, depending on when remaining units are
released for sale.
WindMark Beach, Future Phase
Arvida has started predevelopment planning for a future phase of
WindMark Beach with 1,550 units on approximately 2,000 acres of
timberland along 15,000 feet of beachfront owned by St. Joe. A DRI for
these future phases is expected to be completed in 9 to 15 months.
"Under the proposed master plan, WindMark Beach embraces, restores
and protects a beautiful beach and makes it accessible to the public
with activities that center on family fun," said Rummell. "Together
with the Gulf County community, we are planning WindMark Beach so that
it respects the local culture, landscape, architecture and the
environmentally special lands nearby."
Plans for the future phases of WindMark Beach provide that once
the relocated U.S. 98 is completed, the existing roadbed, through St.
Joe's land, would be restored to create a natural beachfront trail
system. No residential development is planned seaward of the
beachfront trail, and St. Joe will provide public beach parking areas
and multiple access points for the general public.
SouthWood
In the second quarter of 2003, contracts were closed on 22 home
sites and 29 homes at SouthWood. During the quarter, contracts for 18
home sites and 38 housing units were accepted at SouthWood at average
prices of $83,000 and $222,000, respectively.
"In July, SouthWood saw the sale of its 500th unit," said Rummell.
"The pace of construction in the community is accelerating and we are
seeing an increasing interest in commercial space as well.
"In June 2003, Southern Living debuted one of its three 2003 Idea
Houses at SouthWood," said Rummell. "This innovative house is designed
specifically for transitioning Baby Boomers and is featured in the
August edition of Southern Living magazine. This will bring new
attention to Tallahassee generally and SouthWood specifically."
A number of community amenities are completed and opening. Four
additional miles of nature trails opened in the second quarter,
doubling the size of SouthWood's nature trail system. The SouthWood
Community and Recreation Center with three pools, tennis courts and a
community center opened early in the third quarter. Later in the third
quarter, the 7,500 square-foot golf clubhouse is set to open.
In the second quarter, SouthWood introduced several new product
lines. Contracts were accepted in a single morning on the entire
release of 16 single family homes, based on a Saussy Burbank design,
priced from $160,000 to $180,000. Contracts were also accepted in a
single morning on a second release of 15 homes at similar price
points. Based on this demand, Arvida is planning additional product
releases of this type.
"In addition, sales velocity for homes in the $275,000 to $450,000
range at SouthWood remained strong," said Rummell. "However, homes
priced at over $450,000 saw softer sales in the second quarter. At the
same time, pricing and pace for golf course home sites was strong. "
From SouthWood's inception through June 30, 2003, contracts
pending or closed totaled 496 units. SouthWood is planned for
approximately 4,250 residential units plus a variety of retail shops,
restaurants, community facilities, light industrial sites and
professional offices.
Sales at SouthWood are expected to continue for more than 15
years. While the build out of SouthWood is many years away, St. Joe
has enough adjacent land for two additional communities of similar
size.
SummerCamp
On April 3, 2003, the comprehensive plan amendment for SummerCamp
became final. This new beachfront vacation and second-home community
in southeastern Franklin County is being planned for 499 units on 782
acres of St. Joe timberland. Several regulatory steps remain. Sales
are expected to get underway in 2004.
SummerCamp is a family destination, 45 minutes south of
Tallahassee, on the Gulf of Mexico. Current plans call for a 50-room
inn, a beach club with cabanas, observation piers, a community dock
and miles of interconnected nature trails.
"Arvida's SummerCamp master plan evokes the traditional family
camps of Old Florida," said Rummell. "We are working to create an
architectural style that is true to the roots of older and well
recognized communities like St. Teresa and Apalachicola.
"We plan to develop SummerCamp in a way that respects and enhances
the special personality of this region of Florida," said Rummell. "We
want SummerCamp to capture the charm of the 'Forgotten Coast.' We will
emphasize deep respect for the land, water, our neighbors and the
wonderful traditions and quality of life found in Franklin County."
St. James Island
During the second quarter, a visioning process continued in
Franklin County. This process, initiated and directed by the Franklin
County Board of County Commissioners, is focused on updating the
Franklin County Comprehensive Plan. In addition, St. Joe has agreed to
prepare a conceptual plan for its holdings on St. James Island.
St. James Island is located in the eastern end of Franklin County
and represents an area of approximately 49,000 acres, of which 37,000
acres are owned by St. Joe, including the parcel on which SummerCamp
is to be developed.
The St. James Island planning process is expected to commence in
the third quarter and will include input from the community. This
process is expected to conclude in early 2004. The St. James Island
Plan and the revised Franklin County Comprehensive Plan are expected
to be ready for presentation to the Franklin County Board of County
Commissioners in early 2004.
Northeast Florida
St. Johns Golf & Country Club
In the second quarter of 2003, contracts were closed on 30 homes
and 21 home sites at St. Johns Golf & Country Club. During the
quarter, contracts for 32 homes and 44 home sites at St. Johns were
accepted at an average price of $357,000 and $54,000, respectively.
Since St. Johns' inception through June 30, 2003, contracts
pending or closed totaled 442 units at this 799-unit residential
development south of Jacksonville in St. Johns County. With these
results well ahead of original projections, infrastructure
construction is now underway on future phases.
Sales from St. Johns Golf & Country Club are expected to be
substantially complete by 2006.
James Island
A total of 21 contracts for homes were closed in the second
quarter of 2003 at James Island in Jacksonville. Contracts were
accepted during the quarter for 10 units with home prices averaging
$300,000. The 16 units remaining, including three models, in the
365-unit development are expected to be sold by the end of 2003 or
early 2004.
RiverTown
On April 3, 2003, a DRI was filed for RiverTown in St. Johns
County. RiverTown is located on approximately 4,200 acres and is being
planned for 4,500 units with 3.5 miles of frontage on the St. Johns
River. "Planning objectives focus on the riverfront and JOE's unique
ability to provide high-value community development, with significant
public access to the river, not found elsewhere in this market," said
Rummell.
The DRI process is expected to continue another 9 to 15 months.
Sales are not expected before the second half of 2005.
Central Florida
Victoria Park
"We are delighted with a strong increase in sales at Victoria
Park," said Rummell. "In the first half of 2003, contracts were
accepted on 112 units at Victoria Park, almost matching the 116
contracts accepted for the entire year of 2002.
"We are very pleased with the remarkable progress at Victoria
Park," said Rummell. "In the last two months continuing into the third
quarter, the sales pace continued to build at Victoria Park. With more
of the community amenities maturing in the next two quarters, this
community is in an excellent position to perform well going forward."
Contracts for 26 homes and three home sites were closed in the
second quarter of 2003 at Victoria Park, located between Orlando and
Daytona Beach, and set on 1,859 acres in the historic college town of
DeLand. In the second quarter of 2003, contracts were accepted on 60
homes and 4 home sites at an average price of $199,000 for the homes
and $95,000 for the home sites. Measured by sales, the development had
its best quarter ever, and by June 30, 2003 almost equaled the
expectations for the entire year of 2003. This mixed-used community is
planned for approximately 4,000 residences built among parks, lakes
and conservation areas.
"Victoria Park's diversity of product, ranging from
family-oriented neighborhoods to a golf community to age-restricted
homes, is being well-matched with a diversity of buyers in terms of
price, product and lifestyle choices," said Rummell. "These customers
are relocating from a wide variety of markets, with a quarter coming
from other parts of Florida and another quarter from outside the
state. This diversity is a strong advantage."
Since Victoria Park's inception through June 30, 2003, contracts
pending or closed totaled 269 units. Sales are expected to continue at
Victoria Park for more than 10 years.
Celebration, Artisan Park
Sales are expected to get underway early in the third quarter of
2003 for housing units in Arvida's Artisan Park, a 160-acre village in
Celebration, Florida, near Orlando. Infrastructure construction for
phase one is underway and is expected to be concluded in the third
quarter. The neighborhood in the southernmost portion of Celebration
Avenue will be geared toward the growing Baby Boomer market.
"This is the last residential product to be developed in
Celebration," said Rummell. "We want to take advantage of
Celebration's track record. Early indications point to strong demand
for the first release of 43 homes and five home sites." Current plans
call for home sites to be sold to approved builders only.
Plans for the neighborhood feature approximately 300 single-family
homes including 47 town homes and 300 condominium homes, along with
parks, trails, an outdoor performance area and community clubhouse
with a fitness center, pool and educational and recreational
programming.
"This new product in the Orlando market is being positioned to
accommodate a rapidly growing segment of Florida homebuyers - Baby
Boomers," said Rummell. "While oriented towards adults, it will not
have any age restrictions for purchasing or living in the community."
Saussy Burbank
In the second quarter of 2003, Saussy Burbank, St. Joe's
homebuilder based in Charlotte, N.C., closed the sale of 146 homes and
5 home sites compared to 124 homes in the second quarter of 2002.
During the quarter, contracts were accepted for the sale of 133 homes
at an average price of $200,000.
COMMERCIAL REAL ESTATE
During the second quarter of 2003, the Commercial Segment closed
the sale of 12 land parcels, including one parcel in Texas, totaling
62.5 acres at an average price of $139,000 per acre, and continued to
build its pipeline of future income.
St. Joe's Commercial Segment consists of St. Joe Commercial, the
company's commercial real estate development unit, and Advantis.
Pretax income from continuing operations for the commercial segment
was a loss of $(10.9) million for the second quarter of 2003, compared
with a loss of $(0.6) million in the same quarter of 2002. For the
second quarter of 2003, St. Joe Commercial had pretax income of $4.6
million, while Advantis had a pretax loss from continuing operations
of $(15.5) million, including a $14.1 million non-cash pretax charge.
Advantis had a second quarter 2003 pretax loss, before impairment
charges, of $(1.4) million compared to a pretax loss of $(0.1) million
in last year's second quarter after excluding profits relating to
inter-company transactions of $0.3 million in 2003 and $0.4 million in
2002.
"We reported after the first quarter of 2003 that we believed at
that time Advantis would continue its year-over-year performance
improvement despite a very difficult environment for commercial
services companies," said Twomey. "Although we still believe there is
some chance for full year improvement to occur, the disappointing
second quarter results make those prospects far less likely.
Therefore, we believe it is prudent at this time to reduce the
carrying amount of Advantis' goodwill from $28.9 million to $14.8
million, resulting in an after-tax non-cash charge of $8.8 million, or
approximately $0.11 per share.
"We continue to believe in the management of Advantis, in its long
term prospects, in its importance to JOE's management of our
portfolios of investment buildings, and in Advantis' important role in
the sales process for St. Joe Land and St. Joe Commercial in Northwest
Florida. We are encouraged by a good pipeline of business, a very
significant portfolio of buildings under management, success in
recruiting and prospects for future business. We are optimistic about
Advantis' prospects for the coming years.
"St. Joe Commercial completed another successful quarter in
Northwest Florida," said Twomey. "Second quarter commercial land sales
in Northwest Florida increased significantly over the same period last
year. Our prospects look strong for 2003, but as we have said in the
past, we expect earnings from these sales to be 'lumpy,' and the
timing of transactions is very difficult to predict.
"St. Joe Commercial has made significant progress in establishing
value for land for retail use in Northwest Florida," said Twomey.
"Since many retail users have not yet recognized the opportunities of
this part of Florida, we believe there is substantially more untapped
potential for additional value and velocity."
Progress on various St. Joe Commercial projects is summarized
below. Table 5 provides an overview of the Florida commercial real
estate sold by St. Joe Commercial in the second quarter of 2003.
Table 5
St. Joe Commercial
Florida Land Sales
Quarter-Ended June 30, 2003
Average
Number of Gross Sales Price Price/Acre
Land Sales Acres Sold (in Thousands) (in Thousands)
- --------------- --------- ---------- ----------------- ---------------
Unimproved 3 13.04 $1,476 $113
Improved 8 47.14 6,181 131
--------- ---------- ----------------- ---------------
Total/Average 11 60.18 $7,657 $127
========= ========== ================= ===============
Northwest Florida
WaterColor Crossings
In the second quarter of 2003, St. Joe Commercial continued
development of WaterColor Crossings, a commercial center in
WaterColor, anchored by a new full-service 28,800-square-foot Publix
Super Market. The new Publix is scheduled to open in the fall of 2003.
The center has an additional 14,400 square feet of retail space and
three out-parcels for retail operations.
"WaterColor Crossings is designed to be a second town center and
will help make WaterColor a true community where people live and build
family connections," said Twomey. "It will provide the kind of
convenience and service that mark a permanent neighborhood."
SouthWood Village
Construction of a new Publix Super Market continued at SouthWood
Village, a retail development within SouthWood. The 45,000-square-foot
facility is expected to open in September of 2003. The center has an
additional 18,000 square feet of retail space and 11 out-parcels for
retail operations.
"This new Publix Super Market is an important component of turning
the SouthWood vision into reality," said Twomey. "It brings convenient
shopping to the many other amenities at SouthWood, including easy
access to outstanding schools, recreational opportunities and
employment."
Beckrich Office Park
Construction continues on Beckrich Office Two, the second
35,000-square-foot office building in Beckrich Office Park in Panama
City Beach. The building is scheduled to be completed in the third
quarter of 2003.
"Economic development is one of the primary objectives of our
office product development in Northwest Florida," said Twomey.
"Businesses want to know that they will have suitable facilities
before they commit to a new location. Beckrich Office Park is an
example of how this strategy is working.
"Beckrich Office Park has also stimulated interest in
approximately 75 acres of timberland that JOE owns directly across US
98," said Twomey. "Planning is now underway for a portion of this site
for large retail users."
Pier Park
Horizontal infrastructure construction continues at Pier Park, a
mixed-use project in Panama City Beach. Pier Park is a public/private
venture between St. Joe and the City of Panama City Beach with plans
featuring retail, dining and family entertainment venues. Fronting on
six acres of white-sand beach, the project has 50 acres of land
available for retail, dining and entertainment facilities near the
beach, plus hotel and timeshare sites and 70 acres of highway-oriented
commercial land.
In the second quarter, St. Joe Commercial sold 23.75 acres at
$181,000 per acre in Pier Park to Orlando-based Quality Centers, Inc.
to develop a 237,500 square foot value retail center, which is
expected to open within a year.
Investment Property Portfolio
St. Joe continues to redeploy the proceeds of land sales in a
tax-deferred manner through the acquisition of commercial office
buildings in select markets within the southeastern United States.
St. Joe's portfolio of commercial office buildings, acquired
through the capital redeployment program, approximates 1.7 million
square feet and represents an aggregate investment of approximately
$229 million.
Table 6
Investment Property Portfolio
June 30, 2003
Number of Net Rentable Leased
Location Properties Square Feet Percentage
- ------------------------- ------------ -------------- ----------------
Florida
Tampa 5 477,000 83%
Orlando 2 313,000 72
Other 3 222,000 71
Atlanta 2 401,000 82
Washington, D.C. 2 271,000 95
------------ -------------- ----------------
Total 14 1,684,000 81%
============ ============== ================
Land Sales Outside of Florida
In the second quarter, St. Joe sold 2.3 acres of its land holdings
in Houston, Texas for $1.0 million. St. Joe owns 238.7 acres in
Houston and 28.9 acres in Atlanta and Northern Virginia outside of
Washington, D.C.
ST. JOE LAND COMPANY
St. Joe Land Company's pretax income from continuing operations
was $7.7 million in the second quarter of 2003, compared with pretax
income of $9.4 million in the second quarter of 2002.
"St. Joe Land had a solid second quarter with a broad base of
sales and no transaction exceeding $2 million," said Twomey. "The
size, range and variety of product being sold continue to expand. Our
marketing efforts continue to mature with more emphasis on lifestyle
coupled with portfolio diversification as themes."
In the second quarter, work continued on product diversification,
additional entitlements and zoning improvements throughout St. Joe's
land holdings to facilitate alternative uses and increase yield per
acre. Predevelopment work got underway during the quarter on several
rural home site projects with product designed to be attractive to
people living and working in the community. These projects are also
designed to provide local builders with home site inventory to provide
homes for their customers.
Table 7
St. Joe Land Company
Quarter-Ended June 30
Gross Sales
Number Number of Average Price Price Gross Profit
Period of Sales Acres Per Acre (in millions) (in millions)
- --------- -------- --------- ------------- ------------- -------------
2003 47 5,896 $1,867 $11.0 $9.3
2002 44 5,522 $2,191 $12.1 $10.6
RIVERCAMPS
The pace of predevelopment planning for the first RiverCamps
intensified in the second quarter of 2003. RiverCamps are planned
settlements in rustic settings - each designed to respond to the
land's unique character.
"We are very excited as we move closer to the sales launch of our
RiverCamps product later this year," said Rummell. "We expect to open
our first RiverCamps sales center in the third quarter and marketing
activity is expected to intensify. We believe the marketplace is going
to respond quite favorably."
RiverCamps are a real estate product that will provide easy access
to the beautiful rivers, bays and waterways of Northwest Florida by
offering a personal retreat in a private, woodland preserve, with the
services and activities which will allow buyers to enjoy the property
to its fullest. Each RiverCamp is envisioned as a home site sold
fee-simple, surrounded by lands to be preserved as conservation areas.
Many home sites are up to one-acre or larger. Planning is underway on
several potential RiverCamps sites in Bay County.
RiverCamps on Crooked Creek
RiverCamps on Crooked Creek in Bay County is being planned as the
first RiverCamps location to have homes and home sites ready for sale.
Located on approximately 1,500 acres of former timberland, RiverCamps
on Crooked Creek offers bay-front, bay-view, lake, marsh and woodland
home sites set within a proposed conservation area.
With water on three sides, RiverCamps on Crooked Creek features
views of West Bay, the Intracoastal Waterway and Crooked Creek. While
a number of predevelopment steps remain, the parcel is planned for up
to 450 home sites. Prices for home sites are expected to start at
approximately $75,000 and range upward to $350,000. A variety of
RiverCamp floor plans, typically from 1,500 to 2,400 square feet, are
being designed.
"This first RiverCamps site is located near one of Northwest
Florida's most beautiful bay systems," said Rummell. "The site
provides boating and fishing with water access to St. Andrews Bay and
its creeks, the Intracoastal Waterway and the Gulf of Mexico. Plans
call for the sale of home sites and homes. A full menu of owner
services is now being developed.
"We believe the land plan, the architecture and the programming
for RiverCamps on Crooked Creek will be very appealing to a broad
range of customers," said Rummell. "And we believe potential
purchasers will appreciate the opportunity to be a part of broader
conservation efforts in Northwest Florida."
CONSERVATION LAND
In 2003's second quarter, the company sold 4,693 acres of
conservation land for a gross sales price of $5.7 million, or $1,215
per acre.
Table 8
Conservation Land Sales
Six Months Ending June 30, 2003
Gross
Sales
Price Price
Quarter (in Per
Sold Project Buyer Location Acreage Millions) Acre
- ------- -------------- -------- ---------- ------- --------- ------
1st Wacissa River State of Jefferson
West Florida County 13,917 $14.9 $1,071
2nd Wacissa River State of Jefferson
East Florida County 4,693 5.7 1,215
------- --------- ------
Total/Average 18,610 $20.6 $1,107
======= ========= ======
Conservation Land's pretax income from continuing operations for
the second quarter of 2003 was $5.1 million, compared with $1.1
million during the second quarter of 2002.
"JOE's conservation land sales create value in many ways," said
Twomey. "Obviously the sales add to our bottom line, but more
importantly, conserving the best of Northwest Florida adds value to
our other land holdings in the region. Our long-term business
interests are served well by ensuring the protection of Northwest
Florida's special places and quality of life. We hope to make several
significant conservation land sales in 2003 and over the next several
years."
Currently, there is activity underway to sell as many as six
additional parcels in 2003, totaling approximately 61,000 acres of
conservation land, to state and private conservation interests.
Additionally, 12 tracts totaling more than 75,000 acres are being
considered for sale in years 2004 to 2006. "The timing and sequence of
these transactions is uncertain and some transactions could be
delayed," said Twomey.
ST. JOE TIMBERLAND COMPANY
Pretax income from continuing operations for the forestry segment
totaled $2.2 million for the second quarter of 2003, compared with
$2.3 million in the respective 2002 period. "We continue to hold
harvesting operations at St. Joe Timberland to a relatively
conservative level while pulp and timber prices are at low levels,"
said Twomey. "The second quarter saw some improvement in pulp prices,
and a slight improvement in chip and saw timber."
OTHER INCOME (EXPENSE)
Other income (expense), which includes dividend and interest
income, gains (losses) on sales of investments and non-operating
assets and miscellaneous income, and interest expense, was an expense
of $(2.0) million in the second quarter of 2003, compared to an
expense of $(5.3) million in the respective 2002 period.
Table 9
Other Income (Expense)
($ in millions)
Quarter-Ended Quarter-Ended
June 30, 2003 June 30, 2002
--------------- ---------------
Dividend and interest income $0.4 $0.6
Interest expense (3.0) (5.5)
Loss on valuation of derivatives -- (1.1)
Other 0.6 0.7
--------------- ---------------
Total $(2.0) $(5.3)
=============== ===============
Table 10
Reconciliation of Net Income to EBITDA(a)
($ in millions)
Quarter-Ended Quarter-Ended
June 30 , 2003 June 30, 2002
--------------- ---------------
Net Income $9.9 $33.0
Plus:
Income tax expense 5.8 21.4
Depreciation and amortization 7.1 5.5
Interest expense 4.9 6.5
EBITDA(a) $27.7 $66.4
=============== ===============
EBITDA per diluted share $0.36 $0.80
=============== ===============
Weighted average diluted shares
outstanding 77,735,916 83,253,681
(a) We use a supplemental performance measure along with net income
to report our operating results. This measure is Earnings Before
Interest, Taxes, Depreciation and Amortization ("EBITDA"). EBITDA
is not a measure of operating results or cash flows from operating
activities as defined by generally accepted accounting principles.
Additionally, EBITDA is not necessarily indicative of cash
available to fund cash needs and should not be considered as an
alternative to cash flows as a measure of liquidity. However, we
believe that EBITDA provides relevant information about our
operations and, along with net income, is useful in understanding
our operating results.
Prior-year EBITDA has been changed to conform with the SEC's
current guidance on non-GAAP financial measures. The second
quarter of 2003 EBITDA includes the non-cash pretax charge of
$14.1 million to reduce the carrying value of Advantis. The second
quarter of 2002 EBITDA includes the $20.6 million net gain on the
sale of ARS, $1.1 million loss on valuation of forward sale
contracts and $0.5 million other charges, each of which we
previously excluded from EBITDA in prior disclosures. EBITDA
includes conservation land EBITDA of $5.1 million and $1.1 million
in the second quarter of 2003 and 2002, respectively.
Table 11
Summary Balance Sheet
($ in millions)
June 30, 2003 June 30, 2002
------------- -------------
Assets
Investment in real estate $837.0 $797.4
Cash and investments 49.9 145.0
Prepaid pension asset 93.2 91.5
Property, plant and equipment 39.6 44.5
Other assets 198.0 116.0
-------------- --------------
Total assets $1,217.7 $1,194.4
============== ==============
Liabilities and Stockholders' Equity
Debt 348.7 362.7
Accounts payable, accrued liabilities and
minority interest 175.0 139.0
Deferred income taxes 217.7 192.1
-------------- --------------
Total liabilities 741.4 693.8
-------------- --------------
Total stockholders' equity 476.3 500.6
-------------- --------------
Total liabilities and stockholders'
equity $1,217.7 $1,194.4
============== ==============
Table 12
Debt Schedule
($ in millions)
June 30, 2003 June 30, 2002
--------------- ---------------
Revolving debt facility $15.0 $--
Medium term notes 175.0 175.0
Acquisition and other debt 4.0 12.3
Minimum liability on forward-sale of
equity securities -- 37.5
Other collateralized/specific asset
related debt 154.7 137.9
--------------- ---------------
Total Debt $348.7 $362.7
=============== ===============
Table 13
Consolidated Quarterly Comparisons
(As Reported)
($ in millions except per-share amounts)
Quarter-Ended Quarter-Ended
June 30, 2003 June 30, 2002
--------------- ---------------
Total revenues $184.5 $145.5
Operating expenses 136.4 105.8
Depreciation and amortization 7.1 5.4
Impairment loss 14.1 --
Corporate expenses 8.7 8.3
--------------- ---------------
Operating profit 18.2 26.0
Other income (expense) (2.0) (5.3)
--------------- ---------------
Income before taxes and minority
interest 16.2 20.7
Income tax expense 5.8 (8.3)
Minority interest 0.5 (0.3)
Discontinued operations, net of income
taxes of $13.1 -- 20.9
--------------- ---------------
Net Income $9.9 $33.0
=============== ===============
Net Income per diluted share $0.13 $0.40
=============== ===============
EBITDA $27.7 $66.4
=============== ===============
EBITDA per diluted share $0.36 $0.80
=============== ===============
Weighted average diluted shares
outstanding 77,735,916 83,253,681
Table 14
Quarterly Operating Revenues
By Segment
($ in millions)
Quarter-Ended Quarter-Ended
June 30, 2003 June 30, 2002
--------------- ---------------
Community residential development $125.2 $97.9
Commercial real estate 32.4 21.8
St. Joe Land 16.7 13.3
Forestry 10.2 12.0
Corporate and other -- 0.5
--------------- ---------------
Operating revenues $184.5 $145.5
=============== ===============
Table 15
Quarterly Segment Income Before
Taxes and Minority Interest
($ in millions)
June 30, March 31, Dec 31, Sept 30, June 30,
2003 2003 2002 2002 2002
-------- --------- -------- --------- --------
Community residential
Development $22.8 $8.5 $19.7 $21.4 $22.2
Commercial real estate (10.9) 3.5 4.5 (1.1) (0.6)
St. Joe Land 12.8 17.6 30.7 8.6 10.5
Forestry 2.2 1.9 2.0 1.7 2.3
Corporate and other (10.7) (8.1) 28.4 (11.1) (13.7)
-------- --------- -------- --------- --------
Income from continuing
operations before
income taxes and
minority interest $16.2 $23.4 $85.3 $19.5 $20.7
======== ========= ======== ========= ========
March 31, Dec 31 Sept 30, June 30,
2002 2001 2001 2001
--------- -------- --------- --------
Community residential
Development $9.4 $16.8 $14.1 $10.3
Commercial real estate (0.9) 3.3 ( 0.9) 3.9
St. Joe Land 18.4 12.5 15.8 21.1
Forestry 1.9 1.3 1.6 2.9
Corporate and other 87.8 (7.9) (11.0) (6.1)
--------- -------- --------- --------
Income from continuing
operations before
income taxes and
minority interest $116.6 $26.0 $19.6 $32.1
========= ======== ========= ========
Conference Call Information
St. Joe will host an interactive conference call to review the
company's results for the second quarter ended June 30, 2003 on
Tuesday, July 22, 2003, at 10:00 AM Eastern Daylight Time.
To participate in the call, please phone 800-553-0273 (for
domestic calls from the United States) or 612-332-0107 (for
international calls) approximately ten minutes before the scheduled
start time. Approximately three hours following the call, you may
access a replay of the call by phoning 800-475-6701 (domestic) or
320-365-3844 (international) using access code 691269.
The St. Joe Company will also webcast the conference call live
over the Internet in a listen-only format by visiting the company's
web site at http://www.joe.com. Access will be available 15 minutes
prior to the scheduled start time. A replay of the conference call
will be posted to the St. Joe web site approximately three hours
following the call.
About St. Joe
The St. Joe Company, a publicly held company based in
Jacksonville, is one of Florida's largest real estate operating
companies. It is engaged in community, commercial, industrial and
resort development, along with commercial real estate services. The
company also has significant interests in timber.
More information about St. Joe can be found online at
http://www.joe.com
Forward-Looking Statements
We have made forward-looking statements in this earnings release.
The Private Securities Litigation Reform Act of 1995 provides a
safe-harbor for forward-looking information to encourage companies to
provide prospective information about themselves without fear of
litigation so long as that information is identified as
forward-looking and is accompanied by meaningful cautionary statements
identifying important factors that could cause actual results to
differ, possibly materially, from those in the information. You can
find many of these forward-looking statements by looking for words
such as "intend", "anticipate", "believe", "estimate", "expect",
"plan" or similar expressions in this release. In particular,
forward-looking statements include, among others, statements about the
following:
-- the size and number of commercial buildings and residential
units;
-- the expected development timetables, development approvals and
the ability to obtain approvals;
-- the anticipated price range of developments;
-- the number of units that can be supported upon full build out
of a development;
-- the number, price and timing of anticipated land sales;
-- estimated land holdings for a particular use within a specific
time frame;
-- absorption rates and expected gains on land sales;
-- future operating performance, cash flows, and short and
long-term revenue and earnings growth rates;
-- comparisons to historical projects; and
-- the number of shares of company stock which may be purchased
under the terms of the company's existing or future
share-repurchase program.
Forward-looking statements are not guarantees of performance. You
are cautioned not to place undue reliance on any of these
forward-looking statements. These statements are made as of the date
hereof based on current expectations, and we undertake no obligation
to update the information contained in this release.
Forward-looking statements are subject to numerous assumptions,
risks and uncertainties. Factors that could cause actual results to
differ materially from those contemplated by a forward-looking
statement include, among others, the following:
-- economic conditions, particularly in Florida and key southeast
United States areas that serve as feeder markets to the
company's Northwest Florida operations;
-- acts of war, terrorism or other geopolitical events;
-- local conditions such as an oversupply of homes and home sites
and residential or resort properties, or a reduction in the
demand for real estate in an area;
-- timing and costs associated with property developments and
rentals;
-- competition from other real estate developers;
-- whether potential residents or tenants consider our properties
attractive;
-- increases in operating costs, including increases in real
estate taxes;
-- changes in the amount or timing of federal and state income
tax liabilities resulting from either a change in our
application of tax laws, an adverse determination by a taxing
authority or court, or legislative changes to existing laws;
-- how well we manage our properties;
-- changes in interest rates and the performance of the financial
markets;
-- decreases in market rental rates for our commercial and resort
properties;
-- decreases in the prices of wood products;
-- the pace of development of public infrastructure, particularly
in Northwest Florida;
-- adverse changes in laws or regulations affecting the
development of real estate;
-- the availability of funding from governmental agencies and
others to purchase conservation lands; and
-- adverse weather conditions or natural disasters.
Additional risk factors are described in other periodic reports
filed with the SEC, including our Annual Report on Form 10-K for the
year ended December 31, 2002.
Copyright 2003, The St. Joe Company. "Advantis," "WindMark,"
"SouthWood," "WaterColor," "WaterSound," "RiverCamps" and the "taking
flight" logo are service marks of The St. Joe Company. Arvida is a
registered trademark.
CONTACT: The St. Joe Company, Jacksonville
Media Contact: Jerry M. Ray, 904/301-4430
or
Investor Contact: Steve Swartz, 904/301-4347