EXHIBIT 99.1
(ST. JOE LOGO)
St. Joe Media Contact: Jerry M. Ray The St. Joe Company
904 858.2707 1650 Prudential Drive
St. Joe Investor Contact: Steve Swartz Jacksonville, FL 32207
904 858.5295 904 396.6600
FOR IMMEDIATE RELEASE
THE ST. JOE COMPANY (NYSE: JOE) REPORTS FULL YEAR
2002 NET INCOME OF $174.4 MILLION,
OR $2.14 PER SHARE
EBITDA FOR 2002 WAS $163.1 MILLION
FOURTH QUARTER NET INCOME WAS $55.3 MILLION,
OR $0.70 PER SHARE
FOURTH QUARTER EBITDA WAS $60.2 MILLION
ST. JOE REPURCHASES 5.2 MILLION SHARES IN 2002,
1.1 MILLION SHARES IN FOURTH QUARTER
JACKSONVILLE, FLORIDA - (FEBRUARY 4, 2003) - The St. Joe Company (NYSE: JOE)
today announced that its 2002 net income was $174.4 million, or $2.14 per
diluted share, compared with $70.2 million, or $0.83 per diluted share, for
2001.
Excluding after-tax income from conservation land sales of $18.5
million in 2002 and $13.8 million in 2001, the forward sales of securities of
$86.4 million and the sale of Arvida Realty Services of $20.7 million in 2002,
net income for 2002 was $48.8 million, or $0.60 per diluted share, compared with
2001's $56.4 million, or $0.67 per diluted share.
Discussion in this release of results for the fourth quarter of 2001
and full year 2002 and 2001, unless otherwise indicated, include the operations
of Arvida Realty Services (ARS), through the date of its sale on April 17, 2002.
ARS is treated as a discontinued operation in the company's financial
statements.
"JOE turned in another great year in 2002, providing shareholders with
a total return (dividends and stock appreciation) for the year of 8.4 percent,
compared to a 22.1 percent decline in the S&P 500 Index," said Peter S. Rummell,
chairman and CEO of St. Joe. "JOE's strong performance was driven by
well-balanced results across our business units. It highlights the benefits of
our unique competitive advantages - low-basis, high-quality land, favorable
demographics and a strong balance sheet. We will work to continue to capitalize
on these advantages in 2003 and beyond."
Earnings before interest, taxes, depreciation and amortization (EBITDA)
for 2002 were $163.1 million, compared to $162.2 million in 2001. EBITDA for
2001 included full-year results for ARS of $27.0 million, compared to $5.0
million of ARS EBITDA recorded in 2002 prior to its sale in April of that year.
Excluding conservation land, 2002 EBITDA was $133.0 million compared to
$139.9 million in 2001.
"JOE continues to report the company's financial results using the pro
forma measure, EBITDA, in addition to GAAP measurements such as net income and
pretax income," said Kevin M. Twomey, president, COO and CFO of St. Joe. "It is
a metric widely used in the real estate industry, and we believe helpful to many
investors in understanding the company's results."
FOURTH QUARTER 2002
Fourth quarter 2002 net income was $55.3 million, or $0.70 per diluted
share, compared with $18.8 million, or $0.23 per diluted share, in the same
quarter of 2001. Fourth quarter 2002 EBITDA was $60.2 million, compared to $44.6
million in the fourth quarter of 2001. The results of the fourth quarter of 2002
included three sales of conservation land to the State of Florida. Those three
sales, for a total of 8,924 acres, yielded proceeds of $24.3 million, or an
average of $2,723 per acre. In the fourth quarter, conservation land sales
generated $22.9 million of pretax income and contributed $14.1 million to net
income. Fourth quarter 2002 also included gains from the forward sale of
securities amounting to $38.2 million pretax and $24.8 million net income.
Excluding income from conservation land and from the forward sale of
securities, net income was $16.4 million, or $0.21 per diluted share, compared
with $16.8 million, or $0.20 per diluted share, for the same quarter in 2001.
EBITDA was $37.3 million compared to $41.2 million in 2001's fourth quarter. Net
income for 2001's fourth quarter included $2.7 million of ARS operations. EBITDA
for 2001's fourth quarter included $6.7 million from ARS operations.
"JOE closed 2002 with a strong fourth quarter," said Rummell. "Arvida's
residential sales at our beachfront resort properties remained strong, St. Joe
Commercial also turned in a good quarter, as did St. Joe Land Company.
Conservation land sales were also strong in the fourth quarter."
"In the fourth quarter of 2002, the company continued to advance the
value creation process," said Rummell. "The West Bay Sector Plan and a
development agreement for RiverCamps on Crooked Creek were approved. At the end
of the quarter, a RiverCamp concept home was introduced. Although final
regulatory steps for the RiverCamps on Crooked Creek remain, we are pleased with
these accomplishments as we work with local citizens to create value for both
shareholders and the community."
"The fourth quarter and full year 2002 results met or exceeded our
earlier guidance principally due to increased sales at Arvida Community
Development and increased land and building sales by St. Joe Commercial," said
Twomey.
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Table 1 below summarizes EBITDA and net income for the full years and
quarters ended December 31, 2002 and 2001. A reconciliation of net income to
EBITDA can be found in Table 10.
"Our success this past year went beyond delivering strong results to
shareholders in difficult economic conditions," said Rummell. "In 2002, JOE's
efforts to improve Northwest Florida's roads, air service, health care and
education showed tangible results and continue to represent real promise."
"By working closely with local communities to protect the Panhandle's
unique character and quality of life, we believe we are establishing a solid
foundation from which we will be able to create shareholder value for a long
time to come," said Rummell. "We believe we are seeing the beginnings of a
legacy of value for shareholders and for the people who call Northwest Florida
home."
TABLE 1
SUMMARY OF RESULTS
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
YEAR ENDED QUARTER ENDED
----------------------- ----------------------
DEC. 31, DEC. 31, DEC. 31, DEC. 31,
2002 2001 2002 2001
------- -------- -------- --------
Consolidated
Net income $ 174.4 $ 70.2 $ 55.3 $ 18.8
Net income per diluted share 2.14 0.83 0.70 0.23
EBITDA $ 163.1 $ 162.2 $ 60.2 $ 44.6
Consolidated without conservation
land and gain on sale of ARS
Net income $ 135.2 $ 56.4 $ 41.2 $ 16.8
Net income per diluted share 1.66 0.67 0.52 0.20
EBITDA $ 133.0 $ 139.9 $ 37.3 $ 41.2
Consolidated without conservation
land and income from the forward sale of
securities and gain on sale of ARS
Net income $ 48.8 $ 56.4 $ 16.4 $ 16.8
Net income per diluted share 0.60 0.67 0.21 0.20
EBITDA $ 133.0 $ 139.9 $ 37.3 $ 41.2
STOCK REPURCHASE PROGRAM
During the fourth quarter of 2002, the company repurchased a total of
1,139,600 shares for a total of $33.3 million, or an average price of $29.21 per
share.
In 2002, the company repurchased a total of 5,169,906 shares of common
stock for a total of $150.3 million, or an average price of $29.05 per share.
That represents approximately 6.5 percent of the outstanding shares on December
31, 2001.
Page 3
TABLE 2
STOCK REPURCHASE ACTIVITY
THROUGH DECEMBER 31, 2002
SHARES
---------------------------------------------
PURCHASED PURCHASED TOTAL COST
YEAR FROM PUBLIC FROM TRUST TOTAL (IN MILLIONS) AVERAGE PRICE
---- ----------- ---------- ---------- ----------- -------------
1998 2,574,200 -- 2,574,200 $ 55.1 $21.36
1999 2,843,200 -- 2,843,200 69.3 24.32
2000 3,101,566 415,500 3,517,066 80.2 22.78
2001 3,485,400 3,585,900 7,071,300 174.7 24.68
2002 2,583,700 2,586,206 5,169,906 150.3 29.05
---------- --------- ---------- ------
Total 14,588,066 6,587,606 21,175,672 $529.5 $24.98
========== ========= ========== ======
At the end of 2002, $120.5 million remained of the company's fourth
stock repurchase authorization of $150 million.
Also during the fourth quarter of 2002, the company acquired 191,392
shares, for $5.5 million, that were surrendered by executives to pay taxes and
the option exercise price for stock they acquired through option exercise or
vesting of restricted shares. For the full year 2002, a total of 256,729 shares
for $7.4 million were surrendered.
In 2002, the total shares acquired through repurchase and surrender
amounted to $157.6 million and 5,426,635 shares. Since January 1, 1998, shares
acquired through the repurchase and surrender of shares amounted to $538.9
million and 21,514,731 shares.
At December 31, 2002, the company had 76,004,398 shares outstanding.
The number of weighted-average diluted shares in 2002 was 81,340,615 and
79,115,809 in the fourth quarter of 2002.
OUTLOOK FOR 2003
"Looking ahead, we see continued earnings growth in 2003 with a strong
foundation in place for another good year for JOE," said Twomey.
"In discussing our expectations, we will make comparisons to 2002
excluding three large items in that year: conservation land ($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, 2002 earnings per share was $0.60. For the full
year 2003, the company expects per share income, before conservation land, to
increase by 5 to 15 percent from that adjusted total."
"We are pleased to report these expectations, particularly since 2002
net income benefited from earnings from the Arvida/JMB partnership ($8.8
million) and ARS
Page 4
operations ($2.3 million)," said Twomey. "In addition, we expect the after-tax
earnings contribution from the over-funded pension plan of $4.9 million in 2002
to be substantially lower this year."
"Our projections for 2003 are based on the assumption that the current
economic situation continues - with neither a major recovery, nor any further
weakening of the economy," said Twomey. "In that light, we expect to advance our
core strategies in 2003, achieve significant progress in building value for our
holdings in Northwest Florida and deliver excellent results for shareholders."
"Pretax income from continuing operations for Arvida Community
Development is expected to continue to grow in 2003," said Rummell. "These
results reflect continued solid progress, particularly at WaterColor and
WaterSound. Contributions from a number of primary home communities such as
James Island, St. John's Golf and Country Club and SouthWood in Florida and
Saussy Burbank in North and South Carolina are also important."
"We expect to make significant progress this year in the planning and
entitlement of communities in Gulf, Bay and Franklin counties in Northwest
Florida, although they will not contribute to 2003 earnings," said Rummell.
"This progress will position the company for solid earnings growth in the
future. We are particularly pleased with the progress that has been made with
SummerCamp, a proposed community now in the entitlement stage in Franklin
County."
"During 2003, St. Joe Commercial will continue to focus on the
development and sale of retail and commercial properties in Northwest Florida,"
said Twomey. "We expect St. Joe Commercial pretax income from continuing
operations to be up compared with 2002. Commercial land sales in Northwest
Florida delivered a meaningful contribution to results in 2002's fourth quarter.
Although results from this business are hard to predict, particularly in terms
of timing, we enter 2003 with a strong pipeline of transactions under contract
and prospects in discussion."
"JOE continues to acquire multi-tenant buildings in the Southeast
through our investment strategy which defers taxes on land sale gains," said
Twomey. "These buildings produced approximately $15.6 million of net operating
income in 2002. We expect to continue to grow the portfolio, and net operating
income is expected to increase by more than 30 percent in 2003." In 2002, net
operating income of $15.6 million, less depreciation and amortization of $5.4
million and interest expense of $7.0 million, equated to pretax income of $3.2
million.
"We also expect continued good results from the St. Joe Land Company at
or near the same level as in 2002," said Twomey. "In addition, we expect to
begin marketing RiverCamps in 2003. Although RiverCamps are not expected to
contribute income in 2003, we are optimistic the concept will prove very popular
with people seeking a different style of second home, and that RiverCamps will
become a meaningful source of income in future years."
Page 5
"We expect pretax income from conservation land sales to be 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. We expect the average price per acre for conservation land sales in
2003 to be below the relatively high level achieved in 2002, reflecting the
differing characteristics of the specific parcels expected to be sold this
year."
First quarter 2003 net income, excluding conservation land, is expected
to be the lowest quarter of the year and lower than last year since the
after-tax contributions of ARS of $2.0 million, along with the $61.5 million
from the forward-sale of securities and the $3.4 million contribution from the
Arvida/JMB Partnership are included in the first quarter of 2002. Excluding
these items, first quarter 2002 results were $7.5 million after-tax. In
addition, the St. Joe Land Company had after-tax income of $7.5 million in the
first quarter of 2002 as a result of the sale of several large parcels. These
first quarter results will also reflect the seasonal pattern of relatively slow
residential real estate sales during this period.
"We anticipate having sufficient resources available to fund our
development efforts and approximately $150 million for the repurchase of shares
and acquisition of surrendered shares," said Twomey. "Timing of repurchase
activity will reflect the magnitude and timing of cash flows and the generation
of equity."
NORTHWEST FLORIDA INFRASTRUCTURE UPDATE
WEST BAY SECTOR PLAN
The West Bay Sector Plan Overlay received final approval in the fourth
quarter of 2002. The sector plan sets a land-use blueprint for more than 70,000
acres of St. Joe land in northwestern Bay County. Its central features are
37,000 acres of conservation lands, the proposed relocated Panama City - Bay
County International Airport on 4,000 acre and nearby residential and commercial
land uses. The Sector Plan is implemented through a series of Detailed Specific
Area Plans (DSAP). A DSAP for the airport and a mixed-use DSAP for St. Joe are
expected to begin the approval process in 2003.
The Panama City - Bay County International Airport Authority and the
Federal Aviation Administration continue to work on an Environmental Impact
Statement (EIS) for the proposed relocation of the airport in Bay County.
Although numerous steps remain, the airport authority's timetable shows an
airport completion date of 2007.
As planning and environmental work continues on the airport relocation,
a number of airlines announced new service at the present airport location that
are scheduled to begin in the early spring of 2003. The Delta Connection
announced upgraded seasonal service to its hub in Atlanta, including new jet
service using a 70-seat regional jet. In addition, in February, the Delta
Connection scheduled new daily non-stop service from Panama City to Cincinnati
and weekend service to Dallas - Fort Worth. Northwest Airlink announced
additional seasonal flights using upgraded jet equipment from Panama City to
Memphis.
Page 6
"JOE is working with the local community to encourage new and improved
air service for Bay County," said Rummell. "We are pleased that these airlines
are recognizing the growth potential in this market."
THE PAPER MILL AT PORT ST. JOE
In the fourth quarter, demolition of the paper mill at Port St. Joe
continued. Several structures were imploded in January 2003 at the mill site now
owned by the Smurfit-Stone Container Corporation. The mill was previously owned
by St. Joe and was sold in 1996.
The demolition of the mill, scheduled to conclude by the end of 2003,
clears the way for the economic redevelopment of this strategically located
waterfront site.
SACRED HEART HOSPITAL IN WALTON COUNTY
In January 2003, Sacred Heart Health System held the grand opening of
its new 50-bed hospital in south Walton County, built on land donated by St.
Joe. The new facility includes 24-hour emergency care, an intensive care suite
and a chest pain center, in addition to a host of comprehensive specialty
services. The hospital is located near WaterColor, WaterSound and other Arvida
projects.
"This new hospital represents a huge improvement in the ability to
deliver high quality health care in this part of Northwest Florida," said
Rummell. "We are working with local officials to provide appropriate sites in
other areas of this region for new and improved health care facilities to meet
the needs of all residents."
NORTHWEST FLORIDA IMPROVEMENT FOUNDATION
During the fourth quarter The Northwest Florida Improvement Foundation
(NWFIF), founded by The St Joe Company, surpassed the million dollar mark in
grants to community organizations in Bay, Franklin, Gulf and Walton counties in
Northwest Florida. Grants totaling $1.1 million have been made since the first
award in December of 1999.
NWFIF's unique funding structure is based on contributions from St. Joe
that are a percentage of the proceeds from sales in specific communities
developed by Arvida and RiverCamps. NWFIF funding is directly linked to the
success of communities like WaterColor, WaterSound and WindMark Beach. Deed
covenants, mandated by St. Joe at the initial sale, require contributions to the
foundation on all subsequent sales of the property.
The foundation has formed alliances with others that have resulted in
positive changes for Northwest Florida providing funding in healthcare,
education, recreation, public libraries, conservation and the arts.
Page 7
"Exceeding the million dollar amount in just three years is a
significant milestone for the foundation," said Rummell. "However, we have seen
only the beginning of the foundation's potential. NWFIF represents our long-term
commitment to the region's quality of life and to working with others in the
community to make Northwest Florida an even better place to live."
SEGMENT RESULTS
COMMUNITY DEVELOPMENT
Arvida Community Development's pretax income from continuing operations
for the fourth quarter of 2002 was $19.7 million, compared with $16.8 million in
the fourth quarter of 2001. For the full year, Arvida's pretax income was $72.7
million, compared with $48.5 million for the full year 2001, a 50 percent
increase. The 2002 pretax income includes a contribution of the Arvida/JMB
Partnership of $0.6 million in the fourth quarter and $14.3 million for the
year. As previously disclosed, we expect no further material contribution from
that source.
"The market for homes remained very strong in Northwest Florida in the
fourth quarter," said Rummell. "We are pleased that prices are advancing and
sales velocity continues to increase in comparison to the fourth quarter a year
ago. Looking ahead, we continue to see strong, qualified traffic coming through
our sales centers."
TABLE 3
ARVIDA COMMUNITY DEVELOPMENT SALES
($ IN MILLIONS)
THREE MONTHS
ENDED DECEMBER 31,
2002 2001
--------------------------------------- ---------------------------------------
NUMBER REVENUE GROSS PROFIT NUMBER REVENUE GROSS PROFIT
------ ------- ------------ ------ ------- ------------
CLOSING
Lots 140 $ 33.3 $ 20.7 69 $13.9 $ 9.6
Homes 324 92.2 15.7 313 68.1 9.6
--- ------ ------ --- ----- -----
Total 464 $125.5 $ 36.4 382 $82.0 $19.2
=== ====== ====== === ===== =====
YEAR-TO-DATE
THROUGH DECEMBER 31,
2002 2001
--------------------------------------- ---------------------------------------
NUMBER REVENUE GROSS PROFIT NUMBER REVENUE GROSS PROFIT
------ ------- ------------ ------ ------- ------------
CLOSING
Lots 438 $ 99.3 $ 65.1 301 $ 49.7 $31.6
Homes 1,079 271.3 44.7 731 184.6 30.2
----- ------ ------ ----- ------ -----
Total 1,517 $370.6 $109.8 1,032 $234.3 $61.8
===== ====== ====== ===== ====== =====
Page 8
NORTHWEST FLORIDA
WaterColor
In the fourth quarter, contracts closed on 67 home sites and 3 housing
units at WaterColor. During the quarter, contracts for 15 home sites and 13
residences were accepted at average prices of $303,000 and $653,000,
respectively.
"Even as the product for sale moved further back from the beach as we
transitioned from phase one to phase two, the pace and pricing remained
consistent with our experience in phase one," said Rummell. "Traffic at
WaterColor remains very good as we move into the first quarter of 2003."
Of the 179 retail home sites in WaterColor's phase one on the north
side of County Road 30-A, only 23 remain unsold, including 15 that have not been
released for sale and 5 that have been held from the market to provide
construction access. Of a total of 24 Arvida homes completed in phase one, a
single home remains unsold. Of the 88 multi-family units completed in phase one,
all have been sold. Another 18 multi-family units are under construction and are
under contract for sale.
Infrastructure in phase two, with 264 home sites, is expected to be
completed in the second quarter of 2003. At the end of the fourth quarter of
2002, 123 phase two home sites had been sold.
Infrastructure construction of phase three, with 222 home sites, is set
to begin this year. A pedestrian bridge spanning Western Lake, connecting the
Boat House area to phase three, is scheduled to be completed in the third
quarter of 2003. The master plan for phase three features a third community
pool, along with a community center that will be used for a variety of
functions.
Since WaterColor's inception, through December 31, 2002, contracts
pending or closed totaled 426 units. WaterColor is expected to have 1,140 units
at full build-out.
Earnings from WaterColor are expected to be completed in 2007 to 2008.
WaterColor Inn
During the fourth quarter of 2002, the WaterColor Inn and WaterColor's
premier restaurant, Fish Out of Water, received excellent reviews in Food &
Wine, Bon Appetit, and House Beautiful. "In just a short time, as we expected,
the Inn is proving to be a valuable marketing tool helping to bring new
attention to Northwest Florida," said Rummell. "Meanwhile, we believe that the
community amenities added during the year, including health club facilities, a
second community pool, the Fresh Daily market and tennis facility, are acting as
additional marketing stimuli."
Page 9
WaterSound Beach
In the fourth quarter of 2002, contracts were closed on 20 home sites
at WaterSound Beach. During the quarter, contracts were accepted for 19 home
sites at an average price of $559,000. Since WaterSound Beach's inception,
through December 31, 2002, contracts pending or closed totaled 154 units.
WaterSound Beach is expected to have 499 units at full build-out.
The first phase of the 81 beachfront multi-family units designed by
Graham Gund is under construction and should be completed later this year. At
the end of the fourth quarter of 2002, Arvida had accepted contracts for 46 of
the multi-family units priced from $835,000 to $1,495,000.
The pool house in the Bridges neighborhood of WaterSound Beach is
expected to be completed in the Spring of 2003. In addition, a system of
boardwalks across the dunes to WaterSound's spectacular beaches is under
construction.
A groundbreaking for the Southern Accents 2004 Showhouse is scheduled
for the first quarter of 2003 at WaterSound Beach. The 4,500-square-foot home,
to be featured in the July/August 2004 issue of the magazine, is scheduled to
open for public tours Memorial Day weekend in 2004.
Earnings from WaterSound Beach are expected to continue for another
three to four years.
SouthWood
In the fourth quarter of 2002, contracts were closed on 30 home sites
and 34 homes at SouthWood. During the quarter, contracts for 14 home sites and
26 housing units were accepted at SouthWood at average prices of $69,000 and
$205,000, respectively.
From SouthWood's inception, through December 31, 2002, contracts
pending or closed totaled 373 units. SouthWood is planned for up to 4,250
residential units plus a variety of retail shops, restaurants, community
facilities, light industrial sites and professional offices.
In November 2002, play began at the new Fred Couples 7,172 yard par-72
golf course which is located in SouthWood. Working with approximately 175 acres
of the 3,200-acres at SouthWood, Couples award-winning design team set the
18-hole course in the heart of the community. "Without a doubt, the land at
SouthWood is one of the most ideal settings we have ever had the opportunity to
work with," said Couples. "We had the perfect palette from which to sculpt the
course - rolling hills and wide open pasture lands combined with stands of
awesome moss-draped live oaks. Since the first time our team toured the
property, we have been confident this will be one of the premier courses in the
southeast."
Earnings from SouthWood are expected to continue for more than 15
years.
Page 10
WindMark Beach
During the fourth quarter of 2002, contracts for 8 home sites were
closed at WindMark Beach, the first phase of WindMark in Gulf County. To date
through December 31, 2002, contracts for 90 home sites have been accepted or
closed at an average price of $313,000.
"Our sales velocity over the past year far exceeded expectations, with
average home site prices rising from $205,000 a year ago to $313,000 at the end
of 2002 and beachfront prices rising from $400,000 to as high as $760,000 in the
fourth quarter," said Rummell. "The remaining beachfront home sites are priced
from $925,000. We are particularly delighted with the strong pricing and
absorption at WindMark Beach. This makes us even more enthusiastic about
prospects for the next phases of WindMark."
Plans for this phase of WindMark Beach include 110 home sites, a pool
club and several community docks, as well as an extensive conservation area
accessible by boardwalks and trails.
Earnings from WindMark Beach are expected to be completed in 2003.
WindMark Beach, Future Phases
Arvida has started predevelopment planning for future phases of
WindMark on approximately 1,900 acres of timberland along 3.5 miles of
beachfront owned by St. Joe. These future phases, planned for approximately
1,500 units, require a Development of Regional Impacts (DRI) process that is
expected to get underway in early 2003 and continue for 12 to 18 months.
"Under the proposed master plan, WindMark embraces, restores and
protects a beautiful beach and makes it accessible to everyone 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."
The master plan for the additional WindMark development calls for the
realignment of approximately four miles of US 98 in Gulf County. Field survey
work and project engineering and design continued in the fourth quarter. Current
plans provide that once the new highway is completed, the existing roadbed,
through St. Joe's land, would be restored to create a natural beachfront trail
system. No development is planned seaward of the beachfront trail, and St. Joe
will provide two public beach parking areas and multiple access points for the
general public.
SummerCamp
On January 21, 2003, the Franklin County Commission unanimously
approved a comprehensive plan amendment for SummerCamp, a new beachfront
vacation and second home community in southeastern Franklin County. Several
regulatory steps remain to be accomplished.
Page 11
Located on approximately 784 acres of St. Joe timberland, SummerCamp is
a family destination, 45-minutes south of Tallahassee, on the Gulf of Mexico.
Current plans call for 499 units, a beach club with cabanas, observation
platforms, a community dock and miles of interconnected nature trails.
Arvida has been working on land planning and a product line for
SummerCamp that evokes the traditional family camps of Old Florida. "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, in Franklin
County," said Rummell. "Homes in SummerCamp are being designed to bring together
extended families. Current plans include five home designs with two, three and
four bedrooms."
"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 Forgotten Florida. 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
Also in January of 2003, the Franklin County Board of Commissioners
unanimously approved a long term visioning process for St. James Island (with a
total area of approximately 49,000 acres of which approximately 37,000 acres are
owned by St. Joe including SummerCamp), along with a comprehensive plan update
for the entire county. The planning process for St. James Island is expected to
be similar in scope to the West Bay Sector planning effort in Bay County,
completed in 2002. Florida State University has been contracted by the county to
facilitate the public planning and consensus building process which is expected
to last approximately one year.
NORTHEAST FLORIDA
St. Johns Golf & Country Club
In the fourth quarter of 2002, contracts were closed on 4 home sites
and 26 homes at St. Johns Golf & Country Club. During the quarter, contracts for
4 home sites and 31 homes at St. Johns were accepted at average prices of
$87,500 for home sites and $319,000 for homes.
Since St. Johns' inception, through December 31, 2002, contracts
pending or closed totaled 334 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.
Earnings from St. Johns Golf & Country Club are expected to continue
for 4 to 5 more years.
Page 12
James Island
A total of 18 contracts for homes were closed in the fourth quarter of
2002 at James Island in Jacksonville. Contracts were accepted during the quarter
for 8 units with home prices averaging $393,000. We expect the 36 units
remaining in the 365-unit development to be sold in 2003.
RiverTown
Predevelopment planning is underway at RiverTown in St. Johns County.
Located along the St. Johns River just south of Jacksonville, RiverTown is
situated on approximately 4,300 acres. "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 project requires a DRI process that is expected to
continue for up to 24 months.
"The RiverTown DRI application process is expected to get underway in
early 2003," said Rummell. "Earlier in 2002, the St. John's County Board of
Commissioners approved a revised County Comprehensive Plan. The Plan has
received final State review that opens the way for the DRI process."
CENTRAL FLORIDA
Victoria Park
Contracts for 38 homes and one home site were closed in the fourth
quarter of 2002 at Victoria Park, located between Orlando and Daytona Beach, set
on 1,859 acres in the historic college town of De Land. In the fourth quarter of
2002, contracts were accepted on 29 homes and one home site at an average price
of $180,000 for the homes and $83,000 for the home site. This mixed-used
community is planned for approximately 4,000 residences built among parks, lakes
and conservation areas.
Since Victoria Park's inception through December 31, 2002, contracts
pending or closed totaled 157 units.
"Despite a disappointing slow start, we have been pleased with the
growing demand over the last three quarters since a number of the amenities were
completed," said Rummell. "We remain behind our earlier projections, but are
encouraged by the recent progress."
"We are expecting traffic to increase at Victoria Park with the pool
and tennis facilities now opened and excellent reviews received by the Victoria
Hills golf course," said Rummell. "Victoria Hills was named the top new golf
course in Florida by Florida Golf News. The completion of the family recreation
center, which will include a fitness facility, pool, parks and tennis courts,
should also help stimulate traffic."
Sales are expected to continue at Victoria Park for more than 10 years.
Page 13
Celebration
During the fourth quarter of 2002, Arvida began infrastructure
construction on a 160-acre village in Celebration near Orlando, Florida. The
neighborhood, located in the southernmost portion of Celebration Avenue, will be
geared toward the growing Baby Boomer market.
Plans for this next phase of Celebration include approximately 300
single-family homes, 50 town homes, and 300 condominium homes, as well as parks,
trails, an outdoor performance area and a community clubhouse with a fitness
center, pool and educational and recreational programming.
This new neighborhood is expected to accommodate the rising demand for
housing in the Orlando market among a rapidly growing segment of homebuyers -
Baby Boomers. While oriented towards adults it will not have any age
restrictions for purchasing or living in the community.
OTHER RESIDENTIAL
In the fourth quarter of 2002, Saussy Burbank, St. Joe's home builder
based in Charlotte, N.C., closed the sale of 169 homes. During the quarter
contracts were accepted for the sale of 114 homes at an average price of
$199,000. For the full year 2002, Saussy closed on the sale of 523 housing
units.
ST. JOE LAND COMPANY
St. Joe Land Company had sales of $11.9 million in the fourth quarter
of 2002 and pretax income from continuing operations of $7.8 million, compared
with sales of $11.7 million and pretax income of $9.2 million in the fourth
quarter of 2001. For the full year of 2002, St. Joe Land had pretax income of
$38.0 million, compared with $41.6 million for the previous year.
"St. Joe Land had a good fourth quarter and exceeded our initial 2002
projections," said Twomey. "We continue to be delighted with the progress and
prospects of this business."
"As we discussed in the past, the average per acre price achieved by
St. Joe Land Company will vary based on the characteristics of the particular
acreage sold," said Twomey. "For the fourth quarter of 2002, the average per
acre price was $2,383. We're delighted with these results, but expect continued
fluctuation."
"To build future earnings, St. Joe Land has underway a five-year
program seeking additional entitlements and zoning improvements throughout our
land holdings," said Twomey. "These entitlements are designed to facilitate
alternative uses and increase yield per acre."
Page 14
TABLE 4
ST. JOE LAND COMPANY
QUARTER-ENDED DECEMBER 31
NUMBER NUMBER OF AVERAGE PRICE GROSS SALES PRICE GROSS PROFIT
PERIOD OF SALES ACRES PER ACRE (IN MILLIONS) (IN MILLIONS)
------ -------- --------- ------------- ----------------- -------------
2001 21 7,063 $1,657 $11.7 $10.5
2002 52 4,977 2,383 11.9 10.3
ST. JOE LAND COMPANY
YEAR-ENDED DECEMBER 31
NUMBER NUMBER OF AVERAGE PRICE GROSS SALES PRICE GROSS PROFIT
PERIOD OF SALES ACRES PER ACRE (IN MILLIONS) (IN MILLIONS)
------ -------- --------- ------------- ----------------- -------------
2001 128 26,549 $1,947 $51.7 $45.7
2002 176 28,071 1,820 51.1 44.1
RIVERCAMPS
Preliminary marketing for RiverCamps was initiated late in the fourth
quarter of 2002. RiverCamps are planned settlements in a rustic setting - each
designed to respond to the land's unique character.
A RiverCamp concept home is featured as HGTV's 2003 Dream Home in a
promotion running through mid February on Home & Garden Television (HGTV).
The HGTV 2003 Dream Home, located at a proposed RiverCamps site on East
Bay near Mexico Beach in Bay County, Florida, is the grand prize in a national
sweepstakes scheduled to be awarded later this spring. A web-based interactive
virtual tour, with 360-degree photography of the 2,800 square-foot Dream Home,
can be viewed at HGTV.com. HGTV has also aired a one-hour television program
featuring the RiverCamps concept home. The Dream Home was custom built by St.
Joe and sold to HGTV on January 7, 2003.
In addition, the RiverCamps HGTV Dream Home is the subject of a special
section in the January-February issue of Coastal Living magazine.
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 buyers need to enjoy the property to its fullest. Each RiverCamp is
envisioned as a one- to two-acre home site sold in fee-simple, surrounded by
lands to be preserved as conservation areas.
In the fourth quarter of 2002, the Bay County Board of Commissioners
approved a development agreement for RiverCamps on Crooked Creek, located in
western Bay County. Although a number of regulatory steps remain, this site is
expected to be the first RiverCamps location to have homes and home sites ready
for sale. Located on
Page 15
approximately 1,490 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, the RiverCamps on Crooked Creek feature
views of West Bay, the Intracoastal Waterway and Crooked Creek. While a number
of predevelopment steps remain, the parcel is entitled for up to 450 home sites.
Prices for home sites are expected to start at approximately $75,000 and range
upward to over $400,000. Completed RiverCamps, with a variety of floor plans
will be offered as well. Plans call for a wide range of RiverCamps homes
designed to meet a variety of family needs. RiverCamps homes are expected to be
typically from 1,800 to 2,400 square feet.
"This first RiverCamps site on Crooked Creek is located near one of
Northwest Florida's most beautiful bay systems," said Rummell. "The site
provides boating and fishing on both fresh and salt water with access to
hundreds of miles of waterways and the Gulf of Mexico. Plans call for home sites
and turnkey dwellings along and near the waterfront. A full menu of owner
services is now being developed."
"With miles of trails through an untouched wilderness, RiverCamps are
private, secure and secluded, yet only minutes from white-sand Gulf beaches,
shopping and golf," said Rummell.
Work continues on two other potential RiverCamps sites in Bay County.
One is the location of the HGTV Dream Home on the East Bay four miles from the
town of Mexico Beach. Planning and evaluation of the 10,600-acre parcel is
underway. The other site is also located on East Bay at Sandy Creek, where
preliminary planning work has also started.
CONSERVATION LAND
In 2002's fourth quarter, the company sold 8,924 acres of conservation
land for $24.3 million, or $2,723 per acre.
Conservation Land's pretax income from continuing operations for the
fourth quarter of 2002 was $22.9 million, compared with $3.3 million during the
fourth quarter of 2001. For the full year of 2002, Conservation Land had pretax
income of $30.1 million, compared with $22.3 million in 2001. Seven conservation
parcels, totaling 16,512 acres, were sold in 2002. For the year 2002,
conservation land sales averaged $1,999 per acre.
Currently, there is activity underway to sell, by year-end 2003, as
many as 10 additional parcels, totaling approximately 90,000 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.
Page 16
TABLE 5
CONSERVATION LAND SALES
YEAR ENDED DECEMBER 31, 2002
GROSS
SALES
QUARTER PRICE PRICE
SOLD PROJECT BUYER LOCATION ACREAGE (IN MILLIONS) PER ACRE
------- ------------------------- ------------------- ------------- ------- ------------- --------
1st Sweetwater Creek Ravines State of Florida Liberty County 7,008 $ 7.3 $1,035
2nd Aspalaga Bluffs - Nature Conservancy Gadsden County 501 1.2 2,445
Phase One
3rd Rare Plant Site Nature Conservancy Calhoun County 33 0.1 1,500
3rd TNC-ABRP Addition Nature Conservancy Liberty County 46 0.1 2,200
4th Logan Tract City of Jacksonville Duval County 2,518 6.5 2,601
4th Wakulla Springs Protection State of Florida Leon/Wakulla 3,739 7.6 2,033
Zone Counties
4th Bald Point State Park State of Florida Franklin County 2,667 10.2 3,825
Addition
------ ----- ------
Total/Average 16,512 $33.0 $1,999
====== ===== ======
COMMERCIAL REAL ESTATE
We are pleased with the results, progress and prospects of St. Joe
Commercial. During the fourth quarter of 2002, our Commercial Division sold two
office buildings, closed on the sale of 9 land parcels totaling 49 acres at an
average price of $163,000 per acre, and continued to build its pipeline of
future income. In addition, Advantis, St. Joe's Commercial Real Estate Services
Company, completed its third consecutive profitable quarter and enters 2003 with
a growing pipeline of business.
Pretax income from continuing operations for St. Joe Commercial, which
includes Advantis, totaled $4.5 million for the fourth quarter of 2002, compared
with $3.3 million in the same quarter of 2001. In the fourth quarter of 2001,
St. Joe Commercial had a pretax gain of approximately $5.7 million on the sale
of the IBM building in Boca Raton. For the full year 2002, St. Joe Commercial
had pretax income of $2.0 million, compared with $5.0 million for the full year
2001. Included in 2001 full year pretax income was a pretax gain of $4.4 million
on the sale of the NCCI Center, in addition to the $5.7 million pretax gain on
the sale of the IBM building .
Advantis Commercial Real Estate Services had pretax income of $0.8
million in the fourth quarter of 2002, compared to a loss of $(2.0) million in
the fourth quarter of 2001. For the full year 2002, Advantis has a pretax loss
of $(1.5) million, compared to a pretax loss of $(6.5) million in 2001, after
excluding profit of $1.3 million in 2002 and $0.9 million in 2001 relating to
inter-company transactions. "The new management team at Advantis is making great
strides," said Twomey. "With growing sales and leasing activity, new property
management, recruiting and staffing programs now in place, results are evident."
Page 17
"Fourth quarter commercial land sales in Northwest Florida increased
noticeably over prior periods in 2002," said Twomey. "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 is very difficult to predict."
"During 2002, St. Joe Commercial made significant progress in
establishing value for land for retail use in Northwest Florida," said Twomey.
"We have been able to push prices higher with retail parcels selling for $70,000
to $575,000 per acre on closed transactions in 2002. Since many retail users
have not yet recognized the advantages of this part of Florida, we believe there
is substantially more untapped potential for additional value and velocity."
"We also saw several significant commercial opportunities emerge from
our residential development activity in 2002," said Twomey. "SouthWood Village,
the retail center adjacent to SouthWood in Tallahassee, and WaterColor Crossing,
the retail center for WaterColor, are two examples of the linkage between
residential and commercial development that can create new value for JOE. We are
working to cycle development to take advantage of this relationship."
"St. Joe Commercial's commerce parks are designed for the needs of
light industrial users," said Twomey. "With master plans that push value away
from the frontage of major highways, we have added value to interior land, and
at the same time we improved traffic flows. But just as important, each of the
commerce parks has become a `landing zone' for jobs in their respective
communities."
Table 6 summarizes Florida commercial real estate sold by St. Joe
Commercial in 2002.
TABLE 6
ST. JOE COMMERCIAL
FLORIDA LAND SALES
QUARTER ENDED DECEMBER 31, 2002
AVERAGE
NUMBER OF GROSS SALES PRICE PRICE/ACRE
LAND SALES ACRES SOLD (IN THOUSANDS) (IN THOUSANDS)
------------- -------- ---------- ----------------- --------------
Unimproved 3 15 $1,264 $ 84
Improved 4 20 2,305 115
- -- ------ ----
Total/Average 7 35 $3,569 $102
= == ====== ====
ST. JOE COMMERCIAL
FLORIDA LAND SALES
YEAR ENDED DECEMBER 31, 2002
AVERAGE
NUMBER OF GROSS SALES PRICE PRICE/ACRE
LAND SALES ACRES SOLD (IN THOUSANDS) (IN THOUSANDS)
------------- -------- ---------- ----------------- --------------
Unimproved 5 44 $2,782 $ 63
Improved 8 27 2,636 98
-- -- ------ ----
Total/Average 13 71 $5,418 $ 76
== == ====== ====
Page 18
NORTHWEST FLORIDA
WaterColor Crossing
In the fourth quarter of 2002, St. Joe Commercial began development of
WaterColor Crossing, a commercial center in WaterColor. Also in the fourth
quarter, St. Joe and Publix Super Markets, Inc. announced an agreement to
develop a new full-service 28,800-square-foot super market in WaterColor
Crossing. Construction of the new super market is underway and is scheduled to
open in the fall of 2003. The new center has an additional 14,400 square feet of
retail space and three out-parcels for retail operations.
"WaterColor Crossing will enhance the WaterColor lifestyle," said
Rummell. "A super market and other nearby shopping will help make WaterColor a
true community where people live and build connections - not just a resort where
visitors come and go. It will provide the kind of convenience and service that
mark a permanent neighborhood."
WaterColor Crossing, intended to serve as a second town center, is
designed to the same architectural standards that exist throughout the
WaterColor community. It will include a tower icon similar to that of the Town
Center and the Inn. WaterColor Crossing will be easily accessible by foot,
bicycle and automobile and will connect to the WaterColor community by extra
wide walking/bike paths.
SouthWood Village
Construction of a new Publix Super Market is also underway at SouthWood
Village, a retail development within SouthWood. The 45,000-square-foot facility
is expected to open in the fall of 2003. Two additional retail parcels at
SouthWood Village were sold in the fourth quarter of 2002 and contracts were
accepted on four parcels. The remaining four retail parcels are being marketed
by Advantis.
"This new Publix Super Market is an important component of turning the
SouthWood vision into reality," said Twomey. "Community residents will now be
able to add convenient shopping to the many other amenities at SouthWood,
including easy access to outstanding schools, recreational opportunities and
employment. Publix adds yet another ingredient in making SouthWood a complete
community, a place where everything you need is within easy reach."
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. Designed as an economic development tool, the building is scheduled to be
completed in the third quarter of 2003.
"Economic development is one of our 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
Page 19
is an example of how this strategy is working. Today almost 400 people come to
work there everyday, only a year after the office park opened its doors."
Nextel
In the fourth quarter of 2002, St. Joe sold the 67,000-square-foot
Nextel building, located in the Beckrick Office Park in Panama City Beach, for
$8.1 million, a pretax gain to St. Joe of $1.9 million. The property is a
customer service facility for Nextel Partners, a leading provider of wireless
digital communications services in mid-sized and smaller markets throughout the
United States, and is affiliated with Nextel Communications, Inc. Nextel
currently employs more than 300 people at the Beckrich facility, and plans to
add another 300 jobs during 2003.
Advantis continues to manage the building for its new owner.
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 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, hotel and timeshare sites and 70 acres of highway
oriented commercial land.
Port St. Joe Commerce Center
In the fourth quarter of 2002, St. Joe Commercial broke ground on the
Port St. Joe Commerce Center. Also in the fourth quarter, the sale of the first
parcel in the park was closed and contracts were accepted on 4 additional
parcels. By the end of the fourth quarter, thirty-one percent of the lots in the
park, representing 16 acres on 5 parcels, were either sold, or under contract
for sale, at an average price per acre of $23,685. The park, designed for small
and mid-sized businesses, has 57 net saleable acres. Horizontal construction is
slated for completion in the first quarter of 2003.
"This new commerce center is a part of JOE's long standing efforts to
support economic development in Gulf County and to stimulate the creation of a
more diverse job base," said Twomey. "We are very pleased with the value that is
being created at this commerce park for shareholders, but also for the Port St.
Joe community."
Airport Commerce Center
Construction is underway on the Airport Commerce Center in Tallahassee
with approximately 26 parcels with 40 net saleable acres. Prices start at
$76,000 per acre. The park is well-located on Tallahassee's Capital Circle near
the airport in an industrial part of the city.
Page 20
Beach Commerce Center
Since 2000, St. Joe Commercial has sold over 30 acres for a total of
$1.5 million, for an average sales price of $50,000 per acre. In the fourth
quarter of 2002, St. Joe Commercial accepted contracts on two additional parcels
within the park at an average price of $62,500 per acre.
Advantis is marketing the parcels that total 165 net saleable acres to
light industrial and warehouse users for prices from $60,000 to $100,000 per
acre for interior lots and up to $435,000 per acre for lots fronting on US 98.
Interior lot pricing originally started at $45,000 per acre when the park opened
in 2001.
South Walton Commerce Center
On October 8, 2002, the Walton County Commission approved transmittal
of a Comprehensive Plan Amendment for the South Walton Commerce Center to the
Florida Department of Community Affairs for state review. The proposed light
industrial park, located on US 98, is being designed with approximately 24
parcels totaling 85 net saleable acres. There are a number of additional
entitlement steps required before infrastructure construction can begin.
NORTHEAST FLORIDA
245 Riverside
Construction is nearing completion for a 140,000-square-foot office
project at 245 Riverside Avenue in Jacksonville, just south of the central
business district. When complete, St. Joe will relocate its corporate
headquarters to the new, five-story building and occupy approximately 36,000
square feet. One other lease has been executed for 14,000 square feet. The
remaining 86,000 square feet, is being marketed by Advantis. The building is
expected to be ready for occupancy in the spring of 2003.
Tree of Life at Golfway Center
Late in the fourth quarter, St. Joe Commercial sold the
69,000-square-foot Tree of Life building located in St. Augustine for $9.1
million, for a pretax gain of $1.2 million. This build-to-suit property is the
U.S. headquarters for Tree of Life, a leading distributor of natural, specialty
and organic foods in the United States and Canada. The building is located
within Golfway Center, a 27.6-acre master planned office and retail park
developed by St. Joe Commercial, ten miles south of Jacksonville.
Advantis continues to manage the building for its new owners.
Page 21
LAND POSITIONS OUTSIDE OF FLORIDA
Throughout the year, St. Joe continued to reduce its land positions
outside of Florida.
In 2002, St. Joe Commercial sold 19.5 acres of Texas real estate for a
pretax gain of $253,000. The entire original Dallas land position has now been
sold. The company has 34 acres remaining to be sold in Houston. The company has
an additional 29 acres of commercial land outside of Florida, all of it for
sale.
"We continue to execute our strategy to monetize our non-Florida land
positions," said Twomey.
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.
On December 13, 2002, St. Joe Commercial acquired a fourteen-story,
275,000- square-foot office building on 6.2 acres in Atlanta as part of the
capital deployment program. The building is currently 96 percent leased. In
addition, Beckrich Office One in Panama City Beach was purchased in the fourth
quarter of 2002. Advantis will continue to lease and manage these properties.
St. Joe's portfolio of commercial office buildings, acquired through
the capital redeployment program, approximates 1.6 million square feet and
represents an aggregate investment of approximately $220 million.
TABLE 7
INVESTMENT PROPERTY PORTFOLIO
DECEMBER 31, 2002
NUMBER OF NET RENTABLE LEASED
LOCATION PROPERTIES SQUARE FEET PERCENTAGE
-------------- ---------- ------------ ----------
Florida
Tampa 5 476,000 80%
Orlando 2 313,000 69%
Other 2 134,000 87%
Atlanta 2 401,000 87%
Washington, DC 2 271,000 96%
-- --------- ---
Total 13 1,595,000 83%
== ========= ===
ST. JOE TIMBERLAND COMPANY
Pretax income from continuing operations for the forestry segment
totaled $2.0 million for the fourth quarter of 2002, compared with $1.3 million
in the respective 2001
Page 22
period. For the year 2002, pretax income was $8.0 million compared to $9.0
million in 2001. "Harvesting operations at St. Joe Timberland are being held to
a relatively conservative level while pulp and timber prices are at low levels,"
said Twomey.
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 income of $35.4 million in the
fourth quarter of 2002, compared with expense of $(3.4) million in the
respective 2001 period.
In the fourth quarter of 2002, $38.2 million of the other income was
due to the pretax gain on the sale of derivatives associated with the
forward-sale of securities.
TABLE 8
OTHER INCOME (EXPENSE)
($ IN MILLIONS)
YEAR-ENDED YEAR-ENDED QUARTER-ENDED QUARTER-ENDED
DEC. 31, 2002 DEC. 31, 2001 DEC. 31, 2002 DEC. 31, 2001
------------- ------------- ------------- -------------
Dividend and interest $ 2.9 $ 5.1 $ 0.2 $ 1.2
Interest expense (17.0) (17.3) (3.2) (5.5)
(Loss) gain on valuation (0.9) 4.0 0.1 0.5
of derivatives
Gain on sale of derivatives 132.9 -- 38.2 --
Other 2.7 2.4 0.1 0.4
------ ------ ----- -----
Total $120.6 $ (5.8) $35.4 $(3.4)
====== ====== ===== =====
PENSION PLAN
At year-end 2002, the St. Joe Pension Plan (Plan) was over-funded by
approximately $76.0 million.
"The Plan contributed $8.0 million to pretax income in 2002 as a result
of its significantly over-funded status," said Twomey. "In 2003, the pretax
contribution from the Plan is expected to be significantly lower, as a result of
lower Plan balances and changed Plan assumptions. During 2002, the company
reduced the Plan's actuarial assumption for expected return to 8.5 percent. The
Plan's discount rate will be lowered from 7.25 percent in 2002 to 6.5 percent in
2003."
Page 23
TABLE 9
CASH AND DEBT SCHEDULE
($ IN MILLIONS)
DECEMBER 31, 2002 DECEMBER 31, 2001
----------------- -----------------
Cash $ 73.3 $ 40.9
====== ======
Debt
Revolving debt facility $ -- $205.0
Medium term notes 175.0 --
Acquisition and other debt 4.0 4.6
Minimum liability on forward-sale of equity securities -- 131.2
Other collateralized/specific asset related debt 141.9 157.2
------ ------
Total Debt $320.9 $498.0
====== ======
Page 24
TABLE 10
RECONCILIATION OF NET INCOME TO EBITDA
($ IN MILLIONS)
YEAR-ENDED YEAR-ENDED QUARTER-ENDED QUARTER-ENDED
DEC. 31, 2002 DEC. 31, 2001 DEC. 31, 2002 DEC. 31, 2001
------------- ------------- ------------- -------------
Net income $174.4 $ 70.2 $ 55.3 $ 18.8
Plus:
Income tax expense 91.1 42.3 29.6 10.9
Depreciation and amortization 23.8 29.6 6.5 8.0
Interest expense 23.7 22.1 6.0 6.9
Other 2.6 2.0 0.5 0.5
Less:
(Gain) loss on derivatives valuation 0.9 (4.0) (0.1) (0.5)
Gain on derivatives sales (132.9) -- (38.2) --
(Gain) loss on sales of other assets 0.2 -- 0.6 --
(Gain) loss on sale of ARS, net of
tax (20.7) -- -- --
------ ------ ------ ------
EBITDA* $163.1 $162.2 $ 60.2 $ 44.6
====== ====== ====== ======
EBITDA from conservation land 30.1 22.3 22.9 3.4
------ ------ ------ ------
EBITDA excluding conservation land $133.0 $139.9 $ 37.3 $ 41.2
====== ====== ====== ======
RECONCILIATION OF NET INCOME PER DILUTED SHARE
TO EBITDA PER DILUTED SHARE
($ IN MILLIONS)
YEAR-ENDED YEAR-ENDED QUARTER-ENDED QUARTER-ENDED
DEC. 31, 2002 DEC. 31, 2001 DEC. 31, 2002 DEC. 31, 2001
------------- ------------- ------------- -------------
Net income per diluted share $ 2.14 $ 0.83 $ 0.70 $ 0.23
Plus:
Income tax expense 1.12 0.50 0.37 0.13
Depreciation and amortization 0.29 0.35 0.08 0.10
Interest expense 0.29 0.26 0.08 0.08
Other 0.03 0.02 0.01 0.01
Less:
(Gain) loss on derivatives 0.01 (0.04) -- (0.01)
valuation
Gain on derivatives sales (1.63) -- (0.48) --
(Gain) loss on sales of other assets 0.01 -- -- --
(Gain) loss on sale of ARS, net of tax (0.25) -- -- --
---------- ---------- ---------- ----------
EBITDA per diluted share $ 2.01 $ 1.92 $ 0.76 $ 0.54
========== ========== ========== ==========
EBITDA per diluted share from
conservation land 0.38 0.26 0.29 0.04
---------- ---------- ---------- ----------
EBITDA per diluted share excluding
conservation land $ 1.63 $ 1.66 $ 0.47 $ 0.50
========== ========== ========== ==========
Weighted average diluted shares
outstanding 81,340,615 84,288,746 79,115,809 82,859,821
* EBITDA is defined as earnings before interest expense, income taxes,
depreciation and amortization and is net of the effects of minority
interests. EBITDA excludes gains from the sale of discontinued operations
except for gains (losses) for sales of assets which are classified as
discontinued operations under the provisions of FAS 144 and are sold in the
normal course of business. EBITDA also excludes gains on sales of
non-strategic lands and other assets. EBITDA is considered a key financial
measurement in the industries in which the company operates.
Page 25
TABLE 11
CONSOLIDATED QUARTERLY COMPARISONS
(AS REPORTED)
($ IN MILLIONS EXCEPT PER-SHARE AMOUNTS)
Year-to-Date Year-to-Date Quarter-Ended Quarter-Ended
December 31 December 31 December 31 December 31
2002 2001 2002 2001
------------ ------------- ------------- ------------
Total revenues $ 646.4 $ 590.9 $ 226.7 $ 177.4
Operating expenses 474.6 449.9 163.4 138.4
Depreciation and amortization 22.8 21.2 6.5 6.0
Corporate expenses (1) 27.5 18.9 6.9 3.8
------------ ------------ ------------ ------------
Operating profit 121.5 100.9 49.9 29.2
Other income (expense) 120.6 (5.8) 35.4 (3.4)
------------ ------------ ------------ ------------
Income before taxes and minority interest 242.1 95.1 85.3 25.8
Income tax expense (89.6) (35.4) (29.6) (9.2)
Minority interest (1.3) (0.5) (0.4) (0.5)
Discontinued operations, net of income taxes 23.2 11.0 -- 2.7
------------ ------------ ------------ ------------
Net income $ 174.4 $ 70.2 $ 55.3 $ 18.8
============ ============ ============ ============
Net income per diluted share $ 2.14 $ 0.83 $ 0.70 $ 0.23
============ ============ ============ ============
Net income excluding gain on settlement of
forward-sale contracts(2) $ 88.0 $ 70.2 $ 30.4 $ 18.8
============ ============ ============ ============
Net income per diluted share excluding gain
on settlement of forward-sale contracts $ 1.08 $ 0.83 $ 0.38 $ 0.23
============ ============ ============ ============
Net income excluding gain on settlement of
forward-sale contracts and conservation
land $ 69.5 $ 56.4 $ 16.4 $ 16.8
============ ============ ============ ============
Net income per diluted share excluding gain
on settlement of forward-sale contracts and
conservation land $ 0.85 $ 0.67 $ 0.21 $ 0.20
============ ============ ============ ============
EBITDA $ 163.1 $ 162.2 $ 60.2 $ 44.6
============ ============ ============ ============
EBITDA per diluted share $ 2.01 $ 1.92 $ 0.76 $ 0.54
============ ============ ============ ============
EBITDA excluding conservation land $ 133.0 $ 139.9 $ 37.3 $ 41.2
============ ============ ============ ============
EBITDA per diluted share excluding
conservation land $ 1.63 $ 1.66 $ 0.47 $ 0.50
============ ============ ============ ============
Weighted average diluted shares outstanding 81,340,615 84,288,746 79,115,809 82,859,821
(1) Includes net expenses of approximately $1.5 million associated with the
second quarter sale of 8.05 million shares by the Trust.
(2) During 2002, the company recorded pretax gains of $132.9 million ($86.4
million net of taxes) resulting from the settlement of the forward-sale
contracts.
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TABLE 12
QUARTERLY SEGMENT INCOME BEFORE
TAXES AND MINORITY INTEREST
($ IN MILLIONS)
Dec 31, Sept 30, June 30, March 31, Dec 31, Sept 30, June 30, March 31,
2002 2002 2002 2002 2001 2001 2001 2001
------ -------- -------- --------- ------- -------- ------- ---------
Community residential real
estate $ 19.7 $ 21.4 $ 22.2 $ 9.4 $ 16.8 $ 14.1 $ 10.3 $ 7.3
Commercial real estate 4.5 (1.1) (0.6) (0.9) 3.3 (0.9) 3.9 (1.2)
St. Joe Land 30.7 8.6 10.5 18.4 12.5 15.8 21.1 14.4
Forestry 2.0 1.7 2.3 1.9 1.3 1.6 2.9 3.2
Transportation (0.7) (1.7) (0.5) (0.6) (0.9) (0.8) (0.9) (0.8)
Hospitality (0.4) (0.3) (0.3) 0.4 -- 0.1 -- (0.1)
Corporate and other 29.5 (9.1) (12.9) 87.9 (7.0) (10.3) (5.2) (5.3)
------ ------ ------ ------ ------ ------ ------ ------
Income from continuing
operations before income
taxes and minority interest $ 85.3 $ 19.5 $ 20.7 $116.5 $ 26.0 $ 19.6 $ 32.1 $ 17.5
====== ====== ====== ====== ====== ====== ====== ======
St. Joe will host an interactive conference call to review the
company's results for the fourth quarter and for the year that ended December
31, 2002 on Tuesday, February 4, 2003, at 10:00 AM Eastern Standard Time.
To participate in the call, please phone 800.230.1085 (for domestic
calls from the United States) or 612.332.0342 (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
670626.
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.
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, hospitality, leisure 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",
Page 27
"expect", "plan" or similar expressions in this Report. 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 and price of anticipated land sales;
-- estimated land holdings for a particular use within a specific
timeframe;
-- 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, which
speak only as of the date made.
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 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;
-- 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.
Additional risk factors are described in our other periodic reports
filed with the SEC, including our Annual Report on Form 10-K/A for the
year ended December 31, 2001 and a Prospectus dated June 17, 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.
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