Edgar Filing: ST JOE CO

THE ST. JOE COMPANY

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K


(Mark One)
þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the fiscal year ended December 31, 2003

or

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the transition period from to

Commission File No. 1-10466

The St. Joe Company

(Exact name of registrant as specified in its charter)


Florida (State or other jurisdiction of incorporation or organization)		59-0432511 (I.R.S. Employer Identification No.)

245 Riverside Avenue, Suite 500 Jacksonville, Florida (Address of principal executive offices)		32202 (Zip Code)

Registrant’s telephone number, including area code: (904) 301-4200

Securities Registered Pursuant to Section 12(b) of the Act:


Title of Each Class		Name of Each Exchange on Which Registered

Common Stock, no par value		New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. YES þ NO o

Indicate by check mark if disclosure of delinquent filers pursuant to item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). YES þ NO o

The aggregate market value of the registrant’s Common Stock held by non-affiliates based on the closing price on June 30, 2003 was approximately $1.52 billion.

As of March 10, 2004, there were 101,170,081 shares of Common Stock, no par value, issued and 75,930,545 shares outstanding with 25,239,536 shares of treasury stock.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s definitive Proxy Statement for the Annual Meeting of Shareholders to be held on May 18, 2004 (the “proxy statement”) are incorporated by reference in Part III of this Report. Other documents incorporated by reference in this Report are listed in the Exhibit Index.


Item 1.	*Business*

As used throughout this Form 10-K Annual Report, the terms “we,” “JOE,” “Company” and “Registrant” mean The St. Joe Company and its consolidated subsidiaries unless the context indicates otherwise.

JOE is one of Florida’s largest real estate operating companies and the largest private landowner in the State of Florida. The majority of our land is located in Northwest Florida. We own approximately 850,000 acres, which is approximately 2.4% of the land area of the State of Florida. Our acreage includes hundreds of miles of frontage on the Gulf of Mexico, bays, rivers and waterways, with nearly 40 miles of Gulf of Mexico coastline, including 5 miles of beachfront. Approximately 387,000 acres of our land are within ten miles of the coast.

We are engaged in community and resort development, commercial and industrial land sales, and commercial real estate services. We also have significant interests in timber. We believe we are one of the few real estate operating companies to have assembled the range of real estate, financial, marketing and regulatory expertise necessary to take a large-scale approach to real estate development and services.

Our four operating segments are:


	•	Community Development

	•	Commercial Real Estate Development and Services

	•	Land Sales

	•	Forestry

In order to optimize the value of our core real estate assets in Northwest Florida, our strategic plan calls for us to continue to reposition our timberland holdings for higher and better uses. We believe we have a number of key business strengths and competitive advantages, including one of the largest inventories of private land suitable for development in the State of Florida, a very low cost basis in our land and a strong financial condition, which allow us the financial flexibility to pursue development opportunities.

Recent Developments

In 2003, our business experienced the following developments:


	•	Beginning in September, we converted to quarterly dividend distributions of $.12 per share. We paid a total of $0.32 per share in dividends for the year. We paid an annual dividend of $0.08 per share in 2000, 2001 and 2002.

	•	We acquired 3,367,976 shares of our common stock for a total of $102.9 million.

	•	The Alfred I. duPont Testamentary Trust (the “Trust”) sold an aggregate of 11 million shares to the public, decreasing the ownership of our common stock by the Trust and its beneficiary, The Nemours Foundation, to 31.5% on December 31, 2003.

	•	We acquired the 26% minority interest in St. Joe/ Arvida Company, L.P., and resolved claims regarding our ownership of the “Arvida” trademark.

In February 2004:


	•	Our board of directors authorized an additional $150 million for stock repurchases. At December 31, 2003, $43.2 million remained of our prior stock repurchase authorization.

	•	The Trust sold an additional 6 million shares to the public, further decreasing the ownership of our common stock by the Trust and The Nemours Foundation to 23.6% at the closing of the offering on February 13, 2004.

Community Development

Our Community Development segment develops large-scale, mixed-use communities primarily on land that we have owned for a long period of time. We own large tracts of land in Northwest Florida, including large tracts near Tallahassee, the state capital, and significant Gulf of Mexico beach frontage and waterfront properties, which we believe are suited for primary housing, resort and second-home communities. We believe this large, established land inventory, with a low cost basis, provides us an advantage over our competitors who must purchase real estate at current market prices before beginning projects. We manage the conceptual design, planning and permitting process for each of our new communities. We then construct or contract for the construction of the infrastructure for the community. Developed homesites and finished housing units are then marketed and sold.

In addition, we own all of the outstanding stock of Saussy Burbank, a homebuilder located in Charlotte, North Carolina. In 2003, Saussy Burbank closed sales of 555 homes it constructed in North and South Carolina.

The following table describes the primary residential or resort communities we are currently planning and developing in Florida. The expected build-out period for these communities ranges from 2004 to 2017 and the total acreage encompassed by these communities is approximately 17,700 acres. Most of the communities are on lands we own. We expect some of the communities to be developed through ventures with unrelated third parties. In addition to the properties listed in the table, we are developing in Florida the communities of Paseos, located in Palm Beach County, and Rivercrest, located in Hillsborough County, through joint ventures. These communities encompass approximately 207 and 413 acres, respectively, with build-out expected in 2006 and 2008, respectively.

Residential or Resort Communities Under Development

December 31, 2003


									Unit***
	Year			Planned					Sales as of		Contracts on		Approximate		Company-
	Sales			Sales End			Estimated Total		December 31,		Hand (not		Acres in		Built House
Name of Community	Begin*			Date			Units Planned		2003		closed)		Community		Pricing		Lot Pricing

															(In thousands)		(In thousands)
Walton County:
WaterColor		2000			2007			1140		717		85		499	$	400-1000+	$	150-1000+
WaterSound Beach		2001			2007			499		293		62		256	$	500-1000+	$	200-1000+
WaterSound		2005			2012			1060		0		0		1443	$	325-600+	$	100-265+
East Lake Powell		2007			2010			360 entitled		0		0		181	$	400-600+	$	100-200+
Camp Creek Golf Club		TBD	**		TBD	**		50		0		0		1028		TBD**		TBD**
Bay County:
Hammocks		2000			2007			459		232		44		143	$	100-180+	$	30-40+
Palmetto Trace		2001			2008			523		192		61		138	$	105-200+		—
Wavecrest		2005			2007			88		0		0		6		TBD**		TBD**
Gulf County:
WindMark Beach, phase 1		2001			2006			110		100		0		80	$	950	$	90-900+
WindMark Beach, phase 2		2005			2015			1550		0		0		2000	$	315-1,000+	$	200-1,000+
Capital Region:
SouthWood		2000			2017	*		4770 per DRI		588		116		3770	$	115-400+	$	40-150+
SummerCamp		2004			2012			499		0		0		782	$	450-900+	$	150-800+


								Unit***
	Year		Planned					Sales as of		Contracts on		Approximate		Company-
	Sales		Sales End			Estimated Total		December 31,		Hand (not		Acres in		Built House
Name of Community	Begin*		Date			Units Planned		2003		closed)		Community		Pricing		Lot Pricing

														(In thousands)		(In thousands)
Jacksonville:
James Island		1999		2004			365		359		7		194	$	220-400+
St. Johns Golf and County Club		2001		2006			799		519		88		820	$	180-400+	$	30-125+
RiverTown		2000		2015			4500		23		0		4200	$	125-400+	$	55-400+
Hampton Park		2001		2005			158		130		44		150	$	235-400+		—
Central Florida:
Victoria Park		2001		2012	+		Over 4000 per DRI		359		87		1859	$	140-300+	$	45-100+
Artisan Park,
Celebration		2003		2008			616		57		47		160	$	225-400+	$	100-140+

Total													17,709


*	Includes estimated future dates.

**	To be determined.

***	Units are comprised of lots and single-family and multi-family residences.

The following is a more detailed description of some of the above communities:

WaterColor is situated on approximately 499 acres on the beaches of the Gulf of Mexico in south Walton County, Florida. All three phases of WaterColor have been approved under Florida’s Development of Regional Impact (“DRI”) permitting process as well as state and federal environmental permits. We are building homes and condominiums and selling developed homesites in WaterColor. At full build-out, the community is planned to include approximately 1,140 units, a beach club, tennis center, boat house, restaurant on an inland freshwater lake, and a 60-room inn and restaurant, commercial space and parks. Among the amenities now open are the beach club and several community pools, the boat house, a fitness center, the Fresh Daily Market, the tennis facility, the WaterColor Inn and Fish Out of Water restaurant. Infrastructure construction in phase three began in 2003 and is planned to include a community pool and a community center.

WaterSound Beach is located approximately four miles east of WaterColor. Situated on approximately 256 acres, WaterSound Beach includes over one mile of beachfront on the Gulf of Mexico. This community is currently planned to include approximately 499 units. Eighty-one beachfront multi-family units were substantially completed in 2003.

WaterSound is located east of WaterSound Beach with frontage on Lake Powell. This project is situated on approximately 1,440 acres. On October 7, 2003, the Walton County Board of Commissioners approved the Application for Planned Unit Development enabling development of 478 residential units along with 35,000 square feet of commercial space. Including the amount above, the plan for WaterSound calls for approximately 1,060 residential units, 470,000 square feet of commercial space and a golf course. The DRI process for that project commenced in early 2003 and is expected to continue through 2004.

Camp Creek Golf Club is located approximately four miles east of WaterColor and within one-half mile of WaterSound. Plans include 36 holes of golf. The first 18-hole golf course, designed by Tom Fazio, was opened for play in May 2001.

East Lake Powell is situated on approximately 181 acres in Bay County, Florida. Preliminary design for the first phase of East Lake Powell calls for approximately 200 residential units.

WindMark Beach is situated on approximately 2,000 acres in Gulf County, Florida, and includes approximately 15,000 feet of beachfront that we own. Phase I of WindMark Beach, situated on approximately 80 acres, includes approximately 110 homesites, many of which are located on the beachfront. Future phases are planned to include approximately 1,550 units. Significant progress on the

DRI process is expected by mid-2004. Plans also include the realignment of approximately four miles of US Highway 98. Field survey work and project engineering and design of the relocated road are ongoing.

SouthWood is situated on approximately 3,770 acres in southeast Tallahassee, Florida. Plans for SouthWood include approximately 4,250 residential units and a traditional town center with restaurants, entertainment facilities, retail shops and offices. Over 35% of the land is designated for greenspaces, including a 123-acre central park. Certain regulatory approvals are required prior to commencing development on phases of construction that begin in the 2006-2007 timeframe. Two schools opened in SouthWood in the fall of 2001: Florida State Development Research School, a university laboratory school for grades K-12, and the Pope John Paul II Catholic Academy, a private parochial school for grades 9-12. In November 2002, the new Fred Couples designed 18 hole golf course opened for play.

SummerCamp, in Franklin County, Florida, is situated on approximately 782 acres. Current plans include approximately 499 units, a beach club, a community dock and nature trails. Several regulatory steps remain before construction can commence.

St. Johns Golf and Country Club is situated on approximately 820 acres acquired by the Company in St. Johns County, Florida, in 2001. The community is planned to include a total of approximately 799 housing units and an 18-hole golf course. Most homes will be adjacent to golf, conservation land, lakes, or natural wooded areas.

RiverTown is situated on approximately 4,200 acres located in St. Johns County, Florida, south of Jacksonville along the St. Johns River. A Comprehensive Plan Amendment and DRI were approved for RiverTown by the St. Johns County Board of Commissioners in February 2004; a number of regulatory steps remain before construction can commence.

Victoria Park is located in Volusia County in central Florida. Victoria Park is situated on approximately 1,859 acres being acquired by the Company near Interstate 4 in Deland, Florida between Daytona Beach and Orlando, Florida. Plans for Victoria Park include approximately 4,000 single and multi-family units with a traditional town center and an 18-hole golf course which is open for play.

Artisan Park is located in Celebration, Florida near Orlando and is being developed through a joint venture in which we own 74%. The phase of the project we are developing is situated on approximately 160 acres which we acquired in 2002. Current plans include approximately 267 single-family units, 47 townhomes, and 302 condominiums as well as parks, trails, and a community clubhouse with a pool and educational and recreational programming.

Several of our planned developments are in the midst of the entitlement process or are in the planning stage. We cannot assure you that:


	•	the necessary entitlements for development will be secured;

	•	any of our projects can be successfully developed, if at all; or

	•	our projects can be developed in a timely manner.

It is not feasible to estimate project development costs until entitlements have been obtained. Large-scale development projects can require significant infrastructure development costs and may raise environmental issues that require mitigation.

We own approximately 26% of the outstanding limited partnership interests in Arvida/ JMB Partners, L.P. (“Arvida/ JMB”). The partnership developed the master-planned community known as Weston located in Broward County, Florida. The final home in this project was delivered in the first half of 2003. The winding-up of the affairs of the partnership is expected to take two or more years. Based on current expectations, we do not anticipate any material future income or losses from our investment in Arvida/JMB.

Commercial Real Estate Development and Services

Our Commercial Real Estate Development and Services segment develops and sells real estate for commercial purposes. We also own and manage office, industrial and retail properties throughout the southeastern United States. Through the Advantis business unit, we provide commercial real estate services, including brokerage, property management and construction management.

Development & Sales. We focus on development in Northwest Florida because of our large land holdings along roadways and near or within business districts in the region. We also develop parcels within or near existing Community Development projects. For each new development, we direct the conceptual design, planning and permitting process and then contract for the construction of the horizontal infrastructure and any vertical building.

We develop and sell properties focused on the following products:


	•	Retail properties

	•	Mutifamily parcels

	•	Office parks

	•	Commerce or small business parks

Many of our projects are mixed-use in nature due to the large size of the land parcels that we own. The following table shows our mixed-use projects in the Northwest Florida region.

Mixed-Use Projects

December 31, 2003


					Net		Acres
			Year Sales		Saleable		Sold/Under
Project	Product Type	Market	Commence*		Acres		Contract

Beckrich Office Park	Office	Bay County		2002		24		8
Southwood Village	Retail (grocery)	Leon County		2002		22		14
East Lake Creek	Retail/ Multifamily	Bay County		2003		159		45
Highland Commons	Retail/ Multifamily	Bay County		2003		111		14
Pier Park	Retail (mixed-use)	Bay County		2003		127		24
Southwood Business Park	Retail/ Office	Leon County		2003		16		3
WaterColor Crossing	Retail (grocery)	Walton County		2003		9		7
Southwood Town Center	Retail/ Office	Leon County		2005		5		0
Topsail	Retail/ Multifamily	Walton County		2005		105		0

Total						578		115


*	Includes estimated future dates.

The table below summarizes the status of JOE commerce parks throughout Northwest Florida at December 31, 2003.

Commerce Parks

December 31, 2003


					Acres
			Net Saleable		Sold/Under		Current Asking Price
Commerce Parks		County	Acres		Contract		Per Acre

Existing
Beach Commerce		Bay		161		69		$ 65,000 - 435,000
Port St. Joe		Gulf		58		43		$ 45,000 - 50,000
Airport Commerce		Leon		40		—		$ 75,000 - 260,000
Nautilus Business Park		Bay		12		1		$300,000 - 375,000
Hammock Creek		Gadsden		114		24		$ 40,000 - 150,000
Predevelopment
South Walton County		Walton		42		—		$125,000 - 435,000
Beach Commerce II		Bay		140		—		$ 75,000 - 80,000
Cedar Grove		Bay		150		—		$ 35,000 - 45,000
Port St. Joe II		Gulf		45		—		$ 35,000 - 45,000
Apalachicola Commerce		Franklin		50		—		$ 30,000 - 35,000

	Total			812		137

Investment/Development Portfolios. Our commercial development operations, combined with our tax deferral strategy of reinvesting qualifying asset sale proceeds into like-kind properties, have enabled us to create a portfolio of rental properties totaling 2.9 million square feet. As the table below shows, our portfolios of investment and development properties were 86% and 70% leased, respectively, based on net rentable square feet, as of December 31, 2003.

Commercial Rental Properties

December 31, 2003


							Number		Net
Investment					Ownership		of		Rentable		Leased
Property Portfolio*		Dated Acquired		Market	Percentage		Buildings		Sq. Ft.		Percentage

Prestige Place			December-99	Clearwater, FL		100		2		144,000		86
Harbourside			December-99	Clearwater, FL		100		1		147,000		92
Lakeview			May-00	Tampa, FL		100		1		125,000		77
Palm Court			July-00	Tampa, FL		100		1		60,000		68
Westside Corporate Center			October-00	Plantation, FL		100		1		100,000		86
280 Interstate North			January-01	Atlanta, GA		100		1		126,000		71
Southhall Center			April-01	Orlando, FL		100		1		155,000		88
1133 20th Street, N.W.			September-01	Washington, D.C.		100		1		119,000		99
1750 K Street			December-01	Washington, D.C.		100		1		152,000		90
Millenia Park One			December-99	Orlando, FL		100		1		158,000		68
Beckrich Office One			October-02	Panama City Beach, FL		100		1		34,000		96
5660 New Northside			December-02	Atlanta, GA		100		1		272,000		91
SouthWood Office One			June-03	Tallahassee, FL		100		1		88,000		73
Crescent Ridge One			August-03	Charlotte, NC		100		1		158,000		100
Windward Plaza			November-03	Atlanta, GA		100		3		465,000		89

	Total							18		2,303,000		86%


							Number		Net
Development					Ownership		Of		Rentable		Leased
Property Portfolio*		Date Completed		Market	Percentage		Buildings		Sq. Ft.		Percentage

TNT Logistics			February-02	Jacksonville, FL		100		1		99,000		83
245 Riverside			April-03	Jacksonville, FL		100		1		134,000		39
Alliance Bank Building			N/A	Orlando, FL		50		1		71,000		61
Deerfield Commons One			April-00	Atlanta, GA		40		1		122,000		77
Westchase Corporate Center			August-99	Houston, TX		93		1		184,000		94
Beckrich Office Two			November-03	Panama City Beach, FL		100		1		34,000		20

	Total							6		644,000		70%


*	Investment properties are completed office buildings that we have acquired. Development properties are office buildings we have developed.

Other Assets. We have investments in certain other assets including land positions that are held for investment and investments in real estate ventures. It is generally our intent to sell these assets over time

at market prices. The land positions total approximately 111 acres and are located in Florida, Georgia, Northern Virginia and Texas. Our investments in real estate ventures include investments in land and buildings located in Florida, Georgia and Texas and an investment in a full-service real estate company located in South Florida.

Services. We provide commercial real estate services in the southeastern United States through Advantis. Advantis provides our clients with a complete array of services, including:


	•	brokerage;

	•	property management; and

	•	construction management.

We provide property management services for projects owned by us and others. We generally receive a property management fee based on the gross rental revenues of a managed project or building or on a fixed-fee basis. The table below summarizes, by state and by type of property, the approximately 26.6 million rentable square feet of property we manage.

Properties Managed

December 31, 2003


	Rentable
State	Square Feet

Georgia		1,768,485
Washington, D.C		271,086
Virginia		8,974,239
Maryland		2,936,832
North Carolina		3,238,393
Florida		9,419,296


	Rentable
Type of Property	Square Feet

Office property		13,699,735
Industrial property		5,538,336
Retail property		3,602,025
Facilities management		2,186,374
Asset management		1,416,439
Residential property		165,422

Land Sales

Our Land Sales segment markets parcels typically between one and 5,000 acres from a portion of our long-held timberlands in Northwest Florida. This land includes forests and meadowlands, some with frontage on rivers, lakes and bays. These parcels are being marketed as large secluded home sites as well as for plantations, ranches, farms, hunting and fishing preserves or for other recreational uses.

In 2003, our Land Sales segment closed 166 transactions totaling 29,904 acres.

We believe there is an opportunity to create additional value on more than 500,000 acres of our original timberland that is not included in our current development plans. This value creation results from market analysis, land use/zoning changes, and parceling of our land holdings. We have embarked upon a five-year program seeking additional entitlements and zoning improvements throughout our land holdings. These entitlements are intended to facilitate alternative uses of our property and to increase its per acre value. The vast majority of the holdings marketed by our Land Sales segment will continue to be managed as timberland until sold.


	*RiverCamps*

We recently introduced a new product called RiverCamps. These are planned developments in rustic settings, supplemented with amenities that may include docks, pools, tennis courts and community river houses. Most of the lots in these developments are expected to be located on or near waterfront property. The RiverCamps concept envisions homesites and high-quality finished cabins in low-density settings with access to various outdoor activities such as fishing, boating, hiking and horseback riding.

The first of potentially several RiverCamp developments is RiverCamps on Crooked Creek, situated on approximately 1,490 acres of our timberland in western Bay County, Florida and bounded by West Bay, the Intracoastal Waterway and Crooked Creek. In the fourth quarter of 2003, contracts for all 23 home sites of the first release at RiverCamps on Crooked Creek closed at an average price of $150,000. Future releases of home sites for sale are expected in 2004.

Planning and evaluation of a 7,200-acre parcel located on Sandy Creek in Bay County, Florida is underway. The HGTV 2003 Dream Home, a RiverCamp concept home, is located across the bay from this parcel.

Additional RiverCamps locations are actively being reviewed in other parts of Northwest Florida.


	*Ranches*

Work continued in 2003 on the launch of St. Joe Ranches, a new real estate product designed to transform what were once timberlands to higher and better uses. Ranches are for customers who want to own 10 to 150 acres, with controls on how the property around them is used. This product is initially being planned in rural settings in Leon, Wakulla and Gadsden Counties. These sites will benefit from proximity to Tallahassee and the agricultural and recreational nature of adjoining properties.

Project improvements may generally include clearing, fencing, road stabilization and entry features. Each ranch product is to be sold with common restrictions designed to promote a sense of community as each owner finishes their property. Additional land management services will be available to ranch owners on a separate fee basis. Prices of individual tracts are expected to vary depending on the physical attributes of each site, including timber stands, topography and proximity to rivers, creeks and bays.


	*Conservation Lands*

Our Land Sales segment also sells land to conservation groups and governmental agencies. These sales commenced in 1999 and are expected to be completed in 2007. In 2003, we closed seven conservation land transactions, totaling 34,999 acres.

Forestry

Our Forestry segment focuses on the management and harvesting of our extensive timberland holdings. We grow, harvest and sell timber and wood fiber. We are the largest private holder of timberlands in Florida, owning:


	•	Approximately 529,250 acres of planted pine forests, primarily in Northwest Florida.

	•	Approximately 306,462 acres of mixed timberland, wetlands, lake and canal properties.

Our principal forestry product is softwood pulpwood. We also grow and sell softwood and hardwood sawtimber. On December 31, 2003, our standing pine inventory totaled 23 million tons and our hardwood inventory totaled 6.75 million tons. Our timberlands are harvested by local independent contractors under agreements that are generally renewed annually. Our timberlands are located near key transportation links, including roads, waterways and railroads.

Our strategy is to actively manage, with the best available silviculture practices, portions of our timberlands that produce adequate amounts of timber to meet our pulpwood supply agreement obligation with Smurfit-Stone Container Corporation, which expires June 30, 2012. We also harvest and sell

additional timber to regional sawmills that produce products other than pulpwood. In addition, our forestry operation is focused on selective harvesting, thinning, and site preparation of timberlands that may later be sold or developed by other JOE divisions.

As part of our strategy to maximize the cash flows from our forestry operations, we engage in several business activities complementary to our land holdings. In particular, we lease approximately 675,000 acres of our timberlands to private clubs and state agencies for hunting.

Risk Factors

Our business faces numerous risks, including those set forth below. If any of the following risks and uncertainties develop into actual events, our business, financial condition or results of operations could be materially adversely affected. The risks described below are not the only ones we face. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations.


	*A downturn in economic conditions could adversely affect our business.*

Our ability to generate revenues is directly related to the real estate market, primarily in Florida, and to the national and local economy in general. Considerable economic and political uncertainties currently exist that could have adverse effects on consumer buying habits, construction costs, availability of labor and materials and other factors affecting us and the real estate industry in general.

Significant expenditures associated with investment in real estate, such as real estate taxes, maintenance costs and debt payments, cannot generally be reduced if changes in Florida’s or the nation’s economy cause a decrease in revenues from our properties. In particular, if the growth rate for the Florida economy declines or if a recession in the Florida economy occurs, our profitability could be materially adversely affected.

While real estate market conditions have generally remained healthy in our regions of development, particularly in Northwest Florida, continued demand for our services and products is dependent on long term prospects for job growth and strong in-migration population expansion in our regions of development.

Over the last several years, investors have increasingly utilized real estate as an investment. Florida resort real estate has particularly benefited from this trend, creating demand, in addition to that described above, for our products. If this trend were to lessen, the demand for our products could decline, potentially impacting selling prices and/or absorption rates.


	Our businesses are primarily concentrated in the State of Florida. As a result, our financial results are dependent on the economic growth and health of Florida, particularly Northwest Florida. The occurrence of natural disasters in Florida could also adversely affect our business.

The economic growth and health of the State of Florida, particularly Northwest Florida where the majority of our land is located, are important factors in sustaining demand for our products and services. As a result, any adverse change to the economic growth and health of Florida, particularly Northwest Florida, could materially adversely affect our financial results. The future economic growth in certain portions of Northwest Florida may be adversely affected if its infrastructure, such as roads, airports, medical facilities and schools, are not improved to meet increased demand. There can be no assurance that these improvements will occur.

The occurrence of natural disasters in Florida, such as fires, hurricanes, floods, unusually heavy or prolonged rain and droughts, could have a material adverse effect on our ability to develop and sell properties or realize income from our projects.


	*Increases in interest rates could reduce demand for our products.*

An increase in interest rates could reduce the demand for homes we build, particularly primary housing, lots we develop, commercial properties we develop or sell, and land we sell. A reduction in demand could materially adversely affect our profitability.


	*Our real estate operations are cyclical.*

Our business is affected by demographic and economic trends and the supply and rate of absorption of lot sales and new construction. As a result, our real estate operations are cyclical which may cause our quarterly revenues and operating results to fluctuate significantly from quarter to quarter and to differ from the expectations of public market analysts and investors. If this occurs, our stock’s trading price could also fluctuate significantly.


	*We are exposed to risks associated with real estate sales and development.*

Our real estate development activities entail risks that include:


	•	construction delays or cost overruns, which may increase project development costs;

	•	compliance with building codes and other local regulations;

	•	evolving liability theories affecting the construction industry;

	•	an inability to obtain required governmental permits and authorizations;

	•	an inability to secure tenants or anchors necessary to support commercial projects;

	•	failure to achieve anticipated occupancy levels or rents; and

	•	an inability to sell our constructed inventory.

In addition, our real estate development activities require significant capital expenditures. We obtain funds for our capital expenditures through cash flow from operations, property sales or financings. We cannot be sure that the funds available from these sources will be sufficient to fund our required or desired capital expenditures for development. If we are unable to obtain sufficient funds, we may have to defer or otherwise limit our development activities. Our residential projects require significant capital expenditures for infrastructure development before we can begin our selling efforts. If we are unsuccessful in our selling efforts, we may not be able to recover these capital expenditures. Also, our ability to continue to make conservation land sales to government agencies depends on the agencies having sufficient funds available to purchase the lands.


	*Our business is subject to extensive regulation which makes it difficult and expensive for us to conduct our operations.*


	Development of real estate entails a lengthy, uncertain and costly approval process.

Development of real property in Florida entails an extensive approval process involving overlapping regulatory jurisdictions. Real estate projects must generally comply with the provisions of the Local Government Comprehensive Planning and Land Development Regulation Act (the “Growth Management Act”). In addition, development projects that exceed certain specified regulatory thresholds require approval of a comprehensive Development of Regional Impact, or DRI, application. Compliance with the Growth Management Act and the DRI process is usually lengthy and costly and can be expected to materially affect our real estate development activities.

The Growth Management Act requires counties and cities to adopt comprehensive plans guiding and controlling future real property development in their respective jurisdictions. After a local government adopts its comprehensive plan, all development orders and development permits must be consistent with the plan. Each plan must address such topics as future land use, capital improvements, traffic circulation, sanitation, sewerage, potable water, drainage and solid waste disposal. The local governments’

comprehensive plans must also establish “levels of service” with respect to certain specified public facilities and services to residents. Local governments are prohibited from issuing development orders or permits if facilities and services are not operating at established levels of service, or if the projects for which permits are requested will reduce the level of service for public facilities below the level of service established in the local government’s comprehensive plan. If the proposed development would reduce the established level of services below the level set by the plan, the development order will require that, at the outset of the project, the developer either sufficiently improve the services to meet the required level or provide financial assurances that the additional services will be provided as the project progresses.

The Growth Management Act, in some instances, can significantly affect the ability of developers to obtain local government approval in Florida. In many areas, infrastructure funding has not kept pace with growth. As a result, substandard facilities and services can delay or prevent the issuance of permits. Consequently, the Growth Management Act could adversely affect our ability to develop our real estate projects.

The DRI review process includes an evaluation of a project’s impact on the environment, infrastructure and government services, and requires the involvement of numerous state and local environmental, zoning and community development agencies. Local government approval of any DRI is subject to appeal to the Governor and Cabinet by the Florida Department of Community Affairs, and adverse decisions by the Governor or Cabinet are subject to judicial appeal. The DRI approval process is usually lengthy and costly, and conditions, standards or requirements may be imposed on a developer with respect to a particular project, which may materially increase the cost of the project. The DRI approval process is expected to have a material impact on our real estate development activities in the future.


	Environmental and other regulations may have an adverse effect on our business.

A substantial portion of our development properties in Florida is subject to federal, state and local regulations and restrictions that may impose significant limitations on our ability to develop them. Much of our property is raw land located in areas where development may affect the natural habitats of various endangered or protected wildlife species or in sensitive environmental areas such as wetlands and coastal areas.

In addition, our current or past ownership, operation and leasing of real property, and our current or past transportation and other operations are subject to extensive and evolving federal, state and local environmental laws and other regulations. The provisions and enforcement of these environmental laws and regulations may become more stringent in the future. Violations of these laws and regulations can result in:


	•	civil penalties;

	•	remediation expenses;

	•	natural resource damages;

	•	personal injury damages;

	•	potential injunctions;

	•	cease and desist orders; and

	•	criminal penalties.

In addition, some of these environmental laws impose strict liability, which means that we may be held liable for any environmental damages on our property regardless of fault.

Some of our past and present real property, particularly properties used in connection with our previous transportation and papermill operations, involve the storage, use or disposal of hazardous substances that have contaminated and may in the future contaminate the environment. We may bear liability for this contamination and for the costs of cleaning up a site at which we have disposed of or to

which we have transported hazardous substances. The presence of hazardous substances on a property may also adversely affect our ability to sell or develop the property or to borrow using the property as collateral.

Changes in laws or the interpretation thereof, new enforcement of laws, the identification of new facts or the failure of other parties to perform remediation at our current or former facilities could all lead to new or greater liabilities that could materially adversely affect our business, profitability, or financial condition.


	*Our joint venture partners may have interests that differ from ours and may take actions that adversely affect us.*

We are involved in joint venture relationships and may initiate future joint venture projects as part of our overall development strategy. A joint venture involves special risks such as:


	•	we may not have voting control over the joint venture;

	•	the venture partner at any time may have economic or business interests or goals that are inconsistent with ours;

	•	the venture partner may take actions contrary to our instructions or requests, or contrary to our policies or objectives with respect to the real estate investments; and

	•	the venture partner could experience financial difficulties.

Actions by our venture partners may subject property owned by the joint venture to liabilities greater than those contemplated by the joint venture agreement or have other adverse consequences.


	*Changes in our income tax estimates could affect our profitability.*

In preparing our consolidated financial statements, significant management judgment is required to estimate our income taxes. Our estimates are based on our interpretation of federal and state tax laws. We estimate our actual current tax due and assess temporary differences resulting from differing treatment of items for tax and accounting purposes. The temporary differences result in deferred tax assets and liabilities, which are included in our consolidated balance sheet. Adjustments may be required by a change in assessment of our deferred tax assets and liabilities, changes due to audit adjustments by federal and state tax authorities, and changes in tax laws. To the extent adjustments are required in any given period, we would include the adjustments in the tax provision in our statement of operations and/or balance sheet. These adjustments could materially impact our financial position and results of operation.


	*Significant competition could have an adverse effect on our business.*


	The real estate industry is generally characterized by significant competition.

A number of residential and commercial developers and real estate services companies, some with greater financial and other resources, compete with us in seeking properties for acquisition, resources for development and prospective purchasers and tenants. Competition from other real estate developers and real estate services companies may adversely affect our ability to:


	•	sell homes and homesites;

	•	attract purchasers;

	•	attract and retain tenants;

	•	sell undeveloped rural land; and

	•	sell our commercial services.


	The forest products industry is highly competitive.

Many of our competitors in the forest products industry are fully integrated companies with substantially greater financial and operating resources. Our products are also subject to increasing competition from a variety of non-wood and engineered wood products. In addition, we are subject to competition from lumber products and logs imported from foreign sources. Any significant increase in competitive pressures from substitute products or other domestic or foreign suppliers could have a material adverse effect on our forestry operations.


	*We are highly dependent on our senior management.*

Our senior management has been responsible for our transformation from an industrial conglomerate to a successful real estate operating company. Our future success is highly dependent upon the continued employment of our senior management. The loss of one or more of our senior managers could have a material adverse effect on our business. In August 2003, we entered into five-year employment agreements with Peter Rummell, our Chairman and Chief Executive Officer, and Kevin Twomey, our President, Chief Operating Officer and Chief Financial Officer. We do not have key-person life insurance on any of our senior managers.


	*Decline in rental income could adversely affect our financial results.*

We own a large portfolio of commercial real estate rental properties. Our profitability could be adversely affected if:


	•	a significant number of our tenants are unable to meet their obligations to us;

	•	we are unable to lease space at our properties when the space becomes available; and

	•	the rental rates upon a renewal or a new lease are significantly lower than expected.


	*The Trust and The Nemours Foundation own a large percentage of our stock and their interests may not always be identical to those of our public shareholders.*

As of March 1, 2004, the Alfred I. duPont Testamentary Trust and its beneficiary, The Nemours Foundation, together owned 17,870,965 shares, or approximately 24%, of our outstanding common stock. In addition, three of our current directors are trustees of the Trust. Under the terms of our registration rights agreement with the Trust, the Trust is entitled to nominate two members of our board of directors so long as the Trust beneficially owns at least 20% of our common stock. If the Trust beneficially owns less than 20% but at least 5% of our outstanding shares of common stock, the Trust will be entitled to nominate one member of our board. Accordingly, the Trust will continue to be able to have significant influence over our corporate and management policies, including decisions relating to mergers, acquisitions, the sale of all or substantially all of our assets and other significant transactions. The interests of the Trust may not be aligned with our interests or the interests of other shareholders.


	*Future sales or the perception of future sales by the Trust may affect the price of our common stock.*

We cannot predict the effect, if any, that future sales of shares by the Trust, or the availability of shares for future sale, will have on the market price of our common stock. Sales of substantial amounts of our common stock in the public market or the perception that such sales may occur could adversely affect the market price of our common stock.

Forward-looking Statements

This Form 10-K includes forward-looking statements, which are statements that are not historical facts. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to risks, uncertainties and assumptions about

our business, including the risk factors identified above, those described from time to time in our filings with the Securities and Exchange Commission, and the following:


	•	economic conditions, particularly in Florida and key southeastern United States areas that serve as feeder markets to our Northwest Florida operations;

	•	acts of war or terrorism and other geopolitical events;

	•	local conditions such as an oversupply of homes and homesites, residential or resort properties, or a reduction in demand for real estate in the 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;

	•	the pace of development of infrastructure in Northwest Florida;

	•	potential liability under environmental laws or other laws or regulations;

	•	adverse changes in laws or regulations affecting the development of real estate;

	•	decreases in prices of wood products;

	•	the availability of funding from governmental agencies and others to purchase conservation lands;

	•	fluctuations in the size and number of transactions from period to period; and

	•	adverse weather conditions or natural disasters.

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

Employees

We had approximately 1,478 full-time employees and 115 part-time employees at December 31, 2003. We consider our relations with our employees to be good. These employees work in the following segments:


Community development			920
Commercial real estate development and services			528
Land sales			41
Forestry			32
Other — including corporate			72

Website Access to Reports

We will make available, free of charge, access to our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports as soon as

reasonably practicable after such reports are electronically filed with or furnished to the SEC, through our home page at www.JOE.com.


Item 2.	*Properties*

We own our principal executive office located in Jacksonville, Florida. The majority of our other administrative offices are leased.

We own approximately 850,000 acres, the majority of which are located in Northwest Florida, including substantial gulf, lake and riverfront acreage. Most of our raw land assets are managed as timberland until designated for development. For more information on our real estate assets, see Item 1. Business.


Item 3.	*Legal Proceedings*

We are involved in litigation on a number of matters and are subject to certain claims which arise in the normal course of business, none of which, in the opinion of management, is expected to have a material adverse effect on our consolidated financial position, results of operations or liquidity. However, the aggregate amount being sought by the claimants in these matters is presently estimated to be several million dollars.

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

We are subject to costs arising out of environmental laws and regulations, which include obligations to remove or limit the effects on the environment of the disposal or release of certain wastes or substances at various sites including sites which have been previously sold. It is our policy to accrue and charge against earnings environmental cleanup costs when it is probable that a liability has been incurred and an amount can be reasonably estimated. As assessments and cleanups proceed, these accruals are reviewed and adjusted, if necessary, as additional information becomes available.

Pursuant to the terms of various agreements by which we disposed of our sugar assets in 1999, we are obligated to complete certain defined environmental remediation. Approximately $5.0 million of the sales proceeds are being held in escrow pending the completion of the remediation. We have separately funded the costs of remediation. Remediation was substantially completed in 2003. We expect the amounts held in escrow to be released to us during the second half of 2004.

During the fourth quarter of 2000, management became aware of an investigation being conducted by the Florida Department of Environmental Protection (“DEP”) of our former paper mill site and some adjacent real property north of the paper mill site in Gulf County, Florida (the “Mill Site”). The real property on which our former paper mill is located was sold to the Smurfit-Stone Container Corporation (“Smurfit”) and we retained ownership of the adjacent real property. In January 2004, we entered into a joint venture with Smurfit; this joint venture now owns the site of our former paper mill.

The DEP submitted a Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) Site Discovery/ Prescreening Evaluation to Region IV of the United States Environmental Protection Agency (“USEPA”) in Atlanta in September 2000. Based on this submission, the USEPA included the Mill Site on the CERCLIS List. The CERCLIS List is a list of sites which are to be evaluated to determine whether there is a potential presence of actionable contaminants.

Based on its assessment of data obtained from voluntary testing performed by us and Smurfit, the DEP submitted a proposed Consent Order that we and Smurfit have executed. It obligates us to conduct further assessment of that portion of the Mill Site owned by us at that time and, if necessary, to rehabilitate that portion of the Mill Site. Smurfit has a corresponding obligation with respect to its portion of the Mill Site.

Through incorporation of the data and findings which resulted from our voluntary testing, the DEP has completed and submitted a preliminary assessment/site investigation report to the USEPA, including a recommendation that the Mill Site be considered “low priority” under CERCLA. Based on this recommendation, the USEPA has deferred further action on the Mill Site and has agreed to allow the Mill Site to be assessed and rehabilitated, if necessary, under the guidance of the DEP.

On November 5, 2002, the Mill Site was designated as a Brownfields Redevelopment Area for site rehabilitation under the provisions of applicable Florida law. Florida’s Brownfields program provides economic and tax incentives which may be available to us. We entered into a Brownfield Site Rehabilitation Agreement for the Mill Site that obligates us to conduct further assessment of our portion of the Mill Site to delineate the extent of contamination, if any, and, if necessary, to rehabilitate that portion. The Consent Order will be held in abeyance pending the completion of the assessment and remediation, if any, of the Mill Site under the terms of the Brownfield Site Remediation Agreement.

Based on this current information, including the environmental test results, the recommendation for “low priority” USEPA consideration, the USEPA agreement to defer further action, and the Brownfields Area local designation, management does not believe our liability, if any, for the possible cleanup of any potential contaminants detected on the Mill Site will be material.

We are currently a party to, or involved in, legal proceedings directed at the cleanup of Superfund sites. We have accrued an allocated share of the total estimated cleanup costs for these sites. Based upon management’s evaluation of the other potentially responsible parties, we do not expect to incur material additional amounts even though we have joint and several liability. Other proceedings involving environmental matters such as alleged discharge of oil or waste material into water or soil are pending against us. It is not possible to quantify future environmental costs because many issues relate to actions by third parties or changes in environmental regulation. However, based on information presently available, management believes that the ultimate disposition of currently known matters will not have a material effect on our consolidated financial position, results of operations or liquidity. Environmental liabilities are paid over an extended period and the timing of such payments cannot be predicted with any confidence.


Item 4.	*Submission of Matters to a Vote of Security Holders*

None.

PART II


Item 5.	*Market for the Registrant’s Common Stock and Related Stockholder Matters*

We had approximately 42,000 beneficial owners of our common stock as of March 10, 2004. Our common stock is quoted on the New York Stock Exchange (“NYSE”) Composite Transactions Tape under the symbol “JOE.”

The range of high and low prices for our common stock as reported on the NYSE Composite Transactions Tape for the periods indicated is set forth below:



		Common
		Stock Price

		High		Low

2003
	First Quarter	$	30.74	$	26.19
	Second Quarter		31.58		27.04
	Third Quarter		35.01		31.01
	Fourth Quarter		38.60		32.05
2002
	First Quarter		30.00		27.20
	Second Quarter		33.74		29.10
	Third Quarter		30.85		24.35
	Fourth Quarter		30.19		24.69

On March 10, 2004, the closing price of our common stock on the NYSE was $40.40.

Dividends

In September 2003, we initiated the payment of quarterly dividends to holders of our common stock at the rate of $.12 per share. We paid an aggregate of $.32 per share in dividends in 2003. In 2002 and 2001, we paid annual cash dividends of $0.08 per share.


Item 6.	*Selected Consolidated Financial Data*

The selected consolidated financial data set forth below are qualified in their entirety by and should be read in conjunction with the consolidated financial statements and the related notes included elsewhere herein. The statement of operations data with respect to the years ended December 31, 2003, 2002, and 2001 and the balance sheet data as of December 31, 2003 and 2002 have been derived from the financial statements of the Company included herein, which have been audited by KPMG LLP. The statement of operations data with respect to the years ended December 31, 2000 and 1999 and the balance sheet data as of December 31, 2001, 2000, and 1999 have been derived from the financial statements of the Company previously filed with the SEC, and have also been audited by KPMG LLP. Historical results are not necessarily indicative of the results to be expected in the future.



		Year Ended December 31,

		2003			2002		2001			2000		1999


		(In thousands, except per share amounts)
Statement of Operations Data:
Total revenues(1)		$	760,630		$	635,412	$	567,008		$	605,487	$	527,566
Total expenses			630,639			524,936		490,112			475,798		460,125

Operating profit			129,991			110,476		76,896			129,689		67,441
Other income (expense)			(8,729	)		120,648		(5,846	)		6,184		32,448

Income from continuing operations before equity in (loss) income of unconsolidated affiliates, income taxes, and minority interest			121,262			231,124		71,050			135,873		99,889
Equity in (loss) income of unconsolidated affiliates			(2,168	)		10,940		24,126			18,375		13,308
Income tax expense			42,626			89,561		35,441			51,755		21,012

Income from continuing operations before minority interest			76,468			152,503		59,735			102,493		92,185
Minority interest			553			1,366		524			9,954		19,243

Income from continuing operations			75,915			151,137		59,211			92,539		72,942
Income from discontinued operations(2)			—			2,339		10,994			7,784		10,061
Gain on sale of discontinued operations(2)			—			20,887		—			—		41,354

Net income		$	75,915		$	174,363	$	70,205		$	100,323	$	124,357

Per Share Data:
	Basic
Income from continuing operations		$	1.00		$	1.93	$	0.73		$	1.09	$	0.83
Income from discontinued operations(2)			—			0.03		0.14			0.09		0.12
Gain on sale of discontinued operations(2)			—			0.26		—			—		0.47

Net income		$	1.00		$	2.22	$	0.87		$	1.18	$	1.42

	Diluted
Income from continuing operations		$	0.98		$	1.85	$	0.70		$	1.06	$	0.82
Income from discontinued operations			—			0.03		0.13			0.09		0.12
Gain on sale of discontinued operations			—			0.26		—			—		0.46

Net income		$	0.98		$	2.14	$	0.83		$	1.15	$	1.40

Dividends paid		$	0.32		$	0.08	$	0.08		$	0.02		0.02
FLA spin-off(2)			—			—		4.64			—		—



	Year Ended December 31,

	2003		2002		2001		2000		1999

Balance Sheet Data:
Investment in real estate	$	886,076	$	806,701	$	736,734	$	562,181	$	825,577
Cash and investments(3)		57,403		73,273		200,225		201,905		299,944
Property, plant & equipment, net		36,272		42,907		49,826		59,665		386,437
Total assets		1,275,730		1,169,887		1,340,559		1,115,021		1,821,627
Total stockholders’ equity		487,315		480,093		518,073		569,084		940,854


(1)	Total revenues includes real estate revenues from property sales; realty revenues consisting of property and asset management fees, construction management fees, and lease and sales commissions; timber sales; rental revenues; club operations revenues; management fees; development fees; and transportation revenues. Net operating results of the residential real estate services and sugar segments are shown separately as income from discontinued operations for all years presented.

(2)	On October 9, 2000 the Company distributed to its shareholders all of its equity interest in Florida East Coast Industries, Inc. (“FLA”). To effect the distribution, the Company exchanged its 19,609,216 shares of FLA common stock for an equal number of shares of a new class of FLA common stock. On October 9, 2000, the new class of stock, FLA.B, was distributed prorata to the Company’s shareholders in a tax-free distribution. For each share of the Company common stock owned of record on September 18, 2000, the Company’s shareholders received 0.23103369 of a share of FLA.B common stock.

(3)	Includes cash, cash equivalents and marketable securities.


Item 7.	*Management’s Discussion and Analysis of Financial Condition and Results of Operations*

Overview

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

We have four operating segments: community development; commercial real estate development and services; land sales; and forestry.

Our community development segment generates revenues from:


	•	the sale of housing units built by us;

	•	the sale of developed home sites;

	•	rental income;

	•	club operations;

	•	investments in limited partnerships and joint ventures;

	•	brokerage fees; and

	•	management fees.

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


	•	the rental of properties owned by us;

	•	the sale of developed and undeveloped land and in-service buildings;

	•	realty revenues, consisting of property and asset management fees, construction management fees and lease and sales brokerage commissions;

	•	development fees; and

	•	investments in limited partnerships and joint ventures.

Our land sales segment generates revenues from:


	•	the sale of parcels of undeveloped land; and

	•	the sale of a limited amount of developed rural home sites.

Our forestry segment generates revenues from:


	•	the sale of pulpwood and timber; and

	•	the sale of bulk land.

Our ability to generate revenues, cash flows and profitability is directly related to the real estate market, primarily in Florida, and the economy in general. Considerable economic and political uncertainties exist that could have adverse effects on consumer buying behavior, construction costs, availability of labor and materials and other factors affecting us and the real estate industry in general. Additionally, increases in interest rates could reduce the demand for homes we build, particularly primary housing, commercial properties we develop or sell, and lots we develop. However, we believe our secondary resort housing markets are less sensitive to changes in interest rates. We have the ability to mitigate these risks by building to contract as well as building in phases. Management periodically conducts market research in the early stages of a project’s development to ensure our product meets expected customer demand. We also continuously and actively monitor local competitors’ product offerings to evaluate the competitive position of our products. Real estate market conditions in our regions of development, particularly for residential and resort property in Northwest Florida, have been exceptionally strong. These current market conditions place us in an unusually favorable position which may not continue in the future. However, we believe that long-term prospects of job growth, coupled with strong in-migration population expansion in Florida, indicate that demand levels may remain favorable over at least the next two to five years.

Our commercial real estate development and services segment continues to build on strong market interest in Northwest Florida’s retail, office, multi-family and other mixed-use products caused by historical constraints on supply in the area as well as high interest by developers. Although the timing of transactions in this business is hard to predict, we expect 2004 results to be the same as or better than 2003 results.


	*Forward-Looking Statements*

Management’s discussion and analysis contains forward-looking statements, including statements about our beliefs, plans, objectives, goals, expectations, estimates and intentions, as well as trends and uncertainties that could affect our results. These statements are subject to risks and uncertainties and are subject to change based on various factors, many of which are beyond our control. For additional information concerning these factors and related matters, see “Risk Factors” in Item 1 of this Report.


	*Critical Accounting Estimates*

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. We base these estimates on historical experience and on various other assumptions that management believes are reasonable under the circumstances. Additionally, we evaluate the results of these estimates on an on-going basis. Management’s estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We believe the following critical accounting policies reflect our more significant judgments and estimates used in the preparation of our consolidated financial statements:

Investment in Real Estate and Cost of Real Estate Sales. Costs associated with a specific real estate project are capitalized once we determine that the project is economically viable. We capitalize costs directly associated with development and construction of identified real estate projects. Indirect costs that clearly relate to a specific project under development, such as internal costs of a regional project field office, are also capitalized. We capitalize interest based on the amount of underlying expenditures (up to total interest expense), and real estate taxes on real estate projects under development. If we determine not to complete a project, any previously capitalized costs are expensed.

Real estate inventory costs include land and common development costs (such as roads, sewers, and amenities), home construction costs, property taxes, capitalized interest, and certain indirect costs. A portion of real estate inventory and estimates for costs to complete are allocated to each unit based on the relative sales value of each unit as compared to the estimated sales value of the total project. These estimates are reevaluated at least annually, with any adjustments being allocated prospectively to the remaining units available for sale. The accounting estimate related to inventory valuation is susceptible to change due to the use of assumptions about future sales proceeds and related real estate expenditures. Management’s assumptions about future housing and home site sales prices, sales volume and sales velocity require significant judgment because the real estate market is cyclical and highly sensitive to changes in economic conditions. In addition, actual results could differ from management’s estimates due to changes in anticipated development, construction and overhead costs. Although we have not made significant adjustments affecting real estate gross profit margins in the past, there can be no assurances that estimates used to generate future real estate gross profit margins will not differ from our current estimates.

Revenue Recognition — Percentage-of-Completion. In accordance with Statement of Financial Accounting Standards No. 66, Accounting for Sales of Real Estate, revenue for multi-family residences under construction is recognized on the percentage-of-completion method when (1) construction is beyond a preliminary stage, (2) the buyer is committed to the extent of being unable to require a refund except for nondelivery of the unit, (3) sufficient units have already been sold to assure that the entire property will not revert to rental property, (4) sales price is assured, and (5) aggregate sales proceeds and costs can be reasonably estimated. Revenue is recognized in proportion to the percentage of total costs incurred in relation to estimated total costs.

Impairment of Long-lived Assets and Goodwill. Our long-lived assets, primarily real estate held for investment, are carried at cost unless circumstances indicate that the carrying value of the assets may not be recoverable. We review long-lived assets for impairment whenever events or changes in circumstances indicate such an evaluation is warranted. This review involves a number of assumptions and estimates used in determining whether impairment exists, including estimation of undiscounted cash flows. Depending on the asset, we use varying methods to determine fair value, such as (i) discounting of expected future cash flows, (ii) determining resale values by market, or (iii) applying a capitalization rate to net operating income using prevailing rates in a given market. These methods of determining fair value can fluctuate up

or down significantly as a result of a number of factors, including changes in the general economy of our markets and demand for real estate. If we determine that impairment exists due to the inability to recover an asset’s carrying value, a provision for loss is recorded to the extent that the carrying value exceeds estimated fair value.

Goodwill is carried at the lower of cost or fair value and is tested for impairment at least annually, or whenever events or changes in circumstances indicate such an evaluation is warranted, by comparing the carrying amount of the net assets of each reporting unit with goodwill to the fair value of the reporting unit taken as a whole. The impairment review involves a number of assumptions and estimates including estimating discounted future cash flows, net operating income, future economic conditions, fair value of assets held and discount rates. If this comparison indicates that the goodwill of a particular reporting unit is impaired, the aggregate of the fair value of each of the individual assets and liabilities of the reporting unit are compared to the fair value of the reporting unit to determine the amount of goodwill impairment, if any.

Intangibles. We allocate the purchase price of acquired properties to tangible and identifiable intangible assets acquired based on their respective fair values, using customary estimates of fair value, including data from appraisals, comparable sales, discounted cash flow analysis and other methods. These fair values can fluctuate up or down significantly as a result of a number of factors and estimates, including changes in the general economy of our markets, demand for real estate, and fair market values assigned to leases as well as fair value assigned to customer relationships.

Pension Plan. The Company sponsors a defined benefit pension plan covering a majority of our employees. Currently, our pension plan is over-funded and contributes income to the Company. The accounting for pension benefits is determined by standardized accounting and actuarial methods using numerous estimates, including discount rates, expected long-term investment returns on plan assets, employee turnover, mortality and retirement ages, and future salary increases. Changes in these key assumptions can have a significant impact on the income contributed by the pension plan. We engage the services of an independent actuary and investment consultant to assist us in determining these assumptions and in the calculation of pension income. For example, in 2003, a 1% increase in the assumed long-term rate of return on pension assets would have resulted in a $2.2 million increase in pre-tax income ($1.4 million net of tax). A 1% decrease in the assumed long-term rate of return would have caused an equivalent decrease in income. A 1% increase in the assumed discount rate on pension obligations would have resulted in a $0.4 million decrease in pre-tax income ($0.3 million net of tax). A 1% decrease in the assumed discount rate would have resulted in a $0.6 million increase in pre-tax income ($0.4 million net of tax).

Income Taxes. In preparing our consolidated financial statements, significant management judgment is required to estimate our income taxes. Our estimates are based on our interpretation of federal and state tax laws. We estimate our actual current tax due and assess temporary differences resulting from differing treatment of items for tax and accounting purposes. The temporary differences result in deferred tax assets and liabilities, which are included in our consolidated balance sheet. Adjustments may be required by a change in assessment of our deferred tax assets and liabilities, changes due to audit adjustments by federal and state tax authorities, and changes in tax laws. To the extent adjustments are required in any given period we would include the adjustments in the tax provision in the statement of operations and/or balance sheet. These adjustments could materially impact our financial position and results of operation.

Results of Operations

Net income for 2003 was $75.9 million, or $0.98 per diluted share, compared with $174.4 million, or $2.14 per diluted share, in 2002 and $70.2 million, or $0.83 per diluted share, in 2001. The results for 2003 included a non-cash asset impairment charge, net of tax, relating to Advantis, our commercial real estate services unit, of $8.8 million, or $0.11 per diluted share. The results for 2002 included a net gain on the sale of Arvida Realty Services (“ARS”), our former residential real estate services segment, of $20.7 million, or $0.25 per diluted share, and a gain on the forward sale of securities of $86.4 million, or

$1.06 per diluted share. Results for 2002 included earnings from the discontinued operations of ARS of $2.3 million, or $0.03 per diluted share and $11.0 million, or $0.13 per diluted share in 2001.

We report revenues from our four operating segments: community development, commercial real estate development and services, land sales, and forestry. Real estate sales are generated from sales of housing units and developed home sites in our community development segment, developed and undeveloped land and in-service buildings in our commercial real estate development and services segment, parcels of undeveloped land and developed rural sites in our land sales segment and occasionally sales of bulk land from our forestry segment. Realty revenues, consisting of property and asset management fees, construction management fees, and lease and sales commissions, are generated from the commercial real estate development and services segment. Timber sales are generated from the forestry segment. Rental revenue is generated primarily from lease income related to our portfolio of investment and development properties as a component of the commercial real estate development and services segment. Other revenues are primarily club operations and management fees from the community development segment and development fees from the commercial real estate development and services segment.


	*Consolidated Results*

Revenues and Expenses. The following table sets forth a comparison of the revenues and expenses for the three years ended December 31, 2003.



			Years Ended December 31,						2003 vs. 2002						2002 vs. 2001

			2003		2002		2001		Difference			% Change			Difference			% Change


			(Dollars in millions)
Revenues:
	Real estate sales		$	592.2	$	484.0	$	444.0	$	108.2			22	%	$	40.0			9	%
	Realty			62.5		58.5		56.0		4.0			7			2.5			4
	Timber sales			36.6		40.7		37.0		(4.1	)		(10	)		3.7			10
	Rental			40.8		33.2		20.8		7.6			23			12.4			60
	Other			28.5		19.0		9.2		9.5			50			9.8			107

		Total		760.6		635.4		567.0		125.2			20			68.4			12

Expenses:
	Cost of real estate sales			353.2		290.8		298.7		62.4			22			(7.9	)		(3	)
	Cost of realty revenues			36.2		33.2		32.8		3.0			9			0.4			1
	Cost of timber sales			24.2		28.9		24.3		(4.7	)		(16	)		4.6			19
	Cost of rental revenues			17.7		14.5		9.7		3.2			22			4.8			49
	Cost of other revenues			27.2		23.1		9.4		4.1			18			13.7			146
	Other operating expenses			91.7		84.2		74.5		7.5			9			9.7			13

		Total	$	550.2	$	474.7	$	449.4	$	75.5			16	%	$	25.3			6	%

The increases in revenues from real estate sales and costs of real estate sales were in each case primarily due to increased sales in the community development segment, partially offset by decreases in the commercial real estate development and services segment, which is a function of the sale of several large in-service buildings in 2002 and 2001 with no such sales in 2003. The increase in realty revenues was due to increases in brokerage and construction revenues, which were partially offset by a small decrease in property management revenues. The increase in cost of realty revenues was due to increases in the costs of brokerage, property management, and construction revenues. The increases in rental revenues and costs of rental revenues were in each case primarily due to an increase in the amount of investment in operating property in the commercial real estate development and services segment. Other revenues and costs of other revenues increased primarily due to increases in the community development segment’s club operations. Other operating expenses increased from 2002 to 2003 primarily due to increases in the community development segment and the commercial real estate development and services segment. Other

operating expenses increased from 2001 to 2002 primarily due to an increase in the community development segment. For further discussion of revenues and expenses, see Segment Results below.

Corporate Expense. Corporate expense, which represents corporate general and administrative expenses, increased $7.0 million, or 25%, to $34.5 million in 2003, from $27.5 million in 2002. The increase was primarily due to a $4.3 million decrease in the income contribution from the St. Joe Company Pension Plan (the “Pension Plan”) and an increase in employee benefit costs of $2.3 million. Corporate expense increased $8.7 million, or 46%, in 2002 from $18.8 million in 2001. This increase was primarily due to a $3.6 million decrease in the income contribution from the Pension Plan, an increase in employee benefit costs of $3.6 million, and $1.5 million in costs associated with the secondary offering of our common stock completed by the Trust in 2002. For the year 2001, the long-term actuarial expected return for the assets of the Pension Plan was 9.2%. Based on the performance of our mix of pension assets over the previous three years, we lowered the long-term expected return to 8.5%. Management does not expect the over-funded position of the Pension Plan to continue to decline. We do not expect to have to fund the Pension Plan in the foreseeable future, unless market conditions deteriorate significantly.

Depreciation and Amortization. Depreciation and amortization increased $8.7 million, or 38%, to $31.5 million in 2003, compared to $22.8 million in 2002. The increase was due to a $6.6 million increase in depreciation resulting primarily from additional investments in commercial and residential operating property and property, plant and equipment and a $2.1 million increase in amortization primarily resulting from an increase in intangible assets. Depreciation and amortization increased $1.5 million, or 7%, to $22.8 million in 2002, compared to $21.3 million in 2001. The increase was due to a $6.6 million increase in depreciation resulting primarily from expenditures for commercial and residential operating property and property, plant and equipment. This increase was partially offset by the impact of the adoption of Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (“FAS 142”), which resulted in the cessation of goodwill amortization as of January 1, 2002. Goodwill amortization was $4.2 million in 2001, excluding $5.3 million included in discontinued operations.

Impairment Losses. During 2003, we recorded an impairment loss to reduce the carrying amount of Advantis’ goodwill from $28.9 million to $14.8 million, pursuant to FAS 142. This resulted in an impairment loss of $14.1 million pre-tax, $8.8 million net of tax. See note 10 of Notes to Consolidated Financial Statements. No impairment losses were recorded in 2002. Impairment losses of $0.3 million and $0.5 million were recorded in 2003 and 2001, respectively, related to commercial properties.

Other Income (Expense). Other income (expense) was $(8.7) million in 2003, $120.6 million in 2002 and $(5.8) million in 2001. Other income (expense) was made up of investment income, interest expense, gains on sales and dispositions of assets and other income and, in 2002 and 2001, gains and losses on the valuation and settlement of forward sale contracts.

In October 1999, we entered into a forward sale transaction with a major financial institution that, in effect, provided for the monetization of our long-held portfolio of equity investments which, at December 31, 1998, had a cost of approximately $1.7 million and a fair value of approximately $144 million. Under the forward sale agreement, we received approximately $111 million in cash and were required to settle the forward transaction by October 15, 2002, by delivering either the securities or the equivalent value of the securities in cash to the financial institution. The agreement permitted us to retain that amount of the securities representing appreciation up to 20% of their value on October 15, 1999 should the value of the securities increase. The securities were recorded at fair value on the balance sheet and the related unrealized gain, net of tax, was recorded in accumulated other comprehensive income. At the time of entering into the forward sale contracts, we recorded a liability in long-term debt for approximately $111.1 million, subject to increase as interest expense was imputed at an annual rate of 7.9%. The liability was also subject to increase by the amount, if any, that the fair value of the securities increased beyond the retained 20%.

On February 26, 2002 and October 15, 2002, in two separate transactions, we settled our forward sale contracts by delivering equity securities to the financial institution for an aggregate pre-tax gain of $132.9 million. The liability related to the contracts settled in February was $97.0 million at the time of

settlement and the resulting gain recognized in the first quarter of 2002 was $94.7 million pre-tax. The liability related to the contracts settled in October was $38.6 million at the time of settlement and the resulting gain recognized in the fourth quarter of 2002 was approximately $38.2 million pre-tax.

Investment income decreased to $0.9 million in 2003 from $2.9 million in 2002, primarily due to lower dividend income resulting from the disposition of securities. Interest expense decreased $4.5 million to $12.5 million in 2003 compared to $17.0 million in 2002, due to the settlement of the debt related to the forward sale contracts, which was partially offset by interest expense attributable to medium term notes we issued in 2002, and interest attributable to debt secured by commercial buildings. Other income was $2.9 million in 2003 as compared to $1.8 million in 2002. Other income included a loss on the valuation of forward sale contracts of $(0.9) million in 2002. Investment income decreased to $2.9 million in 2002, from $5.1 million in 2001, primarily due to lower dividend income resulting from the disposition of securities. Interest expense decreased $0.3 million to $17.0 million in 2002 compared to $17.3 million in 2001, due to the settlement of the debt related to the forward sale contracts, which was partially offset by interest expense attributable to medium term notes we issued in 2002, and interest attributable to debt secured by commercial buildings. Other income was $1.8 million in 2002 as compared to $6.4 million in 2001. Other income includes a loss on the valuation of forward sale contracts of $(0.9) million in 2002, compared to a gain on the valuation of forward sale contracts of $4.0 million in 2001.

Equity in (Loss) Income of Unconsolidated Affiliates. We have investments in affiliates that are accounted for by the equity method of accounting. Equity in (loss) income of unconsolidated affiliates totaled $(2.2) million in 2003, $10.9 million in 2002 and $24.1 million in 2001.

The community development segment’s unconsolidated affiliates include our 26% limited partnership interest in Arvida/JMB Partners, L.P. (“Arvida/JMB”). Arvida/JMB completed its operations in 2003 and is currently winding up its affairs. As a result, the contribution to pre-tax income from Arvida/JMB substantially ended at the end of 2002. Arvida/JMB has finalized its current estimates of future costs and future cash distributions associated with the completion of operations, and, as a result, we adjusted our investment in the partnership by a $3.5 million pre-tax charge in 2003. Arvida/JMB’s contribution to equity in (loss) income of unconsolidated affiliates was $13.2 million in 2002 and $24.0 million in 2001. Based on current expectations, we do not anticipate any material future income or losses from our investment in Arvida/JMB.

The commercial real estate development and services segment recorded equity in income (loss) of unconsolidated affiliates of $1.9 million in 2003, $(1.0) million in 2002, and $0.2 million in 2001. Included was $(0.3) million in 2003, $(0.3) million in 2002, and $0.9 million in 2001 related to our 50% interest in Codina Group, Inc. (“Codina”), a commercial services company headquartered in Coral Gables, Florida. Although 2003 and 2002 results were negative, we expect Codina to return to profitability in the near term. In 2003, we sold our 45% partnership interest in the 355 Alhambra building, recognizing a gain of $1.0 million which is included in income of unconsolidated affiliates.

Income Tax Expense. Income tax expense on continuing operations totaled $42.6 million in 2003, $89.6 million for 2002 and $35.4 million for 2001. Our effective tax rate decreased to 35% in 2003 compared to 39% in 2002 and 37% in 2001 because the deferred tax liability for state taxes was reduced to reflect the effect of a recently implemented state tax strategy.

Discontinued Operations. Discontinued operations included the gain on sale and the operations of ARS and the gain on sale and operations of two commercial office buildings disposed of in 2002. These entities’ results are not included in income from continuing operations.

As a result of rapid consolidation in the real estate services business, we had the opportunity to sell ARS, our wholly-owned subsidiary, at an attractive value. We completed the sale of ARS on April 17, 2002. The gain recorded on the sale was $33.7 million before taxes, or $20.7 million net of taxes. Prior to its sale, ARS generated revenues of $76.2 million, operating expenses of $71.7 million and net income of $2.3 million during 2002. During 2001, ARS generated revenues of $277.3 million, operating expenses of $252.9 million, and net income of $11.0 million.


	*Segment Results*

Community Development. The table below sets forth the results of operations of our community development segment for the three years ended December 31, 2003.



			Years Ended December 31,

			2003		2002		2001


			(In millions)
Revenues:
	Real estate sales		$	467.3	$	371.2	$	235.6
	Rental revenues			0.8		0.8		0.7
	Other revenues			26.8		14.7		3.4

		Total revenues		494.9		386.7		239.7

Expenses:
	Cost of real estate sales			332.9		260.8		173.4
	Cost of rental revenues			1.6		1.6		1.2
	Cost of other revenues			26.6		20.6		6.2
	Other operating expenses			44.6		38.7		32.7
	Depreciation and amortization			8.6		4.4		2.0

		Total expenses		414.3		326.1		215.5

Other income				—		0.2		0.4

Pretax income from continuing operations			$	80.6	$	60.8	$	24.6

Our community development division develops large-scale, mixed-use communities primarily on land we have owned for a long period of time. We own large tracts of land in Northwest Florida, including significant Gulf of Mexico beach frontage and waterfront properties, and in west Florida near Tallahassee, the state capital. Our residential homebuilding in North Carolina and South Carolina is conducted through Saussy Burbank, Inc. (“Saussy Burbank”), a wholly owned subsidiary.


	Year Ended December 31, 2003 Compared to Year Ended December 31, 2002

Real estate sales include sales of homes and home sites and sales of land. Cost of sales includes direct costs, selling costs and other indirect costs. In 2003, the components of cost of real estate sales were $276.4 million in direct costs, $23.6 million in selling costs, and $31.3 million in other indirect costs. In 2002, the components of cost of real estate sales were $220.5 million in direct costs, $17.8 million in selling costs, and $22.5 million in other indirect costs.

Sales of homes in 2003 totaled $348.4 million, with related cost of sales of $287.8 million, resulting in a gross profit percentage of 17%, compared to sales in 2002 of $271.3 million, with cost of sales of $226.6 million, resulting in a gross profit percentage of 17%. Cost of real estate sales for homes in 2003 consisted of $242.1 million in direct costs, $17.8 million in selling costs, and $27.9 million in indirect costs. Cost of real estate sales for homes in 2002 consisted of $193.8 million in direct costs, $12.8 million in selling costs, and $20.0 million in indirect costs. Sales of home sites in 2003 totaled $115.7 million, with related cost of sales of $43.5 million, resulting in a gross profit percentage of 62%, compared to sales in 2002 of $99.3 million, with related cost of sales of $34.2 million, resulting in a gross profit percentage of 66%. Cost of real estate sales for home sites in 2003 consisted of $34.3 million in direct costs, $5.8 million in selling costs, and $3.4 million in indirect costs. Cost of real estate sales for home sites in 2002 consisted of $26.7 million in direct costs, $5.0 million in selling costs, and $2.5 million in indirect costs. The increase in real estate sales was due to an increase in the number of units sold and higher selling prices. Cost of

real estate sales increased primarily due to the increased volume of sales. The following table sets forth home and home site sales activity by individual developments:



					Year Ended December 31, 2003									Year Ended December 31, 2002

					Closed				Cost of		Gross			Closed				Cost of		Gross
					Units		Revenues		Sales		Profit			Units		Revenues		Sales		Profit


					(Dollars in millions)
Northwest Florida:
	Walton County:
		WaterColor:
			Homes:
				Single-family		12	$	9.6	$	6.4	$	3.2			13	$	10.5	$	6.5	$	4.0
				Multi-family		18		2.6		2.7		(0.1	)		45		23.3		17.8		5.5
				Private Residence Club		—		1.2		0.7		0.5			—		—		—		—
			Home sites			206		57.1		22.5		34.6			172		42.7		15.0		27.7
		WaterSound:
			Multi-family homes			30		72.1		45.1		27.0			—		18.5		11.4		7.1
			Home sites			93		38.1		12.6		25.5			64		25.6		10.0		15.6
	Bay County:
		The Hammocks:
			Homes			48		6.8		6.1		0.7			32		4.6		4.1		0.5
			Home sites			30		0.9		0.7		0.2			36		1.1		0.6		0.5
		Palmetto Trace: Homes				88		13.6		12.1		1.5			43		6.4		5.6		0.8
		Summerwood: Homes				—		—		—		—			12		1.8		1.8		—
		Woodrun: Homes				—		—		0.4		(0.4	)		1		0.3		0.4		(0.1	)
		Other Bay County: Home sites				—		—		—		—			1		0.1		0.1		—
	Leon County:
		SouthWood:
			Homes			133		27.0		23.2		3.8			115		21.3		18.5		2.8
			Home sites			63		5.7		2.6		3.1			65		6.1		2.8		3.3
	Gulf County:
		Windmark Beach: Home sites				13		7.3		1.2		6.1			67		22.1		4.6		17.5
Northeast Florida:
	St. Johns County:
		St. Johns Golf & Country Club:
			Homes			124		39.6		33.1		6.5			111		34.1		27.6		6.5
			Home sites			40		2.2		1.0		1.2			21		1.0		0.7		0.3
	Duval County:
		James Island: Homes				59		19.8		17.1		2.7			72		22.5		19.3		3.2
		Hampton Park: Homes				50		16.1		14.0		2.1			35		11.3		9.9		1.4
Central Florida:
	Volusia County:
		Victoria Park:
			Homes			124		24.3		21.7		2.6			77		14.1		12.0		2.1
			Home sites			32		2.3		1.4		0.9			12		0.6		0.4		0.2
		Artisan Park: Home sites				10		1.3		0.7		0.6			—		—		—		—



			Year Ended December 31, 2003								Year Ended December 31, 2002

			Closed				Cost of		Gross		Closed				Cost of		Gross
			Units		Revenues		Sales		Profit		Units		Revenues		Sales		Profit


			(Dollars in millions)
North Carolina and South Carolina:
	Saussy Burbank:
		Homes		555		115.7		105.2		10.5		523		102.6		91.7		10.9
		Home sites		32		0.8		0.8		—		—		—		—		—

Total				1,760	$	464.1	$	331.3	$	132.8		1,517	$	370.6	$	260.8	$	109.8

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

At WaterColor, the average price of a single-family residence sold in 2003 was $801,000, compared to $800,000 in 2002 which was solely due to the product mix sold. In general, sales prices for homes with similar sizes and locations have increased in 2003. The gross profit percentage from single-family residence sales decreased to 33% in 2003 from 38% in 2002 primarily due to increases in construction and development costs. The decrease in revenue and cost of revenue on multi-family residences was due to a decline in the number of units for sale. The gross profit percentage on multi-family home sales decreased to (4)% in 2003 from 24% in 2002 primarily due to increased development and construction costs in 2003 associated with the wind up of the first phase of multi-family residences. The average price of a home site sold in 2003 was $280,000, compared to $248,000 in 2002. The gross profit percentage from home site sales decreased to 61% in 2003 from 65% in 2002 primarily due to increases in development costs associated with amenities and roadway improvement.

At WaterSound, multi-family unit percentage of completion contributions to income began in the fourth quarter of 2002 and continued for the full year in 2003. The gross profit percentage on home sites increased to 67% in 2003 from 61% in 2002 primarily due to increases in sales prices.

At WindMark Beach, revenues have decreased as a result of a decrease in units offered for sale. The gross profit percentage on home site sales has increased to 84% in 2003 from 79% in 2002 due a change in the mix of relative locations of the home sites sold and to sales price increases on comparable home sites.

At St. Johns Golf and Country Club, the gross profit percentage on home sales decreased to 16% in 2003 from 19% in 2002 primarily due to higher development and construction costs in 2003. The gross profit percentage on home site sales increased to 55% in 2003 from 30% in 2002 primarily due to higher parcel development costs in 2002.

At Victoria Park, the gross profit percentage on home sales decreased to 11% in 2003 from 15% in 2002 because the mix of homes sold in 2003 included more homes located in the active adult community, which has higher parcel development costs. The gross profit percentage on home site sales increased to 39% in 2003 from 33% in 2002 primarily due to the deferral of revenue in 2002 on several of the home sites as a result of contingencies in the sales contracts.

At Saussy Burbank, the gross profit percentage on home sales has decreased to 9% in 2003 from 11% in 2002 primarily due to an increase in lot costs and a change in the mix of locations of homes sold.

Overall, we expect margins in the community development segment to remain stable in the near future.

Other revenues totaled $26.8 million in 2003 with $26.6 million in related costs, compared to revenues totaling $14.7 million in 2002 with $20.6 million in related costs. These included revenues from the WaterColor Inn, which began operations in 2002, other resort operations and management fees.

Other operating expenses, including salaries and benefits of personnel and other administrative expenses, increased $5.9 million during 2003 compared to 2002. The increase was primarily due to increases in project administration costs and marketing costs attributable to the increase in residential development activity.


	Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

Real estate sales include sales of home and home sites and sales of land. Cost of sales includes direct costs, selling costs and other indirect costs. In 2001, the components of cost of sales were $147.2 million in direct costs, $11.3 million in selling costs, and $14.2 million in other indirect costs.

Sales and cost of sales of homes and home sites for 2002 are discussed above. Sales of homes in 2001 totaled $184.6 million with related cost of sales of $154.5 million, resulting in a gross profit percentage of 16%. Cost of real estate sales for homes in 2001 consisted of $132.6 million in direct costs, $9.1 million in selling costs, and $12.7 million in indirect costs. Sales of home sites in 2001 totaled $49.8 million with related cost of sales of $18.3 million, resulting in a gross profit percentage of 63%. Cost of real estate sales for home sites in 2001 consisted of $14.6 million in direct costs, $2.2 million in selling costs, and $1.5 million in indirect costs. The increase in real estate sales was due to an increase in the number of units sold and higher selling prices. Cost of real estate sales increased primarily due to the increased volume of sales. The following table sets forth home and home site sales activity by individual developments:



					Year Ended December 31, 2002									Year Ended December 31, 2001

					Closed				Cost of		Gross			Closed				Cost of		Gross
					Units		Revenues		Sales		Profit			Units		Revenues		Sales		Profit


					(Dollars in millions)
Northwest Florida:
	Walton County:
		WaterColor:
			Homes:
				Single-family		13	$	10.5	$	6.5	$	4.0			7	$	4.8	$	3.1	$	1.7
				Multi-family		45		23.3		17.8		5.5			34		27.9		19.0		8.9
			Home sites			172		42.7		15.0		27.7			50		18.8		5.4		13.4
		WaterSound:
			Multi-family homes			—		18.5		11.4		7.1			—		—		—		—
			Home sites			64		25.6		10.0		15.6			44		14.1		5.9		8.2
	Bay County:
		The Hammocks:
			Homes			32		4.6		4.1		0.5			42		5.4		4.7		0.7
			Home sites			36		1.1		0.6		0.5			—		—		—		—
		Palmetto Trace: Homes				43		6.4		5.6		0.8			—		—		—		—
		Summerwood: Homes				12		1.8		1.8		—			58		8.9		7.8		1.1
		Woodrun:
			Homes			1		0.3		0.4		(0.1	)		3		0.7		0.7		—
			Home sites			—		—		—		—			17		0.5		0.4		0.1
		Other Bay County: Home sites				1		0.1		0.1		—			14		0.4		0.1		0.3



				Year Ended December 31, 2002								Year Ended December 31, 2001

				Closed				Cost of		Gross		Closed				Cost of		Gross
				Units		Revenues		Sales		Profit		Units		Revenues		Sales		Profit


				(Dollars in millions)
	Leon County:
		SouthWood:
			Homes		115		21.3		18.5		2.8		33		6.1		5.6		0.5
			Home sites		65		6.1		2.8		3.3		63		4.2		2.2		2.0
	Franklin County:
		Driftwood: Home sites			—		—		—		—		3		0.4		0.1		0.3
	Gulf County:
		Windmark Beach: Home sites			67		22.1		4.6		17.5		20		4.0		1.2		2.8
Northeast Florida:
	St. Johns County:
		St. Johns Golf & Country Club:
			Homes		111		34.1		27.6		6.5		66		19.1		15.9		3.2
			Home sites		21		1.0		0.7		0.3		69		3.4		2.2		1.2
		RiverTown: Home sites			—		—		—		—		8		3.0		0.2		2.8
	Duval County:
		James Island: Homes			72		22.5		19.3		3.2		76		24.7		21.3		3.4
		Hampton Park: Homes			35		11.3		9.9		1.4		1		0.3		0.2		0.1
Central Florida:
	Volusia County:
		Victoria Park:
			Homes		77		14.1		12.0		2.1		14		2.4		2.0		0.4
			Home sites		12		0.6		0.4		0.2		13		1.0		0.6		0.4
North Carolina and South Carolina:
			Saussy Burbank: Homes		523		102.6		91.7		10.9		397		84.3		74.1		10.2

Total					1,517	$	370.6	$	260.8	$	109.8		1,032	$	234.4	$	172.7	$	61.7

At WaterColor, the average price of a single-family residence sold in 2002 was $800,000 compared to $685,000 in 2001. The increase in average price per unit was primarily due to the change in mix of size and relative location. The decreases in revenue, cost of revenue and gross profit associated with multi-family residences was primarily due to several beachfront multi-family units which closed in 2002, but for which most of the income was recognized in 2001 using the percentage of completion method. The average price of a lot sold in 2002 was $248,000 compared to $376,000 in 2001. The decrease in average price was primarily due to the closing of three beachfront lots during 2001, with an average sales price of $1,228,000 each, compared to no beachfront lots closed in 2002.

At WaterSound, multi-family unit percentage of completion contributions to income began in 2002. The average price of a home site sold in 2002 was $400,000 compared to $320,000 in 2001. The increase was primarily due to the closing of two gulf front lots in 2002 with an average price of $1,237,500 and two peninsula lots at an average price of $730,000. In addition, a portion of the profit recorded from the 2001 closings was deferred until 2002 because the development of the parcels was not completed until 2002.

At WindMark Beach, the margin increases in 2002 compared to 2001 were primarily due to increases in sales prices.

At SouthWood, the margins were higher on homes in 2002 than in 2001 primarily due to higher construction costs in 2001. The margins were higher on home sites due to a change in the mix of sizes of the home sites sold.

At St. Johns Golf & Country Club, home sales margins were higher in 2002 than in 2001 primarily due to the mix of sizes and relative locations of homes sold. Home site margins were lower in 2002 than in 2001 primarily due to the mix of sizes of the home sites sold.

Other revenues in 2002 totaled $14.7 million with $20.6 million in related costs, compared to revenues in 2001 totaling $3.4 million with $6.2 million in related costs. These included revenues from the WaterColor Inn, other resort operations and management fees. The WaterColor Inn began operations in 2002.

The community development operations’ other operating expenses, including salaries and benefits of personnel and other administrative expenses, increased $6.0 million during 2002 compared to 2001. The increase was due to increases in marketing and other administrative expenses associated with new residential development.

Commercial Real Estate Development and Services. The table below sets forth the results of operations of our commercial real estate development and services segment for the three years ended December 31, 2003.



			Years Ended December 31,

			2003			2002			2001


			(In millions)
Revenues:
	Real estate sales		$	25.6		$	28.2		$	131.9
	Realty revenues			62.5			58.5			56.0
	Rental revenues			40.0			32.4			20.2
	Other revenues			1.8			1.1			2.5

		Total revenues		129.9			120.2			210.6

Expenses:
	Cost of real estate sales			7.0			20.8			117.8
	Cost of realty revenues			36.2			33.2			32.7
	Cost of rental revenues			16.4			12.7			8.5
	Other operating expenses			36.6			32.8			32.9
	Depreciation and amortization			15.3			10.3			10.0
	Impairment loss			14.1			—			0.5

		Total expenses		125.6			109.8			202.4
Other expense				(7.8	)		(7.5	)		(3.3	)

Pretax income (loss) from continuing operations			$	(3.5	)	$	2.9		$	4.9


	Year Ended December 31, 2003 Compared to Year Ended December 31, 2002

Rental Revenues. Rental revenues generated by our commercial real estate development and services segment owned operating properties increased $7.6 million, or 23%, in 2003 compared to 2002, due to six buildings placed in service or acquired during 2003 and an increase in the overall leased percentage of rental properties. Operating expenses relating to these revenues increased $3.7 million, or 29% primarily due to the six buildings placed in service and increased occupancy as well as increases in property taxes, utilities and upgraded security at most of the buildings. As of December 31, 2003, our commercial real estate development and services segment had interests in 24 operating properties with 2.9 million total rentable square feet in service, including two buildings, totaling approximately 0.2 million square feet, that were owned by partnerships and accounted for using the equity method of accounting. At December 31, 2002, our commercial real estate development and services segment had interests in 19 operating properties with 2.4 million total rentable square feet in service, including three buildings, totaling 0.4 million square

feet, that were owned by partnerships and accounted for using the equity method of accounting. The overall leased percentage increased to 83% at December 31, 2003, compared to 81% at December 31, 2002. Further information about commercial income producing properties majority owned by the Company, along with results of operations for 2003 and 2002, is presented in the tables below.


			Net Rentable		Percentage			Net Rentable		Percentage
			Square Feet at		Leased at			Square Feet at		Leased at
			December 31,		December 31,			December 31,		December 31,
	Location		2003		2003			2002		2002

Buildings purchased with tax- deferred proceeds:
Harbourside		Clearwater, FL		147,000		92	%		146,000		86	%
Prestige Place One and Two		Clearwater, FL		144,000		86			143,000		84
Lakeview		Tampa, FL		125,000		77			125,000		76
Palm Court		Tampa, FL		60,000		68			62,000		61
Westside Corporate Center		Plantation, FL		100,000		86			100,000		86
280 Interstate North		Atlanta, GA		126,000		71			126,000		67
Southhall Center		Orlando, FL		155,000		88			155,000		94
1133 20th Street		Washington, DC		119,000		99			119,000		99
1750 K Street		Washington, DC		152,000		90			152,000		94
Millenia Park One		Orlando, FL		158,000		68			158,000		44
Beckrich Office One		Panama City Beach, FL		34,000		96			34,000		88
5660 New Northside		Atlanta, GA		272,000		91			275,000		96
SouthWood Office One		Tallahassee, FL		88,000		73			(a)		(a)
Crescent Ridge		Charlotte, NC		158,000		100			(b)		(b)
Windward Plaza		Atlanta, GA		465,000		89			(b)		(b)

Subtotal				2,303,000		86			1,595,000		83

Development property:
Westchase Corporate Center		Houston, TX		184,000		93			184,000		89
TNT Logistics		Jacksonville, FL		99,000		83			99,000		73
245 Riverside		Jacksonville, FL		134,000		39			(b)		(b)
SouthWood Office One		Tallahassee, FL		(a)		(a)			88,000		35
Beckrich Office Two		Panama City Beach, FL		34,000		20			(b)		(b)

Subtotal				451,000		69			371,000		72

Total				2,754,000		83			1,966,000		81


(a)	During 2003, SouthWood Office One was transferred from development property to buildings purchased with tax-deferred proceeds.

(b)	These properties were acquired or completed after the date reported.



	Year Ended December 31, 2003												Year Ended December 31, 2002

										Pre-tax												Pre-tax
	Rental		Operating		NOI		Adjustments			Income			Rental		Operating		NOI		Adjustments			Income
	Revenues		Expenses		(a)		(b)			(Loss)			Revenues		Expenses		(a)		(b)			(Loss)


	(In millions)
Buildings purchased with tax- deferred proceeds:
Harbourside	$	3.0	$	1.0	$	2.0	$	(1.4	)	$	0.6		$	2.4	$	1.0	$	1.4	$	(1.4	)	$	—
Prestige Place One and Two		2.3		1.0		1.3		(1.4	)		(0.1	)		2.0		1.0		1.0		(1.1	)		(0.1	)
Lakeview		1.9		0.7		1.2		(1.3	)		(0.1	)		2.4		1.0		1.4		(1.2	)		0.2
Palm Court		0.5		0.2		0.3		(0.5	)		(0.2	)		0.8		0.3		0.5		(0.4	)		0.1
Westside Corporate Center		1.9		1.0		0.9		(1.1	)		(0.2	)		1.9		0.8		1.1		(1.0	)		0.1



	Year Ended December 31, 2003													Year Ended December 31, 2002

											Pre-tax													Pre-tax
	Rental		Operating		NOI			Adjustments			Income			Rental		Operating		NOI			Adjustments			Income
	Revenues		Expenses		(a)			(b)			(Loss)			Revenues		Expenses		(a)			(b)			(Loss)


	(In millions)
280 Interstate North		1.7		0.8		0.9			(0.9	)		—			2.2		0.8		1.4			(1.0	)		0.4
Southhall Center		2.8		1.0		1.8			(1.5	)		0.3			3.4		1.3		2.1			(1.6	)		0.5
1133 20th Street		4.0		1.3		2.7			(2.1	)		0.6			4.1		1.3		2.8			(2.1	)		0.7
1750 K Street		5.6		1.9		3.7			(2.9	)		0.8			5.4		1.7		3.7			(2.5	)		1.2
Millenia Park One		1.7		0.8		0.9			(1.5	)		(0.6	)		1.0		0.5		0.5			(0.6	)		(0.1	)
Beckrich Office One		0.4		0.2		0.2			(0.3	)		(0.1	)		0.3		0.2		0.1			(0.2	)		(0.1	)
5660 New Northside		5.8		1.8		4.0			(1.4	)		2.6			0.3		—		0.3			—			0.3
SouthWood Office One		0.4		0.3		0.1			(0.4	)		(0.3	)		—		—		—			—			—
Crescent Ridge		1.2		0.3		0.9			(0.4	)		0.5			—				—			—			—
Windward Plaza		0.8		0.2		0.6			(0.6	)		—			—				—			—			—

Subtotal	$	34.0	$	12.5	$	21.5		$	(17.7	)	$	3.8		$	26.2	$	9.9	$	16.3		$	(13.1	)	$	3.2
Development property:
Westchase Corporate Center		4.2		1.6		2.6			(1.8	)		0.8			3.6		1.6		2.0			(2.1	)		(0.1	)
Tree of Life		—		—		—			—			—			1.0		0.4		0.6			(0.6	)		—
TNT Logistics		1.4		0.6		0.8			(0.7	)		0.1			1.1		0.3		0.8			(0.8	)		—
245 Riverside		0.2		0.5		(0.3	)		(1.0	)		(1.3	)		—		—		—			—			—
Nextel Call Center		—		—		—			—			—			0.4		0.1		0.3			(0.4	)		(0.1	)
Beckrich Office Two		—		—		—			(0.1	)		(0.1	)
Other		0.2		1.2		(1.0	)		(1.3	)		(2.3	)		0.1		0.4		(0.3	)		(0.4	)		(0.7	)

Subtotal	$	6.0	$	3.9	$	2.1		$	(4.9	)	$	(2.8	)	$	6.2	$	2.8	$	3.4		$	(4.3	)	$	(0.9	)

Total	$	40.0	$	16.4	$	23.6		$	(22.6	)	$	1.0		$	32.4	$	12.7	$	19.7		$	(17.4	)	$	2.3


(a)	NOI is net operating income.

(b)	Adjustments include interest expense, depreciation and amortization.

Realty Revenues. Advantis’ realty revenues in 2003 increased 7% over 2002 due to increases in brokerage and construction revenues, which were partially offset by a small decrease in property management revenues. Cost of Advantis’ realty revenue increased $3.0 million due to increased broker commissions. Advantis’ other operating expenses, consisting of office administration expenses, increased to $28.9 million in 2003 from $25.6 million in 2002, primarily due to an increase in staffing costs. Advantis recorded a pre-tax loss of $17.8 million for 2003, compared to a pre-tax loss of $1.5 million for 2002, after excluding profit of $2.0 million in 2003 and $1.3 million in 2002 related to intercompany transactions. Although management previously believed that Advantis’ performance would continue to improve despite a very difficult environment for commercial services companies, Advantis’ results of operations declined for the second quarter of 2003 and expectations for future periods were reduced. As a result, the Company recorded an impairment loss to reduce the carrying amount of Advantis’ goodwill from $28.9 million to $14.8 million, pursuant to FAS 142. This resulted in an impairment loss of $14.1 million pre-tax ($8.8 million net of tax). We believe that Advantis’ performance will continue to improve based on current expectations.

Real Estate Sales. During 2003, St. Joe Commercial had no building sales. Total proceeds from land sales were $25.6 million, with a pre-tax gain of $18.7 million. Land sales included the following:


		Number of		Acres		Gross Sales		Average
Land		Sales		Sold		Price		Price/Acre

						(In millions)		(In thousands)

Florida:
	Unimproved		18		268	$	13.1	$	49
	Improved		30		120		11.5		95
Texas			1		2		1.0		449

Total/ Average			49		390	$	25.6	$	66

During 2002, total proceeds from land sales were $11.0 million, with a pre-tax gain of $4.3 million. Land sales included the following:


		Number of		Acres		Gross Sales		Average
Land		Sales		Sold		Price		Price/Acre

						(In millions)		(In thousands)
Florida:
	Unimproved		5		44	$	2.8	$	63
	Improved		8		27		2.6		98
Texas			3		20		5.6		285

Total/ Average			16		91	$	11.0	$	121

Total proceeds for building sales in 2002 were $17.2 million, with a pre-tax gain of $3.1 million. Building sales consisted of:


	•	the sale of the 67,000-square-foot Nextel building located in the Beckrich Office Park in Panama City Beach for $8.1 million, with a pre-tax gain of $1.9 million; and

	•	the sale of the 69,000-square-foot Tree of Life building located in St. Augustine, Florida, for $9.1 million, with a pre-tax gain of $1.2 million.

During 2003 and 2002, the commercial segment made significant progress in establishing value for land for retail, apartment and other commercial use in Northwest Florida. Opportunities for the commercial segment have also begun to emerge from activities originated in the community development segment. In 2002, three commercial land parcels were sold at SouthWood in Tallahassee, Florida. These land sales, which are included in the totals above, represented $2.2 million in proceeds and $1.2 million in pre-tax gain.

Depreciation and amortization was $15.3 million in 2003 compared to $10.3 million in 2002. It was primarily made up of depreciation on the operating properties and amortization of lease intangibles.


	Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

Rental Revenues. Rental revenues generated by our commercial real estate development and services segment owned operating properties increased $12.2 million in 2002 compared to 2001 due to five new buildings placed in service or acquired during 2002, partially offset by two buildings sold during 2002, and two new buildings placed in service or acquired late in the year in 2001. Operating expenses relating to these revenues increased $4.9 million. As of December 31, 2002, our commercial real estate development and services segment had interests in 19 operating properties with 2.4 million total rentable square feet in service including three buildings, totaling 0.4 million square feet that are owned by partnerships and accounted for using the equity method of accounting. As of December 31, 2001, our commercial real estate development and services segment had interests in 20 operating properties with 2.4 million total rentable square feet in service, including five buildings, totaling 0.9 million square feet, that are owned by

partnerships and accounted for using the equity method of accounting. The overall leased percentage decreased to 78% at December 31, 2002, compared to 84% at December 31, 2001. Millennia Park One experienced a decrease in leased percentage due to tenant bankruptcies. Additionally, we were still in the process of procuring tenants for SouthWood Office One, a new speculative building. Two properties totaling approximately 0.2 million square feet of office space were in predevelopment or under construction as of December 31, 2002.

Information about commercial income producing properties owned or managed by the Company, along with results of operations for 2002 and 2001, is presented in the tables below.



	Year Ended December 31, 2002													Year Ended December 31, 2001

											Pre-tax													Pre-tax
	Rental		Operating		NOI			Adjustments			Income			Rental		Operating		NOI			Adjustments			Income
	Revenues		Expenses		(a)			(b)			(Loss)			Revenues		Expenses		(a)			(b)			(Loss)


	(In millions)
Buildings purchased with tax- deferred proceeds:
Harbourside	$	2.4	$	1.0	$	1.4		$	(1.4	)	$	—		$	2.2	$	0.9	$	1.3		$	(1.4	)	$	(0.1	)
Prestige Place One and Two		2.0		1.0		1.0			(1.1	)		(0.1	)		2.3		0.9		1.4			(1.2	)		0.2
Lakeview		2.4		1.0		1.4			(1.2	)		0.2			2.2		0.9		1.3			(1.1	)		0.2
Palm Court		0.8		0.3		0.5			(0.4	)		0.1			0.9		0.3		0.6			(0.3	)		0.3
Westside Corporate Center		1.9		0.8		1.1			(1.0	)		0.1			1.9		0.9		1.0			(0.8	)		0.2
280 Interstate North		2.2		0.8		1.4			(1.0	)		0.4			2.2		0.8		1.4			(0.7	)		0.7
Southhall Center		3.4		1.3		2.1			(1.6	)		0.5			2.4		0.9		1.5			(0.9	)		0.6
1133 20th Street		4.1		1.3		2.8			(2.1	)		0.7			1.2		0.3		0.9			(0.5	)		0.4
1750 K Street		5.4		1.7		3.7			(2.5	)		1.2			0.1		—		0.1			—			0.1
Millenia Park One		1.0		0.5		0.5			(0.6	)		(0.1	)		—		—		—			—			—
Beckrich Office One		0.3		0.2		0.1			(0.2	)		(0.1	)		—		—		—			—			—
5660 New Northside		0.3		—		0.3			—			0.3			—		—		—			—			—

Subtotal	$	26.2	$	9.9	$	16.3		$	(13.1	)	$	3.2		$	15.4	$	5.9	$	9.5		$	(6.9	)	$	2.6
Development property:
Westchase Corporate Center		3.6		1.6		2.0			(2.1	)		(0.1	)		2.9		1.5		1.4			(2.2	)		(0.8	)
Tree of Life		1.0		0.4		0.6			(0.6	)		—			—		—		—			—			—
TNT Logistics		1.1		0.3		0.8			(0.8	)		—			—		—		—			—			—
Nextel Call Center		0.4		0.1		0.3			(0.4	)		(0.1	)		—		—		—			—			—
NCCI		—		—		—			—			—			1.4		—		1.4			(0.7	)		0.7
Other		0.1		0.4		(0.3	)		(0.4	)		(0.7	)		0.5		1.1		(0.6	)		(0.1	)		(0.7	)

Subtotal	$	6.2	$	2.8	$	3.4		$	(4.3	)	$	(0.9	)	$	4.8	$	2.6	$	2.2		$	(3.0	)	$	(0.8	)

Total	$	32.4	$	12.7	$	19.7		$	(17.4	)	$	2.3		$	20.2	$	8.5	$	11.7		$	(9.9	)	$	1.8


(a)	NOI is net operating income.

(b)	Adjustments include interest expense, depreciation and amortization.

Realty Revenues. Advantis’ realty revenues increased 4% in 2002 over 2001 due to increases in brokerage and property management revenues, which were partially offset by a decrease in construction revenues. Advantis’ cost of realty revenues increased $0.4 million. A decrease in brokerage related expenses was offset by increases in property management and construction related expenses. Advantis’ expenses included commissions paid to brokers, property management expenses, and construction costs. Advantis’ other operating expenses, which are made up of office administration expenses, were $25.6 million and $26.0 million in 2002 and 2001, respectively. Advantis recorded a pre-tax loss of $1.5 million for 2002, compared to a pre-tax loss of $6.5 million for 2001, after excluding profit of $1.3 million in 2002 and $0.9 million in 2001 related to intercompany transactions. The decrease in the net loss primarily resulted from increased revenues and a decrease in depreciation expense. In 2002, the new Advantis management team was in the process of implementing numerous changes and improvements in property management, recruiting and staffing.

Real Estate Sales. As discussed above, total proceeds from land sales in 2002 were $11.0 million, with a pre-tax gain of $4.3 million, and total proceeds for building sales were $17.2 million, with a pre-tax gain of $3.1 million.

During 2001, our commercial real estate development and services segment real estate sales consisted of:


	•	the sale of the NCCI center, a 310,000-square-foot building developed through the Codina Group, Inc. in Boca Raton, Florida, for $52.5 million, a pre-tax gain of approximately $4.4 million,

	•	the sales of two Texas properties for combined proceeds of approximately $12.5 million and a pre-tax gain of $0.6 million,

	•	the sale of the 160,000-square-foot facility developed through the Codina Group, Inc. for IBM Corporation at Beacon Square in Boca Raton, Florida, for $33.8 million, a pre-tax gain of approximately $5.7 million, and

	•	other land sales primarily representing sales of Texas real estate with proceeds of $33.4 million and pre-tax gains of $2.9 million.

Depreciation and amortization, primarily made up of depreciation on operating properties, was $10.3 million in 2002 compared to $10.0 million in 2001. Goodwill amortization was $2.3 million in 2001. Pursuant to FAS 142, no amortization of goodwill was recorded in 2002.

Land Sales. The table below sets forth the results of operations of our land sales segment for the three years ended December 31, 2003.



			Years Ended December 31,

			2003		2002		2001


			(In millions)
Real estate sales			$	99.2	$	84.1	$	76.2

Expenses:
	Cost of real estate sales			13.3		9.0		7.8
	Cost of other revenues			0.5		0.2		—
	Other operating expenses			6.8		6.9		4.8
	Depreciation and amortization			0.2		0.2		0.1

		Total expenses		20.8		16.3		12.7

Other income				0.1		0.3		0.3

Pretax income from continuing operations			$	78.5	$	68.1	$	63.8

Land sales activity for 2003, 2002 and 2001, excluding conservation lands, was as follows:


	Number		Number of		Average Price		Gross		Gross
Period	of Sales		Acres		Per Acre		Sales Price		Profit

							(In millions)		(In millions)
2003		166		29,904	$	1,874	$	56.0	$	47.6
2002		176		28,071	$	1,820	$	51.1	$	44.1
2001		128		26,549	$	1,947	$	51.7	$	45.7

Conservation land sales activity for 2003, 2002 and 2001 was as follows:


	Number		Number of		Average Price		Gross		Gross
Period	of Sales		Acres		Per Acre		Sales Price		Profit

							(In millions)		(In millions)
2003		7		34,999	$	1,157	$	40.5	$	36.7
2002		7		16,512	$	1,999	$	33.0	$	30.5
2001		5		18,070	$	1,351	$	24.4	$	22.7

RiverCamps was a new product in 2003 and therefore had no sales in 2002 and 2001. RiverCamps generated $2.0 million in revenues in 2003 with $1.8 million in related costs.

Land sales for 2003 included the sale of the 2003 HGTV Dream Home, located on East Bay in Bay County, Florida. This sale generated revenue of $0.7 million with related costs of $0.7 million.

We are managing our inventory of land to be sold for long-term value maximization. The vast majority of the holdings marketed by our land sales segment will continue to be managed as timberlands until sold. Additionally, no assurance can be given that conservation land sales will continue at historical levels because of potential declines in government spending on acquisition of conservation lands.

Forestry. The table below sets forth the results of operations of our forestry segment for the three years ended December 31, 2003.



			Years Ended December 31,

			2003		2002		2001


			(In millions)
Revenues:
	Timber sales		$	36.6	$	40.7	$	37.0
	Real estate sales			—		0.6		0.3

		Total revenues		36.6		41.3		37.3

Expenses:
	Cost of timber sales			24.2		28.9		24.3
	Cost of real estate sales			—		0.2		0.1
	Other operating expenses			2.6		2.6		2.0
	Depreciation and amortization			4.1		4.1		3.9

		Total expenses		30.9		35.8		30.3

Other income				2.4		2.5		2.1

Pretax income from continuing operations			$	8.1	$	8.0	$	9.1

On June 20, 2001, we purchased Sunshine State Cypress, a cypress sawmill and mulch processing plant located in Liberty County, Florida, for $5.5 million in cash and the assumption of $5.8 million in debt.

Revenues for the forestry segment in 2003 decreased 11% compared to 2002. Revenues in 2002 increased 11% compared to 2001. Total sales under our fiber agreement with Smurfit-Stone Container Corporation were $11.8 million (677,000 tons) in 2003, $12.2 million (686,000 tons) in 2002, and $14.3 million (709,000 tons) in 2001. Sales to other customers totaled $16.2 million (837,000 tons) in 2003, $18.3 million (782,000 tons) in 2002, and $20.5 million (853,000 tons) in 2001. The 2003 decrease in revenues under the fiber agreement was primarily due to the sales of higher priced wood chips in 2002 with no such sales in 2003. The 2002 decrease was due to decreasing prices under the terms of the fiber agreement and a decrease in volume. The 2003 decrease in revenues from sales to other customers was due to a change in the product mix. The 2002 decrease was due to a decrease in prices and volume resulting from unfavorable market conditions. Revenues from the cypress mill operation, which was acquired in the second quarter of 2001, were $8.5 million in 2003, $10.2 million in 2002, and $2.1 million in 2001. The forestry segment recorded no revenues from land sales in 2003, compared to revenues from land sales of $0.6 million in 2002 with related cost of sales of $0.2 million, and $0.4 million in 2001 with related cost of sales of $0.1 million.

Cost of timber sales decreased $4.7 million in 2003 and increased $4.6 million in 2002. Cost of sales as a percentage of revenue was 66% in 2003, 71% in 2002, and 66% in 2001. The 2003 decrease in cost of sales was primarily due to changes in the product mix. The 2002 increase in cost of sales was primarily due to a higher cost of sales of the cypress operation. Cost of sales for the cypress mill operation were

$7.4 million, or 87% of revenue, in 2003, $8.8 million, or 86% of revenue, in 2002, and $2.1 million, or 100% of revenue, in 2001. Cost of sales for timber was $16.8 million, or 60% of revenue, in 2003, $20.1 million, or 66% of revenue, in 2002, and $22.2 million, or 64% or revenue, in 2001. Other operating expenses were $2.6 million in 2003 and in 2002 and $2.0 million in 2001.

Over the short-term, we expect prices for timber to remain steady or improve.

Liquidity and Capital Resources

We generate cash from:


	•	Operations;

	•	Sales of land holdings, other assets and subsidiaries;

	•	Borrowings from financial institutions and other debt; and

	•	Issuances of equity, primarily from the exercise of employee stock options.

We use cash for:


	•	Operations;

	•	Real estate development;

	•	Construction and homebuilding;

	•	Repurchases of our common stock;

	•	Payments of dividends;

	•	Repayments of debt; and

	•	Investments in joint ventures and acquisitions.

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


	*Cash Flows from Operating Activities*

Net cash provided by operations in 2003, 2002 and 2001 were $126.4 million, $109.4 million, and $100.8 million, respectively. During such periods, expenditures relating to our community development segment were $342.5 million, $272.5 million, and $229.5 million, respectively. Other expenditures for operating properties in 2003, 2002 and 2001 totaled $43.1 million, $38.9 million and 110.3 million, respectively, and were made up of commercial property development and residential club and resort property development.

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


	*Cash Flows from Investing Activities*

Net cash used in investing activities in 2003 was $116.5 million and included $93.4 million for the purchase of four commercial buildings and related intangible assets. In 2002, net cash provided by investing activities was $48.9 million and included proceeds from the sale of discontinued operations of $138.7 million and $65.4 million for the purchase of commercial buildings. In 2001, net cash used in investing activities was $123.4 million and included $98.0 million for the purchase of commercial buildings.

The purchase of commercial buildings, comprising the majority of the cash used in investing activities, generally follow the sale of real estate, principally land sales and commercial sales on a tax deferred basis which requires the reinvestment of proceeds over a required time frame. As a consequence, if sales activity slows, the purchase activity will also slow. We expect this relationship to continue going forward.


	*Cash Flows from Financing Activities*

In 2003 and 2002, net cash used in financing activities was $25.8 million and $126.0 million, respectively. In 2001, net cash provided by financing activities was $11.9 million.

We have approximately $76 million of debt maturing in 2004. We expect to spend $125 million to $175 million for the repurchase of shares, the acquisition of surrendered shares and dividend payments in 2004.

We secured borrowings, collateralized by our commercial property, of $26.0 million during 2002 and $72.2 million during 2001. No such borrowings originated in 2003.

On February 7, 2002, we issued a series of senior notes with an aggregate principal amount of $175.0 million in a private placement. The notes range in maturity from three to ten years and bear fixed rates of interest ranging from 5.64% to 7.37%, depending upon maturity. Interest on the notes is payable semiannually. The net proceeds of the notes were used to pay down our revolving credit facility. The senior notes include financial performance covenants relating to our leverage position, fixed charge coverage, and a minimum net worth requirement. Management believes that we are currently in compliance with the covenants.

We have a $250 million revolving credit facility, which matures on March 30, 2005, and can be used for general corporate purposes. The credit facility includes financial performance covenants relating to our leverage position, interest coverage and a minimum net worth requirement. The credit facility also has negative pledge restrictions. Management believes that we are currently in compliance with the covenants of the credit facility. At December 31, 2003, the outstanding balance was $40.0 million. At December 31, 2002, there was no balance outstanding. During 2003, we borrowed $40.0 million on the credit line, net of repayments. During 2001, we borrowed $90.0 million on the credit line, net of repayments.

We have used community development district (“CDD”) bonds to finance the construction of on-site infrastructure improvements at four of our projects. The principal and interest payments on the bonds are paid by assessments on, or from sales proceeds of, the properties benefited by the improvements financed by the bonds. We record a liability for future assessments which are fixed or determinable and will be levied against our properties. At December 31, 2003, CDD bonds totaling $99.5 million had been issued, of which $79.0 million had been expended. At December 31, 2002, CDD bonds totaling $83.5 million had been issued, of which $49.4 million had been expended. At December 31, 2001, CDD bonds totaling $33.5 million had been issued, of which $18.9 million had been expended. In accordance with Emerging Issues Task Force Issue 91-10, “Accounting for Special Assessments and Tax Increment Financing,” we have recorded $30.0 million and $11.3 million of these obligations as of December 31, 2003 and 2002, respectively.

Through December 31, 2003, our Board of Directors had authorized, through a series of four specific authorizations ranging from $150 million to $200 million, a total of $650.0 million for the repurchase of our outstanding common stock from time to time on the open market (the “Stock Repurchase Program”), of which $43.2 million remained available at December 31, 2003. In February 2004, the Board authorized an additional $150.0 million for the Stock Repurchase Program.

Beginning in December 2000 for an initial 90-day term and for additional 90-day terms from time to time (currently through May 7, 2004), the Alfred I. duPont Testamentary Trust, our largest shareholder, and the Trust’s beneficiary, The Nemours Foundation, have agreed to participate in the Stock Repurchase Program. Pursuant to the most recent agreement, effective February 6, 2004, the Trust and/or the Foundation will sell to us each Monday a number of shares equal to 0.46 times the number of shares we purchased from the public during the previous week, if any, at a price equal to the volume weighted average price, excluding commissions, paid for the shares purchased from the public during that week. However, the Trust and the Foundation are not required to sell shares to us if the volume weighted average price of shares repurchased from the public during that prior week is below $37.00 per share.

From the inception of the Stock Repurchase Program through December 31, 2003, we had repurchased 16,057,866 shares on the open market and 7,672,980 shares from the Trust and the Foundation. During the year ended December 31, 2003, 1,469,800 shares were repurchased on the open market and 1,085,374 shares were purchased from the Trust and the Foundation. In addition, 812,802 shares were surrendered by company executives in payment of the strike price and taxes due on exercised stock options and taxes due on vested restricted stock. During the year ended December 31, 2002, 2,583,700 shares were repurchased on the open market, 2,586,206 shares were purchased from the Trust and the Foundation, and executives surrendered 256,729 shares of our stock in payment of the strike price and taxes due on exercised stock options and taxes due on vested restricted stock. Through December 31, 2003, a total of $606.8 million has been expended as part of the Stock Repurchase Program, including $77.3 million in 2003, $150.3 million in 2002, and $174.7 million in 2001.

The Company’s board of directors authorized a quarterly cash dividend in the amount of $0.12 per share, payable on March 31, 2004, to shareholders of record at the close of business on March 15, 2004.


	*Off-Balance Sheet Arrangements*

We have entered into partnerships and joint ventures with unrelated third parties to develop or manage real estate projects and services. At December 31, 2003, three of these partnerships had debt outstanding totaling $16.2 million. The maximum amount of the debt we guaranteed is $17.1 million. We are wholly or jointly and severally liable as guarantor on these credit obligations. Certain partners in these partnerships have indemnified us for a portion of the guaranteed debt. We believe that future contributions, if required, will not have a significant impact on our liquidity or financial position.

Contractual Obligations and Commercial Commitments

December 31, 2003



	Payments Due by Period

			Less Than						After
Contractual Cash Obligations	Total		1 Year		1-3 Years		4-5 Years		5 Years


	(In thousands)
Debt	$	382,176	$	76,379	$	23,468	$	144,421	$	137,908
Operating leases		15,614		5,251		7,926		2,403		34

Total contractual cash obligations	$	397,790	$	81,630	$	31,394	$	146,824	$	137,942



	Amount of Commitment Expiration Per Period

	Total Amounts		Less Than
Other Commercial Commitments	Committed		1 Year		1-3 Years		4-5 Years		Thereafter


	(In thousands)
Guarantees	$	16,230	$	6,730	$	—	$	—	$	9,500
Surety bonds		19,565		18,555		1,010		—		—
Standby letters of credit		21,602		14,132		7,470		—		—

Total commercial commitments	$	57,397	$	39,417	$	8,480	$	—	$	9,500

We do not expect to have to fund the Pension Plan in the foreseeable future, unless market conditions deteriorate significantly.

Item 7A. Market Risk

Our primary market risk exposure is interest rate risk related to our long-term debt. As of December 31, 2003, $40.0 million was outstanding under our $250 million credit facility, which matures on March 30, 2005. This debt accrues interest at different rates based on timing of the loan and our preferences, but generally will be either the one, two, three or six month London Interbank Offered Rate (“LIBOR”) plus a LIBOR margin in effect at the time of the loan. This loan potentially subjects us to interest rate risk relating to the change in the LIBOR rates. We manage our interest rate exposure by monitoring the effects of market changes in interest rates. If LIBOR had been 100 basis points higher or lower, the effect on net income with respect to interest expense on the $250 million credit facility would have been a respective decrease or increase in the amount of $0.2 million pre-tax ($0.1 million net of tax).

Quantitative Disclosures

The table below presents principal amounts and related weighted average interest rates by year of maturity for our long-term debt. The weighted average interest rates for our fixed-rate long-term debt are based on the actual rates as of December 31, 2003. Weighted average variable rates are based on implied forward rates in the yield curve at December 31, 2003.

Expected Contractual Maturities


																								Fair
			2004			2005			2006			2007			2008			Thereafter			Total			Value


			($ in thousands)
Long-term Debt
	Fixed Rate			3,797			20,422			3,045			69,070			69,204			137,908			303,446			323,128
		Wtd. Avg. Interest Rate		7.0	%		5.8	%		6.8	%		6.6	%		7.3	%		7.2	%		7.0	%
	Variable Rate			72,582			1			—			1,151			4,996			—			78,730			78,730
		Wtd. Avg. Interest Rate		2.1	%		5.9	%		—			1.6	%		1.5	%		—			2.1	%

Management estimates the fair value of long-term debt based on current rates available to us for loans of the same remaining maturities. As the table incorporates only those exposures that exist as of December 31, 2003, it does not consider exposures or positions that could arise after that date. As a result, our ultimate realized gain or loss will depend on future changes in interest rate and market values.

Item 8. Financial Statements and Supplementary Data

The Financial Statements in pages F-2 to F-30 and the Independent Auditors’ Report on page F-1 are filed as part of this Report and incorporated by reference hereto.


Item 9.	*Changes in and Disagreements with Accountants on Accounting and Financial Disclosure*

None.

Item 9A. Controls and Procedures

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

(b) Changes in Internal Controls. During the quarter ended December 31, 2003, there have not been any changes in our internal controls that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART III


Item 10.	*Directors and Executive Officers of the Registrant*

Information concerning our directors, nominees for director and executive officers and our code of conduct is described in our proxy statement relating to our 2004 annual meeting of shareholders to be held on May 18, 2004. This information is incorporated by reference.


Item 11.	*Executive Compensation*

Information concerning compensation of our executive officers for the year ended December 31, 2003, is presented under the caption “Executive Compensation and Other Information” in our proxy statement. This information is incorporated by reference.


Item 12.	*Security Ownership of Certain Beneficial Owners and Management*


	•	Information concerning the security ownership of certain beneficial owners and of management is set forth under the caption “Security Ownership of Certain Beneficial Owners, Directors and Executive Officers” in our proxy statement and is incorporated by reference.

	•	Information concerning compliance with Section 16 of the Securities Exchange Act of 1934 is set forth under the caption “Section 16(a) Beneficial Ownership Reporting Compliance” in our proxy statement and is incorporated by reference.

Equity Compensation Plan Information

Our shareholders have approved all our equity compensation plans. These plans are designed to further align our directors’ and management’s interests with the Company’s long-term performance and the long-term interests of our shareholders.

The following table summarizes the number of shares of our common stock that may be issued under our equity compensation plans as of December 31, 2003:

Number of Securities

Remaining Available for

to be Issued

Weighted-Average

Future Issuance Under

Upon Exercise of

Exercise Price of

Equity Compensation Plans

Outstanding Options,

(Excluding Securities Reflected

Plan Category

Warrants and Rights

in the First Column)

Equity compensation plans approved by security holders

4,207,351

21.95

1,440,887

Equity compensation plans not approved by security holders

Total

4,207,351

21.95

1,440,887


Item 13.	*Certain Relationships and Related Transactions*

Information concerning certain relationships and related transactions during 2003 is set forth under the caption “Certain Transactions” in our proxy statement. This information is incorporated by reference.


Item 14.	*Principal Accountant Fees and Services*

Information concerning our independent auditors is presented under the caption “Audit Committee Information” in our proxy statement and is incorporated by reference.

PART IV


Item 15.	*Exhibits, Financial Statement Schedule and Reports on Form 8-K*

(a)(1) Financial Statements


	The financial statements listed in the accompanying Index to Financial Statements and Financial Statement Schedule and Independent Auditors’ Report are filed as part of this Report.

(2) Financial Statement Schedule


	The financial statement schedule and Independent Auditors’ Report listed in the accompanying Index to Financial Statements and Financial Statement Schedule are filed as part of this Report.

(3) Exhibits


	The exhibits listed on the accompanying Index to Exhibits are filed as part of this Report.

(b) Reports on Form 8-K


	(1) We filed Reports on Form 8-K on October 21, 2003 and November 4, 2003 furnishing copies of press releases relating to our financial results for the period ended September 30, 2003.

	(2) We filed a Report on Form 8-K on October 22, 2003, as amended on November 4, 2003, furnishing supplemental information for the period ended September 30, 2003.

All other schedules have been omitted since the required information is not present or not present in amounts sufficient to require submission on the schedule or because the information required is included in the Consolidated Financial Statements and the Notes to the Consolidated Financial Statements.

INDEX TO EXHIBITS


Exhibit
Number			Description

	3	.1	Restated and Amended Articles of Incorporation dated May 12, 1998 (incorporated by reference to Exhibit 3.1 of the registrant’s registration statement on Form S-1 (File 333-89146)).
	3	.2	Amended and Restated By-laws of the registrant (incorporated by reference to Exhibit 3.01 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2002 (File No. 1-10466)).
	4	.1	Registration Rights Agreement between the registrant and the Alfred I. duPont Testamentary Trust, dated December 16, 1997 (incorporated by reference to Exhibit 4.01 to the registrant’s Amendment No. 1 to the registration statement on Form S-3 (File No. 333-42397)).
	4	.2	Amendment No. 1 to the Registration Rights Agreement between the Alfred I. duPont Testamentary Trust and the registrant, dated January 26, 1998 (incorporated by reference to Exhibit 4.2 of the registrant’s registration statement on Form S-1 (File 333-89146)).
	4	.3	Amendment No. 2 to the Registration Rights Agreement between the Alfred I. duPont Testamentary Trust and the registrant, dated May 24, 2002 (incorporated by reference to Exhibit 4.3 of the registrant’s registration statement on Form S-1 (File 333-89146)).
	4	.4	Amendment No. 3 to the Registration Rights Agreement between the Alfred I. duPont Testamentary Trust and the registrant dated September 5, 2003 (incorporated by reference to Exhibit 4.4 of the registrant’s registration statement on Form S-3 (File No. 333-108292)).
	4	.5	Amendment No. 4 to the Registration Rights Agreement between the Alfred I. duPont Testamentary Trust and the registrant dated December 30, 2003 (incorporated by reference to Exhibit 4.5 of the registrant’s registration statement on Form S-3 (File No. 333-111658)).
	10	.1	Second Amended and Restated Credit Agreement dated as of February 7, 2002, among the registrant, First Union National Bank, as agent, and the lenders party thereto.
	10	.2	First Amendment to Second Amended and Restated Credit Agreement dated as of May 7, 2003, among the registrant, Wachovia Bank, National Association (formerly known as First Union National Bank), as agent, and the lenders party thereto (incorporated by reference to Exhibit 99.02 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2003 (File No. 1-10466)).
	10	.3	Second Amendment to Second Amended and Restated Credit Agreement dated as of July 10, 2003 among the registrant, Wachovia Bank, National Association (formerly known as First Union National Bank), as agent, and the lenders party thereto.
	10	.4	Employment Agreement between the registrant and Peter S. Rummell dated August 19, 2003 (incorporated by reference to Exhibit 10.1 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003 (File No. 1-10466)).
	10	.5	Employment Agreement between the registrant and Kevin M. Twomey dated August 19, 2003 (incorporated by reference to Exhibit 10.2 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003 (File No. 1-10466)).
	10	.6	Agreement between the registrant and the Alfred I. duPont Testamentary Trust dated November 6, 2003 (incorporated by reference to Exhibit 10.3 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003 (File No. 1-10466)).
	10	.7	Severance Agreement between Christine M. Marx and the registrant dated as of March 24, 2003 (incorporated by reference to Exhibit 99.04 to the registrant’s Form 10-Q for the quarter ended March 31, 2003 (File No. 1-10466)).
	10	.8	Employment Agreement of Robert M. Rhodes, dated November 3, 1997 (incorporated by reference to Exhibit 10.03 to the registrant’s registration statement on Form S-3 (File No. 333-42397)).
	10	.9	Form of Severance Agreement for Messrs. Regan and Ray (incorporated by reference to Exhibit 10.07 to the registrant’s registration statement on Form S-3 (File No. 333-42397)).
	10	.10	Long-term Incentive Compensation Agreement of Robert M. Rhodes, dated as of August 21, 2001 (incorporated by reference to Exhibit 10.10 to the registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001 (File No. 1-10466)).


Exhibit
Number			Description

	10	.11	Directors’ Deferred Compensation Plan, dated December 28, 2001 (incorporated by reference to Exhibit 10.10 of the registrant’s registration statement on Form S-1 (File 333-89146)).
	10	.12	Deferred Capital Accumulation Plan, as amended and restated effective January 1, 2002 (incorporated by reference to Exhibit 10.11 of the registrant’s registration statement on Form S-1 (File 333-89146)).
	10	.13	1999 Employee Stock Purchase Plan, dated November 30, 1999 (incorporated by reference to Exhibit 10.12 of the registrant’s registration statement on Form S-1 (File 333-89146)).
	10	.14	Amendment to the 1999 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.13 of the registrant’s registration statement on Form S-1 (File 333-89146)).
	10	.15	Supplemental Executive Retirement Plan, as amended and restated effective January 1, 2002 (incorporated by reference to Exhibit 10.15 of the registrant’s registration statement on Form S-1 (File 333-89146)).
	10	.16	Employment Agreement of Jerry M. Ray, dated October 22, 1997 (incorporated by reference to Exhibit 10.16 of the registrant’s registration statement on Form S-1 (File 333-89146)).
	10	.17	Employment Agreement of Michael N. Regan, dated November 3, 1997 (incorporated by reference to Exhibit 10.17 of the registrant’s registration statement on Form S-1 (File 333-89146)).
	10	.18	Amended and Restated Severance Agreement of Robert M. Rhodes, dated August 21, 2001 (incorporated by reference to Exhibit 10.19 of the registrant’s registration statement on Form S-1 (File 333-89146)).
	10	.19	1997 Stock Incentive Plan (incorporated by reference to Exhibit 10.21 of the registrant’s registration statement on Form S-1 (File 333-89146)).
	10	.20	1998 Stock Incentive Plan (incorporated by reference to Exhibit 10.22 of the registrant’s registration statement on Form S-1 (File 333-89146)).
	10	.21	1999 Stock Incentive Plan (incorporated by reference to Exhibit 10.23 of the registrant’s registration statement on Form S-1 (File 333-89146)).
	10	.22	2001 Stock Incentive Plan (incorporated by reference to Exhibit 10.24 of the registrant’s registration statement on Form S-1 (File 333-89146)).
	10	.23	Form of Stock Option Agreement.
	10	.24	Form of Restricted Stock Agreement-Bonus Award.
	10	.25	Note Purchase Agreement dated as of February 7, 2002, among the registrant and the purchasers party thereto ($175 million Senior Secured Notes).
	21	.1	Subsidiaries of The St. Joe Company.
	23	.1	Consent of KPMG LLP, independent auditors for the registrant.
	31	.1	Certification by Chief Executive Officer.
	31	.2	Certification by Chief Financial Officer.
	32	.1	Certification by Chief Executive Officer.
	32	.2	Certification by Chief Financial Officer.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned authorized representative.


	THE ST. JOE COMPANY


	By:	/s/ KEVIN M. TWOMEY



	Kevin M. Twomey
	President, Chief Operating Officer
	and Chief Financial Officer
	(Principal Financial Officer)

Dated: March 12, 2004

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and dates indicated.



Signature	Title	Date


/s/ PETER S. RUMMELL Peter S. Rummell	Chairman of the Board Chief Executive Officer (Principal Executive Officer)	March 12, 2004

/s/ KEVIN M. TWOMEY Kevin M. Twomey	President, Chief Operating Officer Chief Financial Officer (Principal Financial Officer)	March 12, 2004

/s/ MICHAEL N. REGAN Michael N. Regan	Senior Vice President — Finance and Planning (Principal Accounting Officer)	March 12, 2004

/s/ MICHAEL L. AINSLIE Michael L. Ainslie	Director	March 12, 2004

/s/ HUGH M. DURDEN Hugh M. Durden	Director	March 12, 2004

/s/ DELORES KESLER Delores Kesler	Director	March 12, 2004

/s/ JOHN S. LORD John S. Lord	Director	March 12, 2004

/s/ WALTER L. REVELL Walter L. Revell	Director	March 12, 2004

Frank S. Shaw, Jr.	Director



Signature	Title	Date


/s/ WINFRED L. THORNTON Winfred L. Thornton	Director	March 12, 2004

/s/ JOHN D. UIBLE John D. Uible	Director	March 12, 2004

/s/ WILLIAM H. WALTON, III William H. Walton, III	Director	March 12, 2004

INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

THE ST. JOE COMPANY

Annual Financial Statements


Item 15(a)(1) and (2)
	Independent Auditors’ Report	F-1
	Consolidated Balance Sheets	F-2
	Consolidated Statements of Income	F-3
	Consolidated Statements of Changes in Stockholders’ Equity	F-5
	Consolidated Statements of Cash Flow	F-6
	Notes to Consolidated Financial Statements	F-7
	Independent Auditors’ Report — Financial Statement Schedule	S-1
	Schedule III — Real Estate and Accumulated Depreciation	S-2

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders

The St. Joe Company:

We have audited the accompanying consolidated balance sheets of The St. Joe Company and subsidiaries as of December 31, 2003 and 2002, and the related consolidated statements of income, changes in stockholders’ equity, and cash flow for each of the years in the three-year period ended December 31, 2003. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of The St. Joe Company and subsidiaries as of December 31, 2003 and 2002, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States of America.

As discussed in note 2 to the financial statements, The St. Joe Company adopted Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” and Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” effective January 1, 2002.

KPMG LLP

Jacksonville, Florida

March 11, 2004

F-1

THE ST. JOE COMPANY

CONSOLIDATED BALANCE SHEETS



	December 31,

	2003			2002


	(Dollars in thousands)
ASSETS
Investment in real estate	$	886,076		$	806,701
Cash and cash equivalents		57,403			73,273
Accounts receivable, net		75,692			48,583
Prepaid pension asset		91,768			90,990
Property, plant and equipment, net		36,272			42,907
Goodwill, net		48,721			53,074
Intangible assets, net		37,795			2,164
Other assets		42,003			52,195

	$	1,275,730		$	1,169,887

LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES:
Debt	$	382,176		$	320,915
Accounts payable		60,343			46,409
Accrued liabilities		105,524			104,806
Deferred income taxes		232,184			212,017

Total liabilities		780,227			684,147
Minority interest in consolidated subsidiaries		8,188			5,647

STOCKHOLDERS’ EQUITY:
Common stock, no par value; 180,000,000 shares authorized; 100,824,269 and 97,430,600 issued at December 31, 2003 and 2002, respectively		199,787			122,709
Retained earnings		944,000			892,622
Restricted stock deferred compensation		(18,807	)		(512	)
Treasury stock at cost, 24,794,178 and 21,426,202 shares held at December 31, 2003 and 2002, respectively		(637,665	)		(534,726	)

Total stockholders’ equity		487,315			480,093

	$	1,275,730		$	1,169,887

See notes to consolidated financial statements.

F-2

THE ST. JOE COMPANY

CONSOLIDATED STATEMENTS OF INCOME



			Years Ended December 31,

			2003			2002			2001


			(Dollars in thousands except
			per share amounts)
Revenues:
	Real estate sales		$	592,211		$	484,026		$	443,985
	Realty revenues			62,525			58,534			55,964
	Timber sales			36,552			40,727			36,985
	Rental revenues			40,812			33,163			20,854
	Other revenues			28,530			18,962			9,220

		Total revenues		760,630			635,412			567,008

Expenses:
	Cost of real estate sales			353,225			290,816			298,712
	Cost of realty revenues			36,218			33,171			32,801
	Cost of timber sales			24,212			28,853			24,312
	Cost of rental revenues			17,728			14,522			9,742
	Cost of other revenues			27,235			23,060			9,446
	Other operating expenses			91,691			84,206			74,480
	Corporate expense, net			34,467			27,528			18,793
	Depreciation and amortization			31,504			22,780			21,326
	Impairment losses			14,359			—			500

		Total expenses		630,639			524,936			490,112

		Operating profit		129,991			110,476			76,896

Other income (expense):
	Investment income, net			884			2,932			5,122
	Interest expense			(12,515	)		(16,978	)		(17,335	)
	Gain on settlement of forward sale contracts			—			132,915			—
	Other, net			2,902			1,779			6,367

		Total other income (expense)		(8,729	)		120,648			(5,846	)

Income from continuing operations before equity in (loss) income of unconsolidated affiliates, income taxes, and minority interest				121,262			231,124			71,050
Equity in (loss) income of unconsolidated affiliates				(2,168	)		10,940			24,126
Income tax expense (benefit):
	Current			6,388			(180	)		(6,118	)
	Deferred			36,238			89,741			41,559

		Total income tax expense		42,626			89,561			35,441

Income from continuing operations before minority interest				76,468			152,503			59,735
Minority interest				553			1,366			524

Income from continuing operations				75,915			151,137			59,211

Discontinued operations:
	Income from discontinued operations (net of income taxes of $1,469 and $6,904)			—			2,339			10,994
	Gain on sales of discontinued operations (net of income taxes of $13,110)			—			20,887			—

		Total discontinued operations		—			23,226			10,994

		Net income	$	75,915		$	174,363		$	70,205

F-3

THE ST. JOE COMPANY

CONSOLIDATED STATEMENTS OF INCOME



		Years Ended December 31,

		2003		2002		2001


		(Dollars in thousands except
		per share amounts)
EARNINGS PER SHARE
Basic
Income from continuing operations		$	1.00	$	1.93	$	0.73
Income from discontinued operations			—		0.03		0.14
Gain on sale of discontinued operations			—		0.26		—

	Net income	$	1.00	$	2.22	$	0.87

Diluted
Income from continuing operations		$	0.98	$