<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
Commission file number 1-10466
The St. Joe Company
(Exact name of registrant as specified in its charter)
Florida 59-0432511
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Suite 400, 1650 Prudential Drive, Jacksonville, Florida 32207
(Address of principal executive offices) (Zip Code)
(904) 396-6600
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(D) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES [X] NO [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of September 30, 2000, there were 84,876,001 shares of common stock, no par
value, issued and outstanding, with an additional 6,821,810 shares issued and
held in treasury.
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THE ST. JOE COMPANY
INDEX
<TABLE>
<CAPTION>
Page No.
<S> <C>
PART I Financial Information:
Consolidated Balance Sheets-
September 30, 2000 and December 31, 1999 3
Consolidated Statements of Income-
Three months and nine months ended
September 30, 2000 and 1999 4
Consolidated Statements of Cash Flows-
Nine months ended September 30, 2000 and 1999 5
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of
Consolidated Financial Condition and
Results of Operations 10
PART II Other Information
Pro Forma Financial Statements 23
Exhibits and Reports on Form 8-K 27
</TABLE>
2
<PAGE> 3
THE ST. JOE COMPANY
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------- -----------
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 63,739 $ 71,987
Short-term investments 50,506 69,174
Accounts receivable 49,566 38,805
Inventory 4,467 6,360
Other assets 11,886 11,158
----------- -----------
Total current assets 180,164 197,484
----------- -----------
Investments & other assets:
Marketable securities 121,135 188,884
Prepaid pension asset 70,171 63,771
Other assets 25,246 20,867
Investment in unconsolidated affiliates 88,028 80,652
Goodwill 135,946 138,392
Net assets of discontinued operations -- 215
----------- -----------
Total investments and other assets 440,526 492,781
----------- -----------
Investment in real estate 878,267 746,933
Property, plant & equipment, net 491,753 384,429
----------- -----------
Total assets $ 1,990,710 $ 1,821,627
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 51,645 $ 45,697
Accrued liabilities 79,374 54,641
Current portion of long-term debt 31,373 31,250
----------- -----------
Total current liabilities 162,392 131,588
Other liabilities 25,305 17,705
Deferred income taxes 284,529 278,513
Long-term debt 232,430 115,974
Minority interest in consolidated subsidiaries 344,109 336,993
----------- -----------
Total liabilities 1,048,765 880,773
Stockholders' equity:
Common stock, no par value; 180,000,000 shares
authorized; 91,697,811 shares issued 13,170 13,170
Retained earnings 1,014,411 961,819
Accumulated other comprehensive income 73,729 90,597
Restricted stock deferred compensation (2,512) (3,564)
Treasury stock, at cost, 6,821,810 and 5,265,827
shares respectively (156,853) (121,168)
----------- -----------
Total stockholders' equity 941,945 940,854
----------- -----------
Total liabilities and stockholders' equity $ 1,990,710 $ 1,821,627
=========== ===========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 4
THE ST. JOE COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30 Ended September 30
------------------------- -------------------------
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Operating revenues $ 231,438 $ 181,483 $ 664,482 $ 533,599
--------- --------- --------- ---------
Expenses:
Operating expenses 170,105 140,871 494,282 426,395
Corporate expense, net 5,833 4,250 17,511 11,278
Depreciation and amortization 18,659 13,129 47,095 35,234
--------- --------- --------- ---------
Total expenses 194,597 158,250 558,888 472,907
--------- --------- --------- ---------
Operating profit 36,841 23,233 105,594 60,692
--------- --------- --------- ---------
Other income (expense):
Investment income 3,422 3,523 11,559 11,227
Interest expense (3,708) (464) (8,649) (1,765)
Other, net 2,805 9,695 6,146 12,997
--------- --------- --------- ---------
Total other income 2,519 12,754 9,056 22,459
--------- --------- --------- ---------
Income from continuing operations before income taxes
and minority interest 39,360 35,987 114,650 83,151
Income tax expense 16,674 17,854 46,050 10,540
Minority interest 1,058 3,731 9,386 12,798
--------- --------- --------- ---------
Income from continuing operations 21,628 14,402 59,214 59,813
Income from discontinued operations:
Earnings from discontinued operations, net of income
taxes of $331 and $3,222, respectively -- 527 -- 5,131
Gain on sale of discontinued operations, net of income
taxes of $29,031 -- -- -- 42,800
--------- --------- --------- ---------
Net income $ 21,628 $ 14,929 $ 59,214 $ 107,744
========= ========= ========= =========
EARNINGS PER SHARE
Basic:
Income from continuing operations $ 0.25 $ 0.17 $ 0.70 $ 0.68
Earnings from discontinued operations -- 0.01 -- 0.06
Gain on sale of discontinued operations -- -- -- 0.49
--------- --------- --------- ---------
Net income $ 0.25 $ 0.18 $ 0.70 $ 1.23
========= ========= ========= =========
Diluted:
Income from continuing operations $ 0.25 $ 0.16 $ 0.68 $ 0.67
Earnings from discontinued operations -- 0.01 -- 0.06
Gain on sale of discontinued operations -- -- -- 0.48
--------- --------- --------- ---------
Net income $ 0.25 $ 0.17 $ 0.68 $ 1.21
========= ========= ========= =========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE> 5
THE ST. JOE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
Nine Months
Ended September 30
---------------------------
2000 1999
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 59,214 $ 107,744
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 47,095 35,234
Imputed interest on long-term debt 6,883 --
Minority interest 9,386 12,798
Deferred income tax expense (benefit) 17,679 (15,331)
Equity in income of unconsolidated affiliates (12,980) (9,308)
Gain on sales of property and investments (37,101) (32,707)
Gain on sale of discontinued operations, net of taxes -- (42,800)
Purchases and maturities of trading investments, net 24,886 (12,416)
Cost of community residential properties sold 25,778 12,047
Expenditures for community residential properties (99,952) (50,881)
Changes in operating assets and liabilities:
Accounts receivable (10,761) 2,279
Inventory 1,893 3,453
Prepaid pension and other assets (18,505) (14,936)
Accounts payable, accrued liabilities, reserves and
other liabilities 43,030 2,121
Discontinued operations 215 23,343
--------- ---------
Net cash provided by operating activities 56,760 20,640
Cash flows from investing activities:
Purchases of property, plant and equipment (122,361) (145,655)
Purchases of and development of investments in real estate (119,428) (24,193)
Purchases of available-for-sale investments (7,323) (45,926)
Investments in joint ventures and purchase business acquisitions,
net of cash received (10,479) (31,431)
Proceeds from sale of discontinued operations -- 150,682
Maturities and redemptions of available-for-sale investments 40,404 101,740
Proceeds from dispositions of assets 71,903 73,069
Distributions from unconsolidated affiliates 18,213 23,134
--------- ---------
Net cash (used in) provided by investing activities (129,071) 101,420
Cash flows from financing activities:
Proceeds from long-term debt, net of repayments 108,936 (4,197)
Proceeds from exercise of stock options and stock purchase plan 8,367 --
Dividends paid to stockholders (6,817) (1,765)
Dividends paid to minority interest (1,519) (1,254)
Treasury stock purchased (44,904) (53,447)
--------- ---------
Net cash provided (used) by financing activities 64,063 (60,663)
Net (decrease) increase in cash and cash equivalents (8,248) 61,397
Cash and cash equivalents at beginning of period 71,987 39,108
--------- ---------
Cash and cash equivalents at end of period $ 63,739 $ 100,505
========= =========
Supplemental disclosure of cash flow information:
Interest paid $ 4,019 $ 2,028
========= =========
Income taxes paid $ 30,110 $ 27,822
========= =========
</TABLE>
See notes to consolidated financial statements.
5
<PAGE> 6
THE ST. JOE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited interim financial statements have been
prepared pursuant to the rules and regulations for reporting on Form 10-Q.
Accordingly, certain information and footnotes required by generally accepted
accounting principles for complete financial statements are not included
herein. The interim statements should be read in conjunction with the financial
statements and notes thereto included in the Company's latest Annual Report on
Form 10-K. In the opinion of the Company, the accompanying unaudited
consolidated financial statements contain all adjustments (consisting of only
normal recurring adjustments) necessary to present fairly the financial
position as of September 30, 2000 and the results of operations and cash flows
for the three-month and nine-month periods ended September 30, 2000 and 1999.
The results of operations for the three and nine-month periods ended September
30, 2000 and 1999 are not necessarily indicative of the results that may be
expected for the full year. Certain reclassifications of 1999 amounts have been
made to be consistent with current period reporting.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Earnings Per Share
Earnings per share ("EPS") are based on the weighted average number of
common shares outstanding during the period. Diluted EPS assumes options to
purchase shares of common stock have been exercised using the treasury stock
method. In August 1998, the Company's Board of Directors authorized $150.0
million for the repurchase of the Company's outstanding common stock on the
open market. During the first quarter of 2000, the Company completed this
initial repurchase plan by acquiring 1,067,911 shares, for a total of 6,485,311
shares repurchased under this plan. In February 2000, the Company's Board of
Directors authorized an additional $150.0 million for the repurchase of the
Company's outstanding stock. As of September 30, 2000, the Company had
repurchased 636,955 shares under this authorization for a total of 7,122,266
shares repurchased under both repurchase plans. Weighted average basic and
diluted shares, taking into consideration the options used in calculating EPS
and shares repurchased for each of the periods presented are as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------ ------------------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Basic 84,856,136 87,233,774 85,063,056 87,896,021
Diluted 86,865,685 88,206,360 86,775,163 88,814,327
</TABLE>
Comprehensive Income
The Company's comprehensive income differs from net income due to
changes in the net unrealized gains on investment securities
available-for-sale. For the nine months ended September 30, 2000 and 1999,
total comprehensive income was approximately $42.3 million and $106.5 million,
respectively.
Supplemental Cash Flow Information
The Company paid $4.0 million and $2.0 million for interest in the
first nine months of 2000 and 1999, respectively. The Company paid $30.1
million and $27.8 million for income taxes in the first nine months of 2000 and
1999, respectively. The Company capitalized interest expense of $3.9 million
and $1.7 million in the first nine months of 2000 and 1999, respectively.
Cash flows related to community residential developments are included
in operating activities on the statements of cash flows.
6
<PAGE> 7
3. SPIN-OFF
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. The holders
of the new class of FLA common stock will be entitled to elect 80% of the
members of the Board of Directors of FLA, but the new FLA common stock will
otherwise have substantially identical rights to the existing common stock. The
Company will not retain any equity interest in FLA after the spin-off is
completed.
As of the closing of the transaction, various service agreements
between the Company and FLA's wholly owned subsidiary Flagler Development
Company ("Flagler"), formerly known as Gran Central Corporation, became
effective. Under the terms of these agreements, which extend for up to three
years after the closing of the transaction, Flagler will retain the Company,
through its commercial real estate affiliates, to continue to develop and
manage certain commercial real estate holdings of Flagler. The terms of these
agreements have been approved by both the Company's and FLA's Boards of
Directors, and in the judgement of the boards, reflect arms-length terms and
conditions typically found in today's marketplace.
4. DISCONTINUED OPERATIONS
During 1999, the Company discontinued its operations in the sugar
industry and has thus reported its sugar operations as discontinued operations
for all periods presented. Revenues from Talisman Sugar Corporation,
("Talisman"), the Company's sugar subsidiary, were approximately $5.2 million
and $43.6 million for the three and nine month periods ended September 30,
1999. Net income, after tax, for Talisman, excluding the gain on sale of the
land and farming rights, was approximately $.5 million and $5.1 million for the
three and nine-month periods ended September 30, 1999. There have been no
activities at Talisman in 2000.
5. LONG-TERM DEBT
Long-term debt consisted of the following (in thousands):
<TABLE>
<CAPTION>
Sept 30, 2000 December 31, 1999
------------- -----------------
<S> <C> <C>
Minimum liability owed on sale of equity securities $ 120,178 $ 112,941
Senior revolving credit agreement, unsecured 110,000 --
Revolving credit agreement, secured by restricted
short-term investments 30,064 22,741
Notes payable to former owners of businesses acquired 3,676 10,593
Various secured and unsecured notes payable 41 1,511
Less: discounts on non-interest bearing notes payable (156) (562)
Net borrowings 263,803 147,224
Less: current portion 31,373 31,250
========= =========
Total long-term debt $ 232,430 $ 115,974
</TABLE>
In March 2000, the Company entered into a senior unsecured revolving
credit facility for up to $200.0 million. In September 2000, the revolving
credit facility was increased to $250.0 million and matures in March of 2002.
The proceeds of this debt will be used for working capital and general
corporate requirements of the Company and to fund repurchases of the Company's
outstanding common stock. This debt accrues interest at different rates based
on timing of the loan and the Company's 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. The agreement also
subjects the Company to certain restrictive covenants including financial
covenants relating to the Company's leverage position, interest coverage
position and minimum net worth.
The Company has long-term debt relating to the forward sale of its
portfolio of equity securities of approximately $120.2 million, which will
increase as interest expense is imputed at an annual rate of 7.9%. The
liability will also increase by the amount, if any, that the securities
increase beyond the 20% that the Company retains under the terms of the
agreement. The balance as of September 30, 2000 includes imputed interest of
approximately $6.5 million since December 31, 1999 and an amount relating to
certain securities increasing beyond the 20% appreciation that the Company
retains of approximately $0.8 million. This sale will ultimately settle in the
fourth quarter of 2002.
FLA has entered into a $200 million revolving credit agreement with a
syndicate of financial institutions. This agreement subjects FLA to various
financial covenants. No amounts were outstanding on this credit revolver as of
September 30, 2000.
6. SEGMENT INFORMATION
7
<PAGE> 8
The Company conducts primarily all of its business in six reportable
operating segments, which are residential real estate services, community
residential development, commercial real estate development and services, land
sales, forestry and transportation. Intercompany transactions have been
eliminated. The Company evaluates a segment's performance based on Net EBITDA.
Net EBITDA is defined as earnings before interest expense, income taxes,
depreciation and amortization, and is net of the effects of minority interests.
Net EBITDA also excludes gains from discontinued operations and gains (losses)
on sales of nonoperating assets. Net EBITDA is considered a key financial
measurement in the industries that the Company operates. The segment labeled
other primarily consists of investment income, net of corporate general and
administrative expenses. Also, included in the segment labeled other is an
investment in an unconsolidated affiliate that was previously classified in the
leisure and resort segment and costs related to the initial operations of the
Company's newly formed hospitality development group. The Company's reportable
segments are strategic business units that offer different products and
services. They are each managed separately and decisions about allocations of
resources are determined by management based on these strategic business units.
Information by business segment follows: (In millions)
<TABLE>
<CAPTION>
Three months Nine months
ended Sept. 30 ended Sept. 30
------------------------- -------------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Total Revenues:
Residential real estate services $ 68.6 $ 57.2 $ 193.3 $ 154.3
Community residential development 41.4 34.8 104.4 69.2
Commercial real estate development and services 37.3 31.9 121.8 140.3
Land sales 26.6 -- 64.1 --
Forestry 7.8 7.8 27.4 21.8
Transportation 49.1 50.4 152.1 149.7
Other .6 (0.6) 1.4 (1.7)
======== ======== ======== ========
Total revenues 231.4 181.5 664.5 533.6
Net EBITDA:
Residential real estate services 6.1 5.5 15.7 10.6
Community residential development 14.4 11.4 28.5 22.4
Commercial real estate development and services 5.8 7.4 17.9 25.6
Land sales 24.5 -- 57.2
Forestry 3.0 3.7 13.4 10.4
Transportation 2.3 9.3 17.9 18.6
Other (3.8) (1.9) (11.2) (3.7)
======== ======== ======== ========
Net EBITDA 52.3 35.4 139.4 83.9
Adjustments to reconcile to income from continuing operations:
Depreciation and amortization (18.7) (13.1) (47.1) (35.2)
Other income 1.2 3.7 1.7 3.9
Interest expense (4.1) (0.5) (9.3) (1.8)
Income tax expense (16.7) (17.9) (46.1) (10.5)
Minority interest 7.6 6.8 20.6 19.5
======== ======== ======== ========
Income from continuing operations $ 21.6 $ 14.4 $ 59.2 $ 59.8
</TABLE>
There was no material change in any segment's total assets since
December 31, 1999
6. CONTINGENCIES
The Company and its affiliates 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 the Company's consolidated financial position,
results of operations or liquidity.
8
<PAGE> 9
The Company has retained certain self-insurance risks with respect to
losses for third party liability, worker's compensation, property damage, group
health insurance provided to employees and other types of insurance.
The Company is jointly and severally liable as guarantor on six credit
obligations entered into by partnerships in which the Company has equity
interests. The maximum amount of the guaranteed debt totals $148.6 million; the
amount outstanding at September 30, 2000 totaled $100.8 million. In addition,
the Company has indemnification agreements from some of its partners requiring
that they will cover a portion of the debt that the Company is guaranteeing.
The Company is subject to costs arising out of environmental laws and
regulations, which include obligations to remove or limit the effects on the
environment of the disposal or release of certain wastes or substances at
various sites including sites which have been previously sold. It is the
Company's policy to accrue and charge against earnings environmental cleanup
costs when it is probable that a liability has been incurred and an amount is
reasonably estimable. As assessments and cleanups proceed, these accruals are
reviewed and adjusted, if necessary, as additional information becomes
available.
The Company is currently a party to, or involved in, legal proceedings
directed at the cleanup of Superfund sites. The Company has accrued an
allocated share of the total estimated cleanup costs for these sites. Based
upon management's evaluation of the other potentially responsible parties, the
Company does not expect to incur additional amounts even though the Company has
joint and several liability. Other proceedings involving environmental matters
such as alleged discharge of oil or waste material into water or soil are
pending against the Company. It is not possible to quantify future
environmental costs because many issues relate to actions by third parties or
changes in environmental regulation. However, based on information presently
available, management believes that the ultimate disposition of currently known
matters will not have a material effect on the consolidated financial position,
results of operations or liquidity of the Company. Environmental liabilities
are paid over an extended period and the timing of such payments cannot be
predicted with any confidence.
9
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONSOLIDATED
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD LOOKING STATEMENTS
From time to time, the Company has made and will make "forward-looking
statements" as defined by the Private Securities Litigation Reform Act of 1995.
These statements can be identified by the fact that they do not relate strictly
to historical or current facts. Forward-looking statements often use words such
as "anticipate," "expect," "estimate," "intend," "plan," "goal," "believe" or
other words of similar meaning. Forward-looking statements give the Company's
current expectations or forecasts of future events, circumstances or results.
The Company's disclosure in this report, including in the MD&A section,
contains forward-looking statements. The Company may also make forward-looking
statements in our other documents filed with the SEC and in other written
materials. In addition, the Company's senior management may make
forward-looking statements orally to analysts, investors, representatives of
the media and others. Any forward-looking statements made by or on behalf of
the Company speak only as of the date they are made. The Company does not
undertake to update forward-looking statements to reflect the impact of
circumstances or events that arise after the date the forward-looking statement
was made. The reader should, however, consult any further disclosures of a
forward-looking nature the Company may make in its other documents filed with
the SEC and in other written materials. All forward-looking statements, by
their nature, are subject to risks and uncertainties. The Company's actual
future results may differ materially from those set forth in the Company's
forward-looking statements. In particular, discussions regarding the size and
number of commercial buildings, residential units, development timetables,
development approvals and the ability to obtain approvals, anticipated price
ranges of developments, the number of units that can be supported upon full
build-out of development, and the absorption rate and expected gain on land
sales are forward-looking statements. Additional risk factors that may cause
actual results to differ materially from those expressed in forward looking
statements in this Form 10-Q are described in the Company's Annual Report on
Form 10-K for the year ended December 31, 1999 filed with the Securities
Exchange Commission. In addition, the anticipated benefits of the
recapitalization, the exchange and the spin-off of the Company's interest in
Florida East Coast Industries, ("FLA") may be affected by (1) general economic
conditions; (2) economic developments that have a particularly adverse effect
on the Company or FLA and; (3) conditions in the securities markets on which
the Company's and FLA's securities trade. Such statements are based on current
expectations and are subject to certain risks discussed in this report and in
our other periodic reports filed with the SEC. Other factors besides those
listed in this report or discussed in the Company's other reports to the SEC
could also adversely affect the Company's results and the reader should not
consider any such list of factors to be a complete set of all potential risks
or uncertainties.
OVERVIEW
The St. Joe Company is principally a real estate operating company
which conducts primarily all of its business in residential real estate
services, community residential development, commercial real estate development
and services, and land sales. The Company also has significant interests in
timber. In October 2000, the Company completed the spin-off of FLA, which was
primarily included in the transportation and commercial real estate development
segments. In late 1999, the Company also started a hospitality development
group that will offer fee-based development services for hospitality real
estate projects including hotels, resorts, and timeshare facilities. During the
fourth quarter of 1998, the Company discontinued its sugar operations line of
business for accounting purposes and all sugar operations ceased by the fourth
quarter of 1999.
Management believes that the Company has a strategy in place for
disposition of its non-strategic assets and has begun to execute its long term
strategies, particularly in developing its vast holdings in Northwest Florida
and elsewhere in the State of Florida by receiving DRI (primary discretionary
land use approval for large scale projects in Florida) or county approvals for
WaterColor in Northwest Florida, SouthWood in Tallahassee, St. John's Golf and
Country Club in St. John's County and Victoria Park near Orlando. Management
believes that the Company is now in position to execute and deliver their
long-term plan with regards to these developments and the growth of its other
real estate businesses.
10
<PAGE> 11
DISCONTINUED OPERATIONS
During 1999, the Company discontinued its operations in the sugar
industry and has thus reported its sugar operations as discontinued operations
for all periods presented. Revenues from Talisman Sugar Corporation,
("Talisman"), the Company's sugar subsidiary, were approximately $5.2 million
and $43.6 million for the three and nine month periods ended September 30,
1999. Net income, after tax, for Talisman, excluding the gain on sale of the
land and farming rights, was approximately $.5 million and $5.1 million for the
three and nine month periods ended September 30, 1999. There have been no
activities at Talisman in 2000.
RECENT EVENTS
FLA Spin-off
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. The holders
of the new class of FLA common stock will be entitled to elect 80% of the
members of the Board of Directors of FLA, but the new FLA common stock will
otherwise have substantially identical rights to the existing common stock. The
Company will not retain any equity interest in FLA after the spin-off is
completed.
As of the closing of the transaction, various service agreements
between the Company and FLA's wholly owned subsidiary Flagler Development
Company ("Flagler"), formerly known as Gran Central Corporation, became
effective. Under the terms of these agreements, which extend for up to three
years after the closing of the transaction, Flagler will retain the Company,
through its commercial real estate affiliates, to continue to develop and
manage certain commercial real estate holdings of Flagler. The terms of these
agreements have been approved by both the Company's and FLA's Boards of
Directors, and in the judgement of the boards, reflect arms-length terms and
conditions typically found in today's marketplace.
RESULTS OF OPERATIONS
CONSOLIDATED RESULTS
THREE MONTHS ENDED SEPTEMBER 30
Total revenues increased $49.9 million, or 27% to $231.4 million for
the third quarter of 2000 as compared to $181.5 million in the third quarter of
1999. The residential real estate services segment through Arvida Realty
Services ("ARS") contributed $68.6 million in the third quarter of 2000, a 20%
increase over $57.2 million in the third quarter of 1999. The community
residential development segment, through sales recorded at its northwest and
northeast Florida residential communities and sales of homes by Saussy Burbank,
Inc, ("Saussy Burbank") a homebuilder in Charlotte, North Carolina, recorded
$41.4 million in the third quarter of 2000, a 19 % increase over $34.8 million
in the third quarter of 1999. The commercial real estate development and
services segment, through both Flagler and St. Joe Commercial, contributed
$37.3 million in the third quarter of 2000, a 17% increase over $31.9 million
in the third quarter of 1999. The land sales segment of the Company, started
during the fourth quarter of 1999, recorded revenues of $26.7 million in the
third quarter of 2000. The forestry segment reported revenues of $7.8 million
during the third quarter of 2000, consistent with the third quarter of 1999.
The transportation segment, primarily through its Florida East Coast Railroad
("FECR") subsidiary, recorded $49.1 million in revenues, a slight decrease from
the $50.4 million recorded in 1999. Revenues of $.5 million were recorded which
are not attributable to a reportable segment in 2000 as compared to a $.6
million loss recorded on a investment in an unconsolidated affiliate which was
not attributable to a particular segment in 1999.
11
<PAGE> 12
Operating expenses totaled approximately $170.1 million, an increase
of $29.2 million, or 21%, for the third quarter of 2000 as compared to $140.9
million for the third quarter of 1999. The residential real estate services
segment contributed $63.1 million in costs in the third quarter of 2000, a 21%
increase over the $52.0 million in costs recorded in the third quarter of 1999.
The community residential development segment recorded $27.4 million in costs
in the third quarter of 2000, a 16% increase over the $23.6 million recorded in
1999. The commercial real estate development and services segment contributed
$25.9 million in costs recorded in the third quarter of 2000, a 23% increase
over $21.1 million recorded in 1999. The land sales segment contributed $2.5
million in costs in the third quarter of 2000. The forestry segment reported
costs of $5.3 million in the third quarter of 2000, a 13% increase over the
$4.7 million recorded in 1999. The transportation segment costs were $45.4
million in the third quarter of 2000, a 32% increase from the $34.4 million
recorded in 1999. The increase is due primarily to start-up costs in FLA's
telecommunications operation as well as restructuring and other costs recorded
at FECR. Operating expenses of approximately $0.5 million and $5.1 million in
2000 and 1999 were not attributable to a reportable segment. Operating expenses
in 1999 included a $5.1 million non-cash charge to reserve 100% of the
Company's investment in Entros, Inc., which was deemed to be impaired.
Corporate expense increased 35% from $4.3 million to $5.8 million,
primarily due to the effects of increased salary and other benefits costs as
well as lower prepaid pension income. Corporate expense included prepaid
pension income of $1.9 million, a decrease of $.8 million for the third quarter
of 2000 as compared to the third quarter of 1999.
Depreciation and amortization totaled $18.7 million, an increase of
$5.6 million, or 43%, primarily due to a goodwill write-off of $3.1 million at
FLA in connection with its restructuring charges taken this quarter.
Other income (expense) decreased $10.3 million, or 80% to $2.5 million
in the third quarter of 2000 compared to $12.8 million in 1999. The decrease
primarily resulted from a pre-tax gain of $8.7 million on the sale of
timberland to the state of Florida in the third quarter of 1999. Additionally,
the Company recorded $3.7 million of interest expense in the third quarter of
2000, compared to $.5 million in the comparable period of 1999.
Income tax expense on continuing operations totaled $16.7 million, an
effective rate of 42%, for the third quarter of 2000 as compared to expense of
$17.9 million, an effective rate of 50% for the third quarter of 1999.
Income from discontinued operations, net of tax, related to the
run-off of the sugar business totaled $.5 million for the third quarter of
1999. There were no discontinued operations in 2000.
Net income for the third quarter of 2000 was $21.6 million or $0.25
per diluted share as compared to $14.9 million or $0.17 per diluted share for
the third quarter of 1999.
NINE MONTHS ENDED SEPTEMBER 30
Total revenues increased $130.9 million, or 25%, to $664.5 million for
the nine months of 2000 as compared to $533.6 million in the first nine months
of 1999. The residential real estate services segment contributed $193.3
million in revenues, a 25% increase over the $154.3 million recorded in 1999.
The community residential development segment recorded $104.4 million in
revenues during the first nine months of 2000, a 51% increase over $69.2
million recorded in 1999 due to increased sales activity in 2000. The
commercial real estate development and services segment recorded revenue of
$121.8 million during the first nine months of 2000, a 13% decrease from $140.3
million during the first nine months of 1999, primarily due to the sale of two
industrial parks located in south Florida in the first quarter of 1999 totaling
$50.4 million. The land sales segment, formed in the fourth quarter of 1999,
recorded revenues of $64.1 million for the first nine months of 2000. The
forestry segment reported revenues of $27.4 million during the first nine
months of 2000, a 26% increase over the $21.8 million recorded in 1999. The
transportation segment contributed $152.1 million in revenues during the first
nine months of 2000, a 2% increase from the $149.7 million recorded in 1999.
Revenues of $1.4 million were recorded that were not attributable to a
reportable segment in 2000 as compared to a loss of $1.7 million that was
recorded on an investment in an unconsolidated affiliate which was not
attributable to a particular segment in 1999.
12
<PAGE> 13
Operating expenses totaled approximately $494.3 million, an increase
of 16%, for the first nine months of 2000 as compared to $426.4 million for the
first nine months of 1999. Residential real estate services costs were $179.3
million for the first nine months of 2000, a 24% increase over the $144.7
million recorded in 1999. The community residential development segment
recorded $76.7 million in costs for the first nine months of 2000, a 62%
increase over the $47.4 million recorded in 1999. The increase was primarily
due to increased development in 2000 at many of the Company's residential
communities in Florida and a full nine months of Saussy Burbank activity. The
commercial real estate development and services segment recorded costs of $91.4
million, an 8% decrease from the $99.5 million recorded in 1999, primarily due
to cost of sales of the two industrial parks located in south Florida sold in
1999. The land sales segment recorded costs of $7.4 million for the first nine
months of 2000. The forestry segment reported operating expenses of $15.9
million, a 19% increase over the $13.4 million recorded in 1999. The
transportation segment costs were $122.3 million, a 5% increase compared to
$116.1 million. Included in 1999 transportation operating expenses were
one-time charges totaling $8.2 million incurred during the second quarter of
1999. Operating expenses of $1.3 million were recorded in 2000 that were not
attributable to a reportable segment. Operating expenses in 1999 included a
$5.1 million non-cash charge to reserve 100% of the Company's investment in
Entros, Inc.
Corporate expense increased 55% from $11.3 million to $17.5 million,
primarily associated with increased salaries and benefits costs as well as
lower prepaid pension income. Corporate expense included prepaid pension income
of $6.4 million, a decrease of $1.6 million for the first nine months of 2000
as compared to 1999.
Depreciation and amortization totaled $47.1 million for the first nine
months of 2000, a 34% increase over the $35.2 million recorded in 1999,
primarily due to the $3.1 million goodwill write-off previously discussed as
well as increased depreciation expense relating to buildings placed into
service in the last two quarters of 1999 and the first two quarters of 2000.
Other income (expense) decreased $13.4 million, or 60% in the first
nine months of 2000 compared to 1999, due primarily to a pre-tax gain of $8.7
million on the sale of timberland to the state of Florida in the third quarter
of 1999. Additionally, the Company recorded $8.6 million of interest expense in
the third quarter of 2000, compared to $1.8 million in the comparable period of
1999.
Income tax expense on continuing operations totaled $46.1 million for
the first nine months of 2000, an effective rate of 40% as compared to expense
of $10.5 million for 1999, an effective rate of 13%. During the second quarter
of 1999, the Company recorded a $26.8 million deferred income tax benefit
related to the excise tax on its pension surplus. In 1996, the Company sold the
majority of its paper operations, which resulted in a substantial reduction in
employees. Management, at the time, determined that the over-funded status of
the pension plans would probably not be realized other than by a plan
termination and reversion of assets. From 1996 through the first quarter of
1999, the Company recorded deferred income tax expense on its pension surplus
at the statutory rate plus a 50% excise tax that would be imposed if the
company were to liquidate its pension plans and revert the assets back to the
Company. In light of events occurring in 1998 and 1999, including several
acquisitions, which significantly increased the number of participants in the
pension plan, along with plan modifications and the Company's growth strategy,
management reevaluated how the pension plan surplus could be utilized.
Management believes it is now probable that the Company will utilize the
pension surplus over time without incurring the 50% excise tax. Therefore, the
Company reversed the deferred tax liability related to the 50% excise tax
amounting to $26.8 million as a deferred income tax benefit in its 1999 second
quarter operations. Income taxes on the change in pension surplus will continue
to be recorded at the statutory rate in future periods.
Income from discontinued operations for 1999 includes the $42.8
million gain, net of tax, on the sale of Talisman's land and farming rights
which occurred in the first quarter of 1999. Net earnings from discontinued
operations totaled $5.1 million for the first nine months of 1999.
Net income for the first nine months of 2000 was $59.2 million or
$0.68 per diluted share as compared to $107.7 million or $1.21 per diluted
share for 1999. Excluding the FLA special charges of $8.2 million ($2.8
million, net of tax and minority interest), the $26.8 million deferred income
tax benefit related to the pension surplus excise tax, and the $71.8 million
($42.8 net of tax) gain on sale of discontinued operations, net income for 1999
would have been $38.7 million, or $0.44 per diluted share.
13
<PAGE> 14
RESIDENTIAL REAL ESTATE SERVICES
(In millions)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
------------------ -----------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $68.6 $57.2 $193.3 $154.3
Operating expenses 63.1 52.0 179.3 144.7
Depreciation and amortization 1.8 1.4 5.2 4.0
Other income (expense) .7 0.1 1.3 0.4
Pretax income from continuing operations 4.2 3.9 10.1 6.0
EBITDA, net 6.1 5.5 15.7 10.6
</TABLE>
The residential real estate services segment is comprised of the
operation of the Company's ARS subsidiary. ARS provides a complete array of
real estate brokerage services, including residential real estate sales,
relocation and referral, asset management, mortgage and title services, annual
and seasonal rentals and international real estate marketing. The operations of
ARS are seasonal with the volume of transactions increasing in the spring and
summer.
THREE MONTHS ENDED SEPTEMBER 30
Residential real estate services revenues were $68.6 million for the
third quarter of 2000, a 20% increase over $57.2 million for the third quarter
of 1999. Realty brokerage revenues in the third quarter of 2000 were
attributable to 9,429 closed units as compared to 8,808 closed units in 1999.
The average home sales price for the third quarter of 2000 increased to
$215,000 as compared to $190,000 for the third quarter of 1999.
Operating expenses were $63.1 million for the third quarter of 2000, a
21% increase over $52.0 million during the third quarter of 1999 and represent
commissions paid on real estate transactions, underwriting fees on title
policies and administrative expenses of the ARS operations.
NINE MONTHS ENDED SEPTEMBER 30
Residential real estate services revenues were $193.3 million for the
first nine months of 2000, a 25% increase over $154.3 million for the first
nine months of 1999. Realty brokerage revenues in the first nine months of 2000
were attributable to 26,816 closed units as compared to 23,857 closed units in
1999. The average home sales price for the first nine months of 2000 increased
to $211,000 as compared to $186,000 for the first nine months of 1999.
Operating expenses were $179.3 million for the first nine months of
2000, a 24% increase over $144.7 million during the first nine months of 1999
and represent commissions paid on real estate transactions, underwriting fees
on title policies and administrative expenses of the ARS operations.
COMMUNITY RESIDENTIAL DEVELOPMENT
(In millions)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
------------------ ------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $41.4 $34.8 $104.4 $69.2
Operating expenses 27.4 23.6 76.7 47.4
Depreciation and amortization .1 (0.2) 0.1 (1.0)
Other income (expense) .2 (0.1) .4 (0.2)
Pretax income from continuing operations 14.1 11.3 28.0 22.6
EBITDA, gross 14.4 11.2 28.6 21.8
EBITDA, net 14.4 11.4 28.5 22.4
</TABLE>
14
<PAGE> 15
The Company's community residential development operations currently
consist of community development through its residential development on land
owned 100% by the Company, its 26% equity interest in Arvida/JMB Partners, L.P.
("Arvida/JMB") and its 74% ownership of St. Joe/Arvida Company, L.P. Arvida/JMB
is recorded on the equity method of accounting for investments. These two
partnerships manage a total of 27 communities in various stages of planning and
development primarily focused in northwest, northeast and central Florida.
WaterColor, a coastal resort community in Walton County, Florida began
sales in April of this year. Lot sales and multi-family home closings are
currently occurring. In addition, the first premium Gulf-front condominium
units were released for sale in the third quarter. Contracts for all 22 of the
residences, which totaled approximately $27 million, were accepted on the
release's opening day. These units will average over 3,000 square feet and will
be priced at more than $1 million each. Construction is underway and closings
are expected to begin in mid-2001. WaterColor will eventually be a 1,140 unit
beachfront resort and residential community. The beach club and the 60-room
beachfront WaterColor Inn are also under construction.
Approximately three miles east of WaterColor on about a mile of
beachfront property, WaterSound is being planned as an exclusive and secluded
beachfront community. Responding to market demand, the first phase master plan
and mix of product at WaterSound is being revised to include more residential
lots. WaterSound is expected to begin contributing to earnings modestly in the
first half of 2001. Construction is nearing completion on the 18-hole golf
course adjacent to WaterSound.
During the third quarter of 2000, development of the first phase of
SouthWood, consisting of 134 single-family homes and 60 townhomes began.
SouthWood will eventually have more than 4,700 homes, a town center, including
retail shops, professional offices and restaurants, as well as a signature golf
course. Earnings are expected to commence in the second quarter of 2001.
Also in the third quarter of 2000, infrastructure construction began
at Victoria Park, near Orlando and development also began at St. Johns Golf and
Country Club in St. Johns County, Florida. Also in St. Johns County, contracts
have been received for the first 12 riverfront lots at RiverTown. These
contracts are expected to close in the fourth quarter of 2000.
In April 1999, the Company acquired all outstanding stock of Saussy
Burbank, for $16.5 million in cash and assumption of liabilities of
approximately $8.8 million. Saussy Burbank builds approximately 250 to 300
homes a year and has operations in the greater Charlotte, Raleigh and Asheville
market areas. Saussy Burbank's operations are included in community residential
real estate operations since acquisition.
THREE MONTHS ENDED SEPTEMBER 30
Real estate sales totaled $37.5 million with related costs of sales of
$21.9 million during the third quarter of 2000 as compared to sales of $30.3
million in 1999 with related cost of sales of $18.8 million. During the third
quarter of 2000, 32 lots and multi-family unit sales at WaterColor closed.
Revenues from these sales totaled $11.5 million with related cost of sales of
$5.3 million. The lots closed at WaterColor had an average sales price of
approximately $311,000, while the condominium residences averaged approximately
$390,000. Sales this quarter at James Island in northeast Florida totaled $5.5
million on closings of 19 units at an average price of approximately $289,000.
Related cost of sales at James Island were $5.1 million. In 1999, James Island
had sales of $4.2 million in the third quarter. Other sales this quarter
included land sales in northwest Florida totaling $5.9 million with costs of
sales of $.2 million, housing and lots in the Summerwood and Woodrun
developments in west Florida totaling in the aggregate $1.7 million, and at
Driftwood in the Tallahassee, Florida area of $1.0 million. Related cost of
sales for these developments totaled $1.7 million in 2000. In the third quarter
of 1999, sales at the Retreat amounted to $11.6 million with related cost of
sales of $2.8 million. Other sales in the third quarter of 1999 included
housing and lots in the Summerwood, Woodrun, Camp Creek Point developments
totaling $1.7 million, with related cost of sales of $.9 million. Saussy
Burbank, acquired in April 1999, contributed revenues in the third quarter of
2000 from homebuilding totaling $11.7 million with related cost of sales of
$10.3 million on closing of 57 units at an average price of approximately
$205,000 as compared to the third quarter of 1999 when Saussy Burbank had sales
of $12.9 million with cost of sales of $12.6 million.
15
<PAGE> 16
Other revenues from management fees and rental income totaled $.4
million with related costs of $.6 million in the third quarter of 2000 as
compared to $.5 million in revenues and $.7 in related costs in 1999. The
community residential development operations also had other operating expenses,
including salaries and benefits of personnel and other administrative expenses,
of $4.9 million during the third quarter of 2000 as compared to $4.1 million in
1999.
Income from the Company's investment in Arvida/JMB was $3.2 million
for the third quarter of 2000, as compared to $3.8 million in 1999. During the
third quarter of 2000, the Company also had income from other joint ventures of
$.3 million as compared to $.2 million in 1999.
NINE MONTHS ENDED SEPTEMBER 30
Real estate sales totaled $92.2 million with related costs of sales of
$61.5 million during the first nine months of 2000 as compared to sales of
$57.8 million in 1999 with related cost of sales of $34.3 million. During the
first nine months of 2000, 57 lots and multi-family unit sales at WaterColor
closed generating pre-tax gain of $11.0 million. Revenues from these sales
totaled $20.0 million with related cost of sales of $9.0 million. At the
Retreat, the final eight lots were sold during the first half of 2000 for sales
of $3.2 million with related cost of sales of $.2 million. In the first nine
months of 1999, sales at the Retreat amounted to $23.1 million. Sales for the
first nine months of 2000 at James Island in northeast Florida totaled $18.4
million on closings of 64 units at an average price of approximately $288,000.
Related cost of sales at James Island were $16.7 million. In the first nine
months of 1999, James Island had sales of $4.4 million with cost of sales of
$4.0 million. Other sales during the first nine months included land in west
Florida totaling $6.0 million with cost of sales of $.2 million, housing and
lots in the Summerwood, Woodrun, Camp Creek Point and other various
developments in west Florida totaling in the aggregate $5.5 million and at
Driftwood and SouthWood in the Tallahassee, Florida area of $2.5 million.
Related cost of sales for these developments totaled $3.5 million . In 1999,
Summerwood, Deerwood, Woodrun and Camp Creek Point had sales aggregating $5.9
million with cost of sales for these developments totaling $2.7 million. Saussy
Burbank contributed revenues in the first nine months of 2000 of $36.7 million
with related cost of sales of $31.9 million on closing of 181 units at an
average price of approximately $203,000. For the prior period, Saussy Burbank
had sales of $24.5 million with cost of sales of $22.5 million from the date of
acquisition.
Other revenues from management fees and rental income totaled $1.1
million with related costs of $1.9 million in the first nine months of 2000 as
compared to $.5 million in revenues and $1.7 million in related costs in 1999.
The community residential development operations also had other operating
expenses of $13.3 million during the first nine months of 2000 as compared to
$11.4 million in 1999.
Income from the Company's investment in Arvida/JMB was $10.4 million
for the first nine months of 2000, as compared to $10.7 million in 1999. During
the first nine months of 2000, the Company also had income from other joint
ventures of $.7 million compared with $.2 million during 1999.
COMMERCIAL REAL ESTATE DEVELOPMENT AND SERVICES
(In millions)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
------------------ -----------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $37.3 $31.9 $121.8 $140.3
Operating expenses 25.9 21.1 91.4 99.5
Depreciation and amortization 6.5 5.4 18.2 13.3
Other income (expense) 0.1 -- -- --
Pretax income from continuing operations 4.8 5.4 12.2 27.5
EBITDA, gross 11.5 10.5 30.8 40.4
EBITDA, net 5.8 7.4 17.8 25.6
</TABLE>
16
<PAGE> 17
Operations of the commercial real estate development and services
segment include the development of St. Joe properties ("St. Joe Commercial"),
development and management of the Flagler real estate portfolio, the Advantis
service businesses and investments in affiliates, including the Codina Group,
Inc. ("CGI"), to develop and manage properties throughout the southeast. Until
October 9, 2000, the Company owned 54% of FLA and Flagler is the wholly owned
real estate subsidiary of FLA.
THREE MONTHS ENDED SEPTEMBER 30
Revenues generated from rental operations in the third quarter of 2000
are from both St. Joe Commercial owned operating properties and Flagler
operating properties and FECR owned rental properties. Revenues generated from
rental operations in the third quarter of 1999 were primarily from Flagler and
FECR owned rental properties. Rental revenues in the third quarter of 2000 were
$17.8 million, an increase of 30% over the $13.7 million recognized during the
third quarter of 1999.
Rental revenues generated by St. Joe Commercial owned operating
properties were $2.7 million during the third quarter of 2000 compared to $.5
million in 1999, while operating expenses relating to these revenues were $1.3
million and $.2 million, respectively. Using tax-deferred proceeds from sales
of non-strategic assets, St. Joe Commercial has acquired five commercial
properties in the Tampa-St. Petersburg area in 2000. As of September 30, 2000,
St. Joe Commercial had interests in, either wholly owned or through
partnerships, 13 operating buildings with 1.5 million total rentable square
feet in service. Approximately 0.7 million square feet of office space is under
construction as of September 30, 2000.
Rental revenues generated by Flagler owned operating properties and
FECR rental properties during the third quarter of 2000 were $15.1 million, a
14% increase over the $13.2 million earned in 1999. Operating expenses on
rental revenues, excluding depreciation, decreased to $4.4 million for the
third quarter of 2000, from $4.7 million in 1999. As of September 30, 2000,
Flagler had 51 operating buildings with 5.3 million total rentable square feet
in service. Approximately 643,000 square feet of office and industrial space is
under construction as of September 30, 2000. Additionally, approximately
586,000 square feet is in the predevelopment stage.
Operating revenues generated from Advantis totaled $14.3 million
during the third quarter of 2000 compared with $14.9 million for the third
quarter of 1999, a decrease of 4% due primarily to a decrease in the profit
margins for construction contracts. Advantis expenses were $14.7 million during
the third quarter of 2000 compared with $13.9 million in 1999, an increase of
6%, primarily due to increased office administration costs. Advantis' expenses
include commissions paid to brokers, property management expenses, office
administration expenses and construction costs.
The Company has investments in various real estate developments and
affiliates that are accounted for by the equity method of accounting. Earnings
from these investments were breakeven during the third quarter of 2000 compared
to $2.3 million in 1999. The third quarter 1999 earnings were comprised
primarily from $2.0 million contributed by land sales in 1999 from the
Company's investment in Deerfield Park, LLC, located in Atlanta, Georgia which
did not occur during the third quarter of 2000.
General and administrative expenses for the commercial group, which
are included in operating expenses, increased 52% to $3.5 million for the third
quarter of 2000 from $2.3 million in the third quarter of 1999. Of total
general and administrative expenses for the third quarter of 2000, $2.3 million
are St. Joe Commercial related and $1.2 million are related to Flagler. For
1999, St. Joe Commercial related expenses were $1.0 million and $1.3 million
were related to Flagler.
Depreciation and amortization increased by $1.1 million to $6.5
million and is attributable to additional depreciation on operating properties
and increased goodwill.
Net EBITDA totaled $5.8 million for the third quarter of 2000.
Excluding Flagler, St. Joe Commercial had Net EBITDA of $(0.8) million,
compared to $3.4 million in 1999 and was comprised of $1.0 million from rental
operations, $(0.1) million from earnings on investments in real estate
developments, $(0.1) million from Advantis, and $(1.6) from commercial general
and administrative expenses.
NINE MONTHS ENDED SEPTEMBER 30
17
<PAGE> 18
Revenues generated from rental operations in the first nine months of
2000 are from both St. Joe Commercial owned operating properties and Flagler
operating properties and FECR owned rental properties. Revenues generated from
rental operations in the first nine months of 1999 were from primarily Flagler
and FECR owned rental properties. Rental revenues in the first nine months of
2000 were $49.7 million, an increase of 25% over the $39.7 million during the
first nine months of 1999.
Rental revenues generated by St. Joe Commercial owned operating
properties were $6.3 million during the first nine months of 2000, while
operating expenses relating to these revenues were $2.2 million. St. Joe
Commercial had $.7 million of rental revenues in the first nine months of 1999
with $.1 million in operating expenses related to those revenues.
Rental revenues generated by Flagler owned operating properties and
FECR rental properties during the first nine months of 2000 were $43.4 million,
an 11% increase over $39.0 million in 1999. Operating expenses on rental
revenues, excluding depreciation, increased to $14.8 million for the first nine
months of 2000, from $13.6 million in 1999.
Operating revenues generated from Advantis totaled $47.6 million
during the first nine months of 2000 , an increase of 11%, compared with $43.0
million for the first nine months of 1999. The increase was primarily due to an
increase in office leasing transactions and the growth of investment sales
activities. Advantis expenses were $47.8 million during the first nine months
of 2000, an increase of 18% compared with $40.6 million in 1999. The increase
in operating expense was primarily due to increased brokerage commissions as
well as increased office administration costs. Advantis' expenses include
commissions paid to brokers, property management expenses, office
administration, and construction costs. St. Joe Commercial also had management
and development fees earned of $1.9 million in 1999.
In the first quarter of 2000, St. Joe Commercial sold the Homeside
Lending building for gross proceeds of $16.0 million and had cost of sales of
approximately $14.4 million resulting in a $1.6 million pre-tax gain.
In the first nine months of 2000, Flagler sold real estate properties
for gross proceeds of $6.7 million with cost of sales of $2.5 million. In 1999
Flagler had revenues of $50.4 million which were from the sale of two
industrial parks, Gran Park at McCahill and Gran Park at Lewis Terminals which
resulted in a pre-tax gain of $10.4 million ($5.6 million, net of the effect of
FECI's minority interest). The two industrial parks sold in 1999 consisted of
10 buildings with 1.2 million square feet.
The Company has investments in various real estate developments and
affiliates that are accounted for by the equity method of accounting. Earnings
from these investments contributed $1.8 million to the commercial real estate
segment's revenues during the first nine months of 2000 compared to $5.3
million in 1999. The first nine months earnings were comprised primarily from
$1.7 million and $4.7 million contributed by 2000 and 1999 land sales,
respectively, from the Company's investment in Deerfield Park, LLC, located in
Atlanta, Georgia.
General and administrative expenses for the commercial group, which
are included in operating expenses, increased 60% to $9.7 million for the first
nine months of 2000 from $6.1 million in the first nine months of 1999. Of
total general and administrative expenses for the first nine months of 2000,
$5.0 million are St. Joe Commercial related and $4.7 million are related to
Flagler. For 1999, St. Joe Commercial related expenses were $2.5 million and
$3.6 million were related to Flagler. The increase at St. Joe Commercial is
primarily due to increased salaries and benefits charges. The increase in
expenses at Flagler is primarily due to transition costs associated with
Flagler's new management team.
Depreciation and amortization increased by $4.9 million to $18.2
million and is attributable to additional goodwill amortization of $.4 million
and additional depreciation on operating properties of $4.4 million. Of the
$4.4 million increase in depreciation, $2.8 million was from Flagler operating
buildings and $1.6 million was from St. Joe Commercial related operating
properties.
Net EBITDA totaled $17.8 million for the first nine months of 2000.
Excluding Flagler, St. Joe Commercial had Net EBITDA of $2.5 million, which was
comprised of $1.6 million from sales of real estate, $3.3 million from rental
operations, $1.7 million from earnings on investments in real estate
developments, $.6 million from Advantis, and ($4.7) million from commercial
general and administrative expenses. Net
18
<PAGE> 19
EBITDA in 1999 totaled $7.4 million and included the $4.7 million contribution
from the Company's equity investment in Deerfield Park, LLC which contributed
$1.7 million in 2000.
LAND SALES
(In millions)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
----------------- ----------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C>
Revenues $26.7 -- $64.1 --
Operating expenses 2.5 -- 7.4 --
Depreciation and amortization -- -- -- --
Other income (expense) .3 -- .5 --
Pretax income from continuing operations 24.5 -- 57.2 --
EBITDA, net 24.5 -- 57.3 --
</TABLE>
During the fourth quarter of 1999, the St. Joe Land Company was
created to sell parcels of land, typically 5 to 5,000 acres, from a portion of
the total of 800,000 acres of timberland held by The Company in northwest
Florida and southwest Georgia. These parcels could be used as large secluded
home sites, quail plantations, ranches, farms, hunting and fishing preserves
and for other recreational uses.
THREE MONTHS ENDED SEPTEMBER 30
During the third quarter of 2000, the land sales division had revenues
of $26.7 million, which represented sales of 14,004 acres at an average price
of $1,906 per acre. Gross profit resulting from these sales totaled $24.9
million. Included in the third quarter was the sale to the State of Florida of
8,867 acres of conservation land for $16.3 million and another sale of 3,900
acres for $7.5 million to the City of Tallahassee.
NINE MONTHS ENDED SEPTEMBER 30
During the first nine months of 2000, the land sales division had
revenues of $64.1 million and a total gross profit of approximately $58.3
million, which represented sales of 30,690 acres at an average price of $2,087
per acre. In addition to the third quarter sales previously discussed,
year-to-date sales included the first quarter sale of 3,620 acres for
approximately $3,200 per acre, in Capps, near Tallahassee, Florida and the sale
in the second quarter of one parcel of 4,094 acres for approximately $2,700 per
acre.
FORESTRY
(In millions)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
------------------ ----------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $7.8 $7.8 $27.4 $21.8
Operating expenses 5.3 4.7 15.9 13.4
Depreciation and amortization .8 0.6 2.2 1.8
Other income (expense) .6 9.4 2.0 10.9
Pretax income from continuing operations 2.3 11.8 11.3 17.5
EBITDA, net 3.0 3.7 13.4 10.4
</TABLE>
In August of 1998 the Florida Coast Paper Company, L.L.C. ("FCP"), the
Company's major pulpwood customer, shut down its mill in Port St. Joe. Under
the terms and conditions of the amended fiber supply agreement with FCP, the
Company began redirecting the volumes of pulpwood from the FCP mill in Port St.
Joe to another mill in Panama City, Florida. Sales of pulpwood resumed in
November of 1998 and
19
<PAGE> 20
continued through June 30, 2000 with no significant loss in volume of sales.
FCP filed for protection from its creditors in the Federal Bankruptcy Court for
the District of Delaware. Pursuant to an order entered by the Bankruptcy Court,
the amended fiber supply agreement was terminated, effective June 30, 2000. On
July 1, 2000, a new fiber agreement with the surviving entity, Jefferson
Smurfit (U.S.), also known as Smurfit-Stone Container Corporation went into
effect. The agreement is for twelve years and it requires an annual pulpwood
volume of 700,000 tons per year that must come from company-owned fee simple
lands. 311,870 acres are encumbered, subject to certain restrictions, by this
agreement, although the obligation may be transferred to a third party if a
parcel is sold.
THREE MONTHS ENDED SEPTEMBER 30
Total revenues for the forestry segment remained constant with prior
year at $7.8 million. Total sales under the new fiber agreement were $3.2
million (137,000 tons) in 2000 as compared to $4.6 million (168,000 tons) in
1999 sold under the previous fiber agreement. Sales to other customers totaled
$4.6 million (187,000 tons) in the third quarter of 2000 compared to $3.0
million (114,000 tons) a year ago. The increase in sales to other customers is
the result of price and local demand increasing for solid wood products in 2000
as well as successful efforts to diversify the customer base.
Operating expenses for the third quarter of 2000 increased $.6
million, or 13% compared to 1999. Cost of sales were $4.9 million in 2000 as
compared to $4.3 million in 1999 due to higher harvest volumes. Other operating
expenses were $.4 million in 2000 and in 1999.
NINE MONTHS ENDED SEPTEMBER 30
Total revenues for the nine months ended September 30, 2000 increased
$5.6 million, or 26%, to $27.4 million compared to the first nine months of
2000. Sales under the fiber agreement were $11.9 million (484,000 tons) in 2000
as compared to $13.9 million (479,000 tons) in 1999. Sales to other customers
increased to $14.8 million (531,000 tons) in 2000 from $7.5 million (307,000
tons) in 1999. In the first three months of 2000, the Company conducted several
lump sum bid timber sales to take advantage of favorable market conditions,
which was not the case in 1999. Revenues in 2000 include bulk land sales of
$0.8 million compared to $0.3 million in 1999.
Operating expenses for the first nine months of 2000 increased $2.5
million, or 19%, to $15.9 million. Cost of sales were $14.5 million in the
first nine months of 2000 as compared to $12.2 million in 1999. Cost of sales
as a percentage of sales was lower in 2000 than in 1999, due to the lump sum
timber sales in 2000, which do not incur cut and haul charges. Other operating
expenses were $1.3 million in 2000 and $1.2 million in 1999.
TRANSPORTATION
(In millions)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
------------------ -----------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $49.1 $50.4 $152.1 $149.7
Operating expenses 45.4 34.4 122.3 116.1
Depreciation and amortization 8.5 4.9 18.8 14.6
Other income (expense) 1.1 0.3 3.0 0.4
Pretax income from continuing operations (3.7) 11.4 14.0 19.4
EBITDA, gross 4.5 16.2 33.1 34.1
EBITDA, net 2.3 9.3 17.9 18.6
</TABLE>
THREE MONTHS ENDED SEPTEMBER 30,
The transportation segment includes the railway, trucking and telecom
operations of FLA. Total FLA transportation operating revenues remained
constant at $48.6 million for the third quarter of 2000 compared
20
<PAGE> 21
to the third quarter of 1999. Transportation revenues for 2000 included $1.9
million in revenues from FLA's telecommunications division compared with $1.6
million in 1999. Railway and trucking revenues totaled $47.4 million in 2000
compared to $48.8 million in 1999. Automotive traffic declined as previously
strong demand for automobiles began to slow. This, along with continued
declines in intermodal traffic, accounted to the bulk of the decrease.
FECR's operating expenses increased to $44.5 million, or 32% in the
third quarter of 2000 from $33.6 million in 1999. Included in the third quarter
of 2000 operating expenses are restructuring and other costs totaling $5.3
million associated with revamping the trucking operations. Operating expenses
also include $8.0 million in expenses relating to FLA's telecommunication
division in 2000 as compared to $.9 million in 1999.
Apalachicola Northern Railroad Company ("ANRR") operating revenues
decreased $1.3 million to $.5 million in 2000 as compared to 1999. Up until
early in the second quarter of 2000, included in revenues recorded by ANRR were
contractual payments from Seminole Electric Cooperative, Inc. ("Seminole").
Seminole halted shipments of coal in January 1999. ANRR's workforce has been
reduced significantly, commensurate with its loss in traffic. The railroad
intends to maintain a staff adequate to operate a minimal schedule sufficient
to provide service to existing customers.
ANRR's operating expenses remained constant at $.9 million in the
third quarter of 2000 as compared to the third quarter of 1999.
NINE MONTHS ENDED SEPTEMBER 30
Total FLA transportation operating revenues increased to $149.8
million, or 3% for the first nine months of 2000 as compared to $145.0 million
for the first nine months of 1999. Transportation revenues for 2000 included
$6.4 million in revenues from FLA's telecommunications division compared with
$3.8 million in 1999. Railway and trucking revenues totaled $143.4 million in
2000 as compared to $141.2 million in 1999. The increase in these revenues was
attributable to improved sales efforts in the trucking operations resulting in
additional customer accounts.
FECR's operating expenses increased to $120.0 million, or 7% in the
first nine months of 2000 from $111.7 million in 1999. Included in the third
quarter of 2000 operating expenses are restructuring and other costs totaling
$5.3 million associated with revamping the trucking operations. Included in
1999 results was $8.2 million in special charges that FECR took in the second
quarter of 1999 relating to a reorganization and workforce reduction in its
railway operations. Operating expenses also include $13.4 million in expenses
relating to FLA's telecommunication division in 2000 as compared to $1.6
million in 2000.
ANRR's operating revenues decreased $2.4 million to $2.3 million in
2000 as compared to 1999. ANRR's operating expenses decreased $2.2 million to
$2.3 million in the first nine months of 2000 as compared to $4.5 million in
the first nine months of 1999, commensurate with the loss in traffic.
FINANCIAL POSITION
In August 1998, the St. Joe Board of Directors authorized $150 million
for the purchase of outstanding common stock through open-market purchases.
During the first quarter of 2000, the Company completed this program having
purchased 6.5 million shares at an average price of $23.13. In February 2000,
the St. Joe Board of Directors authorized a second $150 million stock
repurchase plan and the Company has purchased .6 million shares at an average
price of $27.95 under this program. The Board believes that the current price
of the Company's common shares does not reflect the value of the Company's
assets or its future prospects. The Company's goal is to repurchase, on
average, over a million shares per quarter over the next several quarters.
For the period ended September 30, 2000, cash provided by operations
was $56.8 million. Included in cash flows from operations were expenditures of
$100.0 million relating to its community residential development segment. The
Company also obtained a $250 million line of credit, of which it has drawn
$110.0 million as of September 30, 2000. Capital expenditures, other than
community residential development expenditures, during the first nine months of
2000 were $241.8 million consisting of building acquisitions, real estate
development and FLA transportation and telecom expenditures.
21
<PAGE> 22
The $250 million credit facility has an initial term of 2 years. This
facility will be available for general corporate purposes, including
repurchases of the Company's outstanding common stock. The facility includes
financial performance covenants relating to its leverage position, interest
coverage and a minimum net worth requirement and also negative pledge
restrictions.
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and
Hedging Activities" ("FAS 133"), which is effective for all fiscal quarters of
all fiscal years beginning after June 15, 2000. FAS 133 establishes accounting
and reporting standards for derivative instruments and hedging activities. FAS
133 requires entities to recognize all derivatives as either assets or
liabilities in the balance sheet and measure those instruments at fair value.
The Company has not yet determined the impact of FAS 133 on its financial
statements but does not believe it will materially effect its financial
statements.
Management believes that its financial condition is strong and that
its cash, investments, other liquid 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.
ITEM 7A. MARKET RISK
The Company's primary market risk exposure is interest rate risk
related to its long-term debt. The Company entered into a senior unsecured
revolving credit facility for up to $200.0 million, which was increased to
$250.0 million in September 2000 and matures in March 2002. As of September 30,
2000, $110 million was outstanding. This debt accrues interest at different
rates based on timing of the loan and the Company's 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
subjects the Company to interest rate risk relating to the change in the LIBOR
rates. The Company manages its interest rate exposure by monitoring the effects
of market changes in interest rates.
22
<PAGE> 23
PART II - OTHER INFORMATION
Item 5. Other Information
(a) Pro Forma Financial Statements
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.
The following unaudited pro forma consolidated balance sheet is based
upon the historical consolidated balance sheet of the Company as of September
30, 2000 as if the Company had completed the spin-off of FLA as of that date.
The following unaudited pro forma consolidated statement of income of the
Company is based upon the historical consolidated statement of income for the
nine-month period ended September 30, 2000. These statements are presented as
if the Company had effected the spin-off as of January 1, 2000. These unaudited
pro forma consolidated financial statements should be read in conjunction with
the Company's annual report filed on Form 10-K for the year ended December 31,
1999 and the Company's Form 8-K filed on October 24, 2000.
The unaudited pro forma consolidated financial statements are not
necessarily indicative of what the actual financial position or results of
operations of the Company would have been at September 30, 2000 assuming the
transaction had been completed as set forth above, nor does it purport to
represent the financial position or results of the Company in the future
periods.
23
<PAGE> 24
Pro forma Condensed Consolidated Balance Sheet
September 30, 2000
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Spin-off Other
Historical of FLA(a) Adjustments Pro forma
---------- ---------- ----------- ---------
ASSETS
<S> <C> <C> <C> <C>
Current assets:
Cash & cash equivalents $ 63,739 (4,252) (2,677)(b),(c) 56,810
Short-term investments 50,506 (20,441) -- 30,065
Other assets 65,919 (39,590) 2,000 (b),(c) 28,329
---------- -------- ------ ---------
Total current assets 180,164 64,283 (677) 115,204
Investments and other assets:
Marketable securities 121,135 (951) -- 120,184
Investment in unconsolidated affiliates 88,028 (18,704) -- 69,324
Prepaid pension asset 70,171 -- -- 70,171
Goodwill 135,946 -- -- 135,946
Other assets 25,246 (14,596) -- 10,650
---------- -------- ------ ---------
Total investments and other assets 440,526 34,251 -- 406,275
Investment in real estate 878,267 417,474 -- 460,793
Property, plant & equipment, net 491,753 434,599 -- 57,154
---------- -------- ------ ---------
Total assets $1,990,710 950,607 (677) 1,039,426
========== ======= ====== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and
accrued liabilities $ 129,571 (59,211) -- 70,360
Income tax payable 1,448 (1,556) 2,053 (b) 1,945
Current portion of long-term debt 31,373 -- -- 31,373
---------- -------- ------ ---------
Total current liabilities 162,392 (60,767) 2,053 103,678
Other liabilities 25,305 (16,232) -- 9,073
Deferred income taxes 284,529 (132,957) (9,608)(d) 141,964
Long-term debt 232,430 -- -- 232,430
Minority interest in consolidated subsidiaries 344,109 (341,521) -- 2,588
---------- -------- ------ ---------
Total liabilities 1,048,765 (551,477) (7,555) 489,733
Stockholders' equity 941,945 (399,130) 6,878 (b),(c),(d) 549,693
---------- -------- ------ ---------
Total liabilities and stockholders' equity $1,990,710 (950,607) (677) 1,039,426
========== ======== ====== =========
</TABLE>
Notes to Pro Forma Condensed Consolidated Balance Sheet
(a) Effective October 9, 2000, the Company completed its tax-free pro-rata
spin-off of its 54% equity interest in Florida East Coast Industries,
Inc. ("FLA") to the Company's shareholders. The September 30, 2000
historical balance sheet included FLA on a consolidated basis. This
pro forma adjustment represents the deconsolidation and dividend
distribution of the Company's 54% equity interest in FLA. The
adjustment also includes the add-back of intercompany transactions
between the Company and
24
<PAGE> 25
FLA, which were formerly eliminated in consolidation. The intercompany
transactions primarily relate to management and development fees paid
to the Company by FLA, of which $2,345 was capitalized to investment
in real estate and other assets owned by FLA and $2,345 was recorded
as an increase in retained earnings of the Company.
(b) In contemplating the spin-off, the Company and FLA entered into an
Amended and Restated Master Agreement, which provides for several
property management and development service agreements between the two
companies. In consideration of FLA's execution of the Amended and
Restated Master Agreement, the Company will pay to FLA the sum of
$6,000 in three annual installments, the first installment was made on
the effective date of the spin-off. Each annual installment will be
amortized to expense over the one-year period following the date of
payment. The first installment of $2,000 has been included as a
reduction of cash, all of which has been recorded as prepaid. In
addition, in consideration of the abandonment by the Company of its
entitlement to become a 50% joint venture partner in certain properties
previously agreed to between the Company and FLA, FLA paid the Company
the sum of $5,323 on the effective date of the spin-off. Such amount is
presented as an increase in cash and retained earnings of the Company,
net of a corresponding tax expense of $2,053.
(c) The estimated costs related to the spin-off transaction total
approximately $6,000 and include investment banker's, legal and tax
advisory fees. This amount is presented as a decrease in cash and
retained earnings of the Company. There is no corresponding tax effect
as the items are not tax deductible.
(d) The Company has recorded a deferred tax liability of $9,608 related to
undistributed earnings from FLA during the Company's period of
ownership. This deferred tax liability is reversed through operations
as of the effective date of the spin-off.
25
<PAGE> 26
Pro forma Condensed Consolidated Statement of Income
Nine months ended September 30, 2000
(Unaudited)
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Spin-off of Other
Historical FLA (a) Adjustments Pro forma
---------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Operating revenues $664,482 (197,816) 466,666
Expenses:
Operating expenses 494,282 (140,022) 1,500 (b) 355,760
Corporate expense, net 17,511 -- -- 17,511
Depreciation and amortization 47,095 (31,025) -- 16,070
-------- -------- ------ -------
Total expenses 558,888 (171,047) 1,500 389,341
-------- -------- ------ -------
Operating profit 105,594 (26,769) (1,500) 77,325
Other income (expense) 9,056 (6,364) -- 2,692
------- ------- ------ -------
Income from continuing operations before
income taxes and minority interest 114,650 (33,133) (1,500) 80,017
-------- -------- ------ -------
Income tax expense 46,050 (13,397) (1,249)(b),(c) 31,404
Minority interest 9,386 (9,265) 121
-------- -------- ------ -------
Net income $ 59,214 (10,471) (251) 48,492
======== ======== ====== =======
<CAPTION>
EARNINGS PER SHARE
Basic: $ 0.70 0.57
Diluted: 0.68 0.56
</TABLE>
Notes to Pro Forma Condensed Consolidated Statement of Income
(a) This pro forma adjustment represents the deconsolidation of the
revenues and expenses, including minority interest and income tax
expense, attributable to FLA for the related period. These amounts are
removed from the Company's historical balances to reflect the spin-off
as if it occurred on January 1, 2000. The adjustment also includes the
add-back of intercompany transactions between the Company and FLA,
which were formerly eliminated in consolidation. The intercompany
transactions primarily relate to asset management fees and management
fee expenses between the Company and FLA. The resulting additions to
operating revenues for the nine months ended September 30, 2000
totaled $2,168. The resulting additions to operating expenses for the
nine months ended September 30, 2000 totaled $1,930.
(b) As previously discussed in note (b) of the Notes to Pro Forma
Consolidated Balance Sheet, in consideration of FLA's execution of the
Amended and Restated Master Agreement, the Company will pay to FLA the
sum of $6,000 in three annual installments, with each installment to
be amortized to management fee expense over the subsequent one-year
period. Included in the nine month pro forma statement of income are
management fee expenses of $1,500 and related tax benefits of $579
related to the amortization of such payments.
(c) This adjustment represents the reversal of deferred tax expense
previously recorded for the undistributed earnings of FLA, which
totaled $670 during the nine months ended September 30, 2000.
26
<PAGE> 27
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.01 Financial Data Schedule (for SEC use only)
99.01 Supplemental Calculation of Selected Consolidated Financial
Data
(b) Reports on Form 8-K
Item 5 - Other Events - September 7, 2000
Item 7 - Financial Statements and Exhibits - October 24, 2000
27
<PAGE> 28
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
The St Joe Company
Date: November 13, 2000 /s/ Peter S. Rummell
---------------------------------------
Peter S. Rummell
Chairman of the Board and
Chief Executive Officer
Date: November 13, 2000 /s/ Kevin M. Twomey
---------------------------------------
Kevin M. Twomey
President, Chief Operating Officer, and
Chief Financial Officer
Date: November 13, 2000 /s/ Janna L. Connolly
---------------------------------------
Janna L. Connolly
Vice President, Controller
(Chief Accounting Officer)
28
