St. Joe 2nd Quarter 2009 Results

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JOE Focused on Opening of the New Panama City - Bay County International Airport

Jacksonville, Florida - (August 4, 2009) - The St. Joe Company (NYSE: JOE) today announced a Net Loss for the second quarter 2009 of $(44.6) million, or $(0.49) per share, which includes pre-tax non-cash charges of $64.7 million, or $0.43 per share after tax. This compares to a Net Loss of $(20.8) million, or $(0.23) per share, for the second quarter of 2008, which included significant charges of $35.3 million, or $0.24 per share after tax. All per-share references in this release are presented on a diluted basis.


As previously announced, JOE annuitized approximately $93 million of its pension plan liabilities by transferring approximately $101 million of its pension plan assets to an insurance company. The transaction resulted in a pre-tax non-cash charge for the second quarter of approximately $44.7 million, or $0.30 per share after-tax.



The remaining non-cash charges of $20.0 million pre-tax, or $0.13 per share after-tax, included the $7.4 million write-off of a note receivable from GVA Advantis, the $6.7 million write-down related to JOE's SevenShores condominium and marina development project, $5.5 million of impairments associated with homes and home sites in certain of JOE's communities and $0.4 million of impairments for the write-down of a builder note receivable.


Net Loss for the first half of 2009 was $(56.3) million, or $(0.62) per share, compared to Net Income of $11.2 million, or $0.13 per share, for the first half of 2008.



Included in the results for the first six months of 2009 were the following significant non-cash charges:

• Settlement charge on pension annuitization of $44.7 million, or $0.30 per share after-tax; and
  
• Pre-tax impairment charges of $21.5 million, or $0.14 per share after-tax.

Included in the results for the first six months of 2008 were significant charges of $38.0 million pre-tax, or $0.26 per share after tax.

Second Quarter Sales Results


"As a result of a slight uptick in the market in the second quarter, we experienced positive results from our ongoing efforts to sell residential inventory with closings in a number of our communities generating revenue of approximately $11.7 million," said Britt Greene, President and CEO of JOE.



Approximately 5,300 acres of rural lands were sold during the second quarter of 2009, generating approximately $8.4 million of revenue, compared to approximately 29,400 acres for $39.0 million in the second quarter last year.


Liquidity and Balance Sheet
At June 30, 2009, JOE had cash of $116.6 million and pledged treasury securities of $28.0 million, compared to debt of $49.1 million, $28.0 million of which is defeased debt. JOE's $100 million line of credit remained undrawn at June 30, 2009.



The pre-tax non-cash charge related to the annuitization of the pension plan liabilities did not impact tangible net worth as calculated for purposes of our line of credit covenants due to the offsetting credit to accumulated other comprehensive income. As a result of this transaction, JOE was able to significantly increase the pension plan's funded status ratio at June 30, 2009, thereby reducing the potential for future funding requirements.



"With economic challenges unabated, we continue to take a very prudent approach as we manage our assets and continue to reduce capital expenditures, as well as operating and overhead expenses," said William S. McCalmont, JOE's Executive Vice President and CFO. "Because we have managed our balance sheet in a conservative manner, we now have the flexibility to execute our growth strategy as we begin to implement the initial development plans on our valuable land holdings near the new international airport."


Capital expenditures for the second quarter this year were $9.4 million, compared to $31.6 million in the second quarter last year, a reduction of 70 percent. In addition, JOE incurred cash overhead costs of $14.3 million during the quarter, compared to $21.5 million for the second quarter last year, a 33 percent reduction.


The International Airport at West Bay
JOE has accelerated preconstruction development activity on approximately 1,000 acres in West Bay adjacent to the new international airport scheduled to open in May 2010. The land is being planned for office, retail, hotel and industrial users. Aerial photography of the airport construction activity can be seen on the airport authority's web site, Project updates on construction of the new Panama City-Bay County International Airport — The New PFN.



"In the coming quarters, our priority will be to take advantage of the opening of the newest international airport in the country that is centered within some of JOE's most valuable land holdings," said Greene.


"We expect, over time, that this international airport will expand our customer base as it connects Northwest Florida with the global economy and the area is repositioned from a regional to a national destination. While we understand growth around the airport will ramp up over time, the JOE team is keenly focused on implementing our strategy to maximize these great assets."



"During the second quarter, we initiated a significant outreach program to site consultants and multinational corporations, as well as their suppliers, within the aerospace, defense, security and aviation economic clusters," said Greene. "With the airport opening now less than one year away, we are working to position several initial parcels near the airport to be 'revenue-ready'."


In June, JOE entered into agreements with The Haskell Company, America's Green Design-Build Leader, and TranSystems Corporation, one of the world's leading transportation planning and engineering firms, to master plan JOE land adjacent to the airport.


The team is master-planning a development node capable of joining the Gulf Coast's aerospace corridor. A concentration of U.S. Air Force, Navy and Army aerospace and aviation facilities along the Florida, Alabama and Mississippi Gulf Coast have created a cluster of aerospace and aviation businesses and workforce talent in the region.


JOE's development program at West Bay is part of the larger West Bay Sector Plan, a product of Florida's unique sector planning process. A planning framework is in place for approximately 75,000 acres, which includes the airport, to ensure long-term land-use compatibility. Already entitled within the West Bay Sector Plan DSAP I are over 5,600 residential units and over 4.4 million square feet of commercial space.


Land Holdings and Entitlements
On June 30, 2009, JOE owned approximately 580,000 acres, concentrated primarily in Northwest Florida. Approximately 405,000 acres, or 70 percent of JOE's total land holdings, are within 15 miles of the coast of the Gulf of Mexico.
On June 30, 2009, JOE's land-use entitlements in hand or in process totaled approximately 44,000 residential units and approximately 13.8 million square feet of commercial space, as well as an additional 589 acres with land-use entitlements for commercial uses.





Cash overhead is a non-GAAP financial measure. We believe this information is useful to investors in understanding the underlying operational performance of the Company, its business and performance trends. Specifically, we believe that the reduction in total cash overhead shows investors the cash savings achieved by management through various restructuring initiatives. Although we believe disclosure of total cash overhead enhances investors' understanding of our business and performance, this non-GAAP financial measure should not be considered an alternative to GAAP basis financial measures.


Additional Information
Additional information with respect to the Company's results for the second quarter of 2009 will be available in a Form 10-Q that will be filed with the Securities and Exchange Commission today.



Conference Call Information
On August 4, 2009 at 10:30 a.m. (EST), JOE will host a conference call to review the Company's results for the second quarter ended June 30, 2009.


To participate in the call, please phone 866.316.1366 (for domestic calls from the United States) or 913.312.1266 (for international calls) approximately ten minutes before the scheduled start time. You will be asked for a confirmation code which is 5384462. JOE will also webcast the conference call live over the Internet in a listen-only format at the company's website www.joe.com.


Following the call, you may access a replay of the call by phoning 888.203.1112 (for domestic calls) or 719.457.0820 (for international calls) using access code 5384462. Access to the replay will be available until August 11, 2009. A webcast archive of the conference call will be posted to the JOE website approximately 90 minutes following the call and will also be available until August 11, 2009.