##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 10-Q
  (Mark One)þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    September 30, 2006o

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

(I.R.S. Employer
    Identification No.)245 Riverside Avenue,
    Suite 500
    Jacksonville, Florida(Address of principal
    executive offices)

32202(Zip
    Code)   (904) 301-4200
 (Registrants telephone number, including area code)
  þ o
  Rule 12b-2
 þ o o
  Rule 12b-2 o þ
  APPLICABLE
    ONLY TO CORPORATE ISSUERS:




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##### 



THE ST.
    JOE COMPANY
    INDEX
  Page No.PART I
    Financial InformationItem 1.


Financial
    Statements


2Consolidated
    Balance Sheets  September 30, 2006 and
    December 31, 2005


2Consolidated
    Statements of Income  Three and Nine months ended
    September 30, 2006 and 2005


3Consolidated
    Statement of Changes in Stockholders Equity 
    Nine months ended September 30, 2006


4Consolidated
    Statements of Cash Flows-Nine months ended September 30,
    2006 and 2005


5Notes to
    Consolidated Financial Statements


6Item 2.


Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


18Item 3.


Quantitative and
    Qualitative Disclosures About Market Risk


44Item 4.


Controls and
    Procedures


44PART II
    Other InformationItem 1.


Legal
    Proceedings


45Item 1A.


Risk
    Factors


45Item 2.


Unregistered Sales
    of Equity Securities and Use of Proceeds


45Item 3.


Defaults upon
    Senior Securities


45Item 4.


Submission of
    Matters to a Vote of Security Holders


45Item 5.


Other
    Information


45Item 6.


Exhibits


46Signatures


47Ex-10.6 Form of Amendment to Restricted Stock and Stock Option AgreementsEx-31.1 Section 302 Certification of CEOEx-31.2 Section 302 Certification of CFOEx-32.1 Section 906 Certification of CEOEx-32.2 Section 906 Certification of CFO   1




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##### Table of Contents



PART I.
    FINANCIAL INFORMATION  Item 1.
    Financial
    Statements  THE ST.
    JOE COMPANY
  CONSOLIDATED
    BALANCE SHEETS
 (Unaudited)
 (Dollars in thousands)
  September 30,


December 31,2006


2005ASSETSInvestment in real estate

$
1,218,017


$
1,036,174Cash and cash equivalents


21,729



202,605Accounts receivable, net


44,886



58,905Prepaid pension asset


97,359



95,044Property, plant and equipment, net


38,308



40,176Goodwill, net


36,733



36,733Other intangible assets, net


34,776



46,385Other assets


82,309



75,924$
1,574,117


$
1,591,946LIABILITIES AND
    STOCKHOLDERS EQUITYLIABILITIES:Debt

$
653,488


$
554,446Accounts payable


76,381



75,309Accrued liabilities


129,965



135,156Income tax payable






3,931Deferred income taxes


250,227



315,912Total liabilities


1,110,061



1,084,754Minority interest in consolidated
    subsidiary


14,578



18,194STOCKHOLDERS EQUITY:Common stock, no par value;
    180,000,000 shares authorized; 104,345,607 and 103,931,705
    issued at September 30, 2006 and December 31, 2005,
    respectively


301,947



280,970Retained earnings


1,067,857



1,074,990Treasury stock at cost, 30,026,216
    and 29,003,415 shares held at September 30, 2006 and
    December 31, 2005, respectively


(920,326
)


(866,962
)Total stockholders equity


449,478



488,998$
1,574,117


$
1,591,946    2




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##### Table of Contents



THE ST.
    JOE COMPANY
  CONSOLIDATED
    STATEMENTS OF INCOME
 (Unaudited)
 (Dollars in thousands except per share amounts)
  Three Months Ended


Nine Months EndedSeptember 30,


September 30,2006


2005


2006


2005Revenues:Real estate sales

$
149,197


$
206,485


$
451,878


$
593,363Rental revenues


10,310



8,752



30,977



26,208Timber sales


7,212



6,225



23,529



21,828Other revenues


11,374



12,663



31,567



34,893Total revenues


178,093



234,125



537,951



676,292Expenses:Cost of real estate sales


95,629



132,678



290,462



380,212Cost of rental revenues


4,457



3,181



12,836



10,254Cost of timber sales


5,254



4,942



17,472



15,063Cost of other revenues


12,986



10,021



33,250



29,858Other operating expenses


21,364



18,934



59,718



52,067Corporate expense, net


11,293



12,370



40,608



36,297Depreciation and amortization


9,604



9,033



28,902



26,869Restructuring charge


13,129







13,129



Total expenses


173,716



191,159



496,377



550,620Operating profit


4,377



42,966



41,574



125,672Other income (expense):Investment income, net


854



770



3,805



1,374Interest expense


(5,392
)


(3,953
)


(13,716
)


(9,305
)Other, net


739



1,043



1,039



2,964Total other income (expense)


(3,799
)


(2,140
)


(8,872
)


(4,967
)Income from continuing operations
    before equity in income of unconsolidated affiliates, income
    taxes, and minority interest


578



40,826



32,702



120,705Equity in income of unconsolidated
    affiliates


1,738



3,139



7,320



10,564Income tax expense


2,256



15,804



15,300



47,707Income from continuing operations
    before minority interest


60



28,161



24,722



83,562Minority interest


745



1,345



5,622



3,379Income (loss) from continuing
    operations


(685
)


26,816



19,100



80,183Discontinued operations:Income (loss) from discontinued
    operations (net of income tax expense (benefit) of $20, $(333),
    $124 and $(530), respectively)


33



(559
)


207



(890
)Gain on sales of discontinued
    operations (net of income taxes of $3,982, $5,861, $5,619 and
    $6,032, respectively)


6,636



9,851



9,364



10,140Income from discontinued operations


6,669



9,292



9,571



9,250Net income

$
5,984


$
36,108


$
28,671


$
89,433EARNINGS PER SHAREBasicIncome (loss) from continuing
    operations

$
(0.01
)

$
0.36


$
0.26


$
1.07Income from discontinued operations

$
0.09


$
0.12


$
0.13


$
0.12Net income

$
0.08


$
0.48


$
0.39


$
1.19DilutedIncome (loss) from continuing
    operations

$
(0.01
)

$
0.35


$
0.26


$
1.05Income from discontinued operations

$
0.09


$
0.12


$
0.13


$
0.12Net income

$
0.08


$
0.47


$
0.39


$
1.17    3




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##### Table of Contents



THE ST.
    JOE COMPANY
  CONSOLIDATED STATEMENT OF CHANGES IN
    STOCKHOLDERS EQUITY
 (Dollars in thousands, except per share amounts)
  Common Stock


RetainedOutstanding Shares


Amount


Earnings


Treasury Stock


TotalBalance at December 31, 2005


74,928,290


$
280,970


$
1,074,990


$
(866,962
)

$
488,998Comprehensive income:Net income










28,671







28,671Total comprehensive income


















28,671Issuances of restricted stock


242,047















Forfeitures of restricted stock


(54,646
)














Dividends ($0.48 per share)










(35,804
)






(35,804
)Issuances of common stock


226,501



6,485











6,485Excess tax benefit on options
    exercised and vested restricted stock






2,728











2,728Amortization of stock based
    compensation






11,764











11,764Purchases of treasury shares


(1,022,801
)










(53,364
)


(53,364
)Balance at September 30, 2006


74,319,391


$
301,947


$
1,067,857


$
(920,326
)

$
449,478    4




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##### Table of Contents



THE ST.
    JOE COMPANY
  CONSOLIDATED
    STATEMENTS OF CASH FLOW
 (Dollars in thousands)
  Nine Months EndedSeptember 30,2006


2005Cash flows from operating
    activities:Net income

$
28,671


$
89,433Adjustments to reconcile net income
    to net cash (used in) provided by operating activities:Depreciation and amortization


30,175



30,989Stock-based compensation


11,764



7,364Minority interest in income


5,622



3,379Equity in income of unconsolidated
    joint ventures


(7,320
)


(10,564
)Distributions of income from
    unconsolidated affiliates


8,318



12,968Deferred income tax (benefit)
    expense


(65,685
)


30,170Excess tax benefits from
    stock-based compensation






10,152Cost of operating properties sold


315,914



384,957Expenditures for operating
    properties


(516,980
)


(399,660
)Gains on sale of discontinued
    operations


(14,983
)


(15,647
)Write-off of previously capitalized
    home building costs


9,549



Changes in operating assets and
    liabilities:Accounts receivable


14,017



(1,492
)Other assets


(4,782
)


(27,039
)Accounts payable and accrued
    liabilities


(8,981
)


24,965Income taxes payable


(23,019
)


7,374Net cash (used in) provided by
    operating activities

$
(217,720
)

$
147,349Cash flows from investing
    activities:Purchases of property, plant and
    equipment


(4,845
)


(16,545
)Purchases of investments in real
    estate


(5,230
)


(88,123
)Purchases of short-term
    investments, net of maturities and redemptions


(7
)


Investments in unconsolidated
    affiliates


(1,507
)


5Proceeds from sale of discontinued
    operations


48,037



65,637Distributions of capital from
    unconsolidated affiliates






5,973Net cash provided by (used in)
    investing activities

$
36,448


$
(33,053
)Cash flows from financing
    activities:Proceeds from revolving credit
    agreements


245,000



Repayment of revolving credit
    agreements


(150,000
)


Proceeds from other long-term debt


26



152,682Repayments of other long-term debt


(5,436
)


(52,475
)Distributions to minority interests


(9,239
)


Proceeds from exercises of stock
    options


6,485



10,516Dividends paid to stockholders


(35,804
)


(33,791
)Excess tax benefits from
    stock-based compensation


2,728



Treasury stock purchases


(53,364
)


(68,161
)Investment by minority interest
    partner






2,860Net cash provided by financing
    activities

$
396


$
11,631Net (decrease) increase in cash and
    cash equivalents


(180,876
)


125,927Cash and cash equivalents at
    beginning of period


202,605



94,816Cash and cash equivalents at end of
    period

$
21,729


$
220,743    5




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##### Table of Contents



THE ST.
    JOE COMPANY
 NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) 1.
    Basis of
    Presentation  Form 10-Q. Form 10-K.
  2.
    Summary
    of Significant Accounting Policies  Principles
    of Consolidation
  Accounting for Certain Financial Instruments
    with Characteristics of Both Liabilities and Equity
  Stock-Based
    Compensation
  Share-Based
    Payment (SFAS 123R) Accounting for Stock-Based Compensation
    (SFAS 123) Accounting for Stock Issued to
    Employees (APB 25).
  Stock
    Options and Non-vested Restricted Stock
   6




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          2006


2005Expected dividend yield


1.03
%


0.78
%Risk free interest rate


4.67
%


4.32
%Weighted average expected
    volatility


23.5
%


23.0
%Expected life (in years)


7



7     Three Months Ended


Nine Months EndedSeptember 30, 2006


September 30, 2006Stock option expense

$
414


$
2,299Non-vested restricted stock


1,957



9,401Employee stock purchase plan
    expense


46



165Total

$
2,417


$
11,865  7




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Three Months Ended


Nine Months EndedSeptember 30, 2005


September 30, 2005Net income:Net income as reported

$
36,108


$
89,433Add: stock-based compensation
    expense included in reported net income, net of related tax
    effects


1,507



4,603Deduct: total stock-based
    compensation expense determined under fair value based methods
    for all awards, net of related tax effects


(2,211
)


(6,761
)Net income  pro forma

$
35,404


$
87,275Per share  Basic:Earnings per share as reported

$
0.48


$
1.19Earnings per share  pro
    forma

$
0.47


$
1.16Per share  Diluted:Earnings per share as reported

$
0.47


$
1.17Earnings per share  pro
    forma

$
0.47


$
1.15     Number of


Weighted AverageShares


Exercise PriceBalance at December 31, 2005


1,051,451


$
30.63Granted


119,873



54.24Forfeited


(27,000
)


31.43Exercised


(226,501
)


28.63Balance at September 30, 2006


917,823


$
34.18       Weighted Average


Range of


Weighted AverageNumber of Options Outstanding

Remaining Contractual Life


Exercise Prices


Exercise Price101,755


3 years


$
15.96-$23.94


$
19.45627,195


6 years


$
23.95-$35.91


$
30.0429,000


7 years


$
35.92-$53.86


$
40.21159,873


10 years


$
53.87-$72.09


$
58.71917,823


6 years


$
15.96-$72.09


$
34.18  8




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Weighted Average


Range of


Weighted AverageNumber of Options Exercisable

Remaining Contractual Life


Exercise Prices


Exercise Price101,755


3 years


$
15.96-$23.94


$
19.45543,582


6 years


$
23.95-$35.91


$
29.7914,500


7 years


$
35.92-$53.86


$
40.21659,837


5 years


$
15.96-$53.86


$
28.43     Weighted AverageNumber of


Grant Date FairNon-Vested Restricted Shares

Shares


ValueBalance at December 31, 2005


890,738


$
40.34Granted


242,047



51.36Forfeited


(54,646
)


52.79Vested


(223,079
)


49.47Balance at September 30, 2006


855,060


$
41.38           Employee
    Stock Purchase Plan
   9




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Earnings
    Per Share
            Three Months Ended


Nine Months EndedSeptember 30,


September 30,2006


2005


2006


2005Basic


73,373,896



74,750,516



73,726,138



75,007,401Diluted


73,927,941



76,089,307



74,467,972



76,432,285   Reclassifications
      Supplemental
    Cash Flow Information
     10




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Restructuring
    Residential Real


Commercial RealEstate


Estate


Land Sales


Forestry


Other


TotalWrite-off of previously
    capitalized homebuilding costs

$
9.5


$



$



$



$



$
9.5One-time termination benefits to
    employees


2.4



0.1



0.3







0.8



3.6Total restructuring charges, pretax

$
11.9


$
0.1


$
0.3


$



$
0.8


$
13.1    11




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Balance atBalance at


Costs


Non-cash





September 30,


Due within


Due afterJuly 1, 2006


Accrued


Adjustments


Payments


2006


12 months


12 monthsWrite-off of previously
    capitalized homebuilding costs

$



$
9.5


$
(9.5
)

$



$



$



$
One-time termination benefits to
    employees






3.6



(0.1
)


(2.0
)


1.5



1.5



Total

$



$
13.1


$
(9.6
)

$
(2.0
)

$
1.5


$
1.5


$
     Discontinued
    Operations
         12




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  3.
    Investment
    in Real Estate    September 30, 2006


December 31, 2005Operating property:Residential real estate

$
102,286


$
82,791Commercial real estate


12,880



12,778Land sales


208



93Forestry


135,049



134,239Other


61



374Total operating property


250,484



230,275Development property:Residential real estate


624,723



426,745Commercial real estate


54,951



46,052Land sales


8,243



6,279Other


294



294Total development property


688,211



479,370Investment property:Commercial real estate


309,944



338,382Land sales


411



260Forestry


1,373



1,372Other


7,141



6,816Total investment property


318,869



346,830Investment in unconsolidated
    affiliates:Residential real estate


11,452



22,027Total real estate investments


1,269,016



1,078,502Less: Accumulated depreciation


50,999



42,328Investment in real estate
    investments

$
1,218,017


$
1,036,174      13




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  4.
    Debt    September 30, 2006


December 31, 2005Senior notes

$
407,000


$
407,000Debt secured by certain commercial
    and residential property


147,488



143,446Senior revolving credit agreement


95,000



Various secured and unsecured
    notes payable


4,000



4,000Total debt

$
653,488


$
554,446     2006

$
95.92007


69.52008


57.72009


52.12010


8.9Thereafter


369.4Total

$
653.5       5.
    Employee
    Benefit Plans    Three Months Ended


Nine Months EndedSeptember 30, 2006


September 30, 2005


September 30, 2006


September 30, 2005Service cost

$
1,222


$
3,020


$
3,667


$
5,200Interest cost


2,180



3,180



6,540



6,500Expected return on assets


(4,250
)


(5,996
)


(13,344
)


(13,600
)Prior service costs


180



296



541



600Settlement charge


133







133



Curtailment charge


148



900



148



900Total pension (credit) expense

$
(387
)

$
1,400


$
(2,315
)

$
(400
)  14




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  6.
    Segment
    Information              Three Months Ended


Nine Months EndedSeptember 30,


September 30,2006


2005


2006


2005Operating Revenues:Residential real estate

$
132,037


$
176,960


$
405,236


$
533,025Commercial real estate


22,474



34,567



50,763



77,325Land sales


16,378



16,382



58,447



44,158Forestry


7,204



6,216



23,505



21,784Consolidated operating revenues

$
178,093


$
234,125


$
537,951


$
676,292Income (loss) from continuing
    operations before equity in income of unconsolidated affiliates,
    income taxes and minority interest:Residential real estate

$
(4,425
)

$
30,472


$
28,031


$
112,663Commercial real estate


7,760



14,146



8,587



17,579Land sales


12,296



11,679



45,813



31,511Forestry


1,390



645



4,373



4,213Other


(16,443
)


(16,116
)


(54,102
)


(45,261
)Consolidated income from
    continuing operations before equity in income of unconsolidated
    affiliates, income taxes and minority interest

$
578


$
40,826


$
32,702


$
120,705   15




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  September 30, 2006


December 31, 2005Total Assets:Residential real estate

$
846,744


$
666,075Commercial real estate


393,349



510,522Land sales


11,052



39,560Forestry


149,495



147,874Corporate


173,477



227,915Total assets

$
1,574,117


$
1,591,946   7.
    Contingencies  Accounting for
    Contingencies
      Guarantors
    Accounting and Disclosure Requirements for Guarantees, Including
    Indirect Guarantees of Indebtedness of Others.
       16




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     17




---



##### Table of Contents



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Overview
        
    the sale of developed home sites to retail customers and
    builders;
    the sale of parcels of entitled, undeveloped land;
    the sale of housing units built by us;
    rental income;
    club operations;
    investments in limited partnerships and joint ventures;
    brokerage, title issuance and mortgage origination fees on
    certain transactions within our residential real estate
    developments; and
    management fees.    
    the rental
    and/or sale
    of commercial buildings owned
    and/or
    developed by us; and
    the sale of developed and undeveloped land for retail,
    multi-family, office and industrial uses.    
    the sale of parcels of undeveloped land; and
    the sale of developed home sites primarily within rural settings.    
    the sale of pulpwood and timber; and
    the sale of cypress lumber and mulch.     18




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##### Table of Contents



Forward-Looking
    Statements
    
    future operating performance, revenues, earnings, cash flows,
    and short and long-term revenue and earnings growth rates;
    the size and number of residential units and commercial
    buildings;
    expected development timetables and projected timing for the
    first sales or closings of homes or home sites in a community;
    development approvals and the ability to obtain such approvals,
    including possible legal challenges;
    the anticipated price ranges of developments; 19




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##### Table of Contents




    the number of units or commercial square footage that can be
    supported upon full build-out of a development;
    the number, price and timing of anticipated land sales or
    acquisitions;
    estimated land holdings for a particular use within a specific
    time frame;
    absorption rates and expected gains on land and home site sales;
    the pace at which we release new product for sale;
    comparisons to historical projects;
    the amount of dividends we pay; and
    the number or dollar amount of shares of Company stock which may
    be purchased under the Companys existing or future
    share-repurchase program.  Form 10-Q.
  Form 10-K
  
    economic conditions, particularly in Northwest Florida, Florida
    as a whole and key areas of the southeastern United States that
    serve as feeder markets to our Northwest Florida operations;
    changes in the demographics affecting projected population
    growth in Florida, including the demographic migration of Baby
    Boomers;
    changes in perceptions or conditions in the national real estate
    market or the real estate markets in the states and regions in
    which we operate;
    the termination of sales contracts or letters of intent due to,
    among other factors, the failure of one or more closing
    conditions or market changes;
    whether our developments receive all land-use entitlements or
    other permits necessary for development
    and/or full
    build-out or are subject to legal challenge;
    local conditions such as the supply of homes and home sites and
    residential or resort properties or a change in the demand for
    real estate in an area;
    timing and costs associated with property developments and
    rentals;
    the pace of commercial development in Northwest Florida;
    competition from other real estate developers;
    changes in pricing of our products and changes in the related
    profit margins;
    changes in operating costs, including real estate taxes and the
    cost of construction materials;
    changes in the amount or timing of federal and state income tax
    liabilities resulting from either a change in our application of
    tax laws, an adverse determination by a taxing authority or
    court, or legislative changes to existing laws;
    changes in interest rates and the performance of the financial
    markets;
    changes in market rental rates for our commercial and resort
    properties;
    changes in the prices or availability of wood products; 20




---



##### Table of Contents




    the pace of development of public infrastructure, particularly
    in Northwest Florida, including a proposed new airport in Bay
    County, which is dependent on various regulatory approvals and
    permits, and the availability of adequate funding;
    potential liability under environmental laws or other laws or
    regulations;
    changes in laws, regulations or the regulatory environment
    affecting the development of real estate;
    fluctuations in the size and number of transactions from period
    to period;
    natural disasters, including hurricanes and other severe weather
    conditions, and the impact on current and future demand for our
    products;
    the continuing effects of past years hurricane disasters
    on the regional and national economies and current and future
    demand for our products in Florida;
    the prices and availability of labor and building materials;
    changes in insurance rates and deductibles for property in
    Florida;
    changes in gasoline prices; and
    acts of war, terrorism, or other geopolitical events.  Critical
    Accounting Estimates
    Form 10-K
  Recently
    Issued Accounting Pronouncements
  No. 04-5, (EITF 04-5). FSP SOP 78-9-1,Interaction Issue 04-5 SOP 78-9, Accounting for Investments in Real Estate Ventures No. 04-5. EITF 04-5 and/or
  Accounting Changes and Error
    Corrections
 21




---



##### Table of Contents



Accounting for Uncertainty in Income Taxes, an
    Interpretation of FASB Statement No. 109
  Fair Value Measurements
  Employers Accounting for Defined Benefit Pension
    and Other Postretirement Plans  An Amendment of FASB
    Statements No. 87, 88, 106, and 132R
  Considering the Effects of Prior
    Year Misstatements when Quantifying Misstatements in Current
    Year Financial Statements
  Stock-based
    Compensation
  Share-Based Payment
 22




---



##### Table of Contents



Results
    of Operations
     23




---



##### Table of Contents



Consolidated
    Results
  Revenues and expenses.
  Three Months Ended September 30,


Nine Months Ended September 30,2006


2005


Difference


% Change


2006


2005


Difference


% Change(Dollars in millions)Revenues:Real estate sales

$
149.2


$
206.5


$
(57.3
)


(28
)%

$
451.9


$
593.4


$
(141.5
)


(24
)%Rental revenues


10.3



8.7



1.6



18



31.0



26.2



4.8



18Timber sales


7.2



6.2



1.0



16



23.5



21.8



1.7



8Other revenues


11.4



12.7



(1.3
)


(10
)


31.6



34.9



(3.3
)


(9
)Total


178.1



234.1



(56.0
)


(24
)


538.0



676.3



(138.3
)


(20
)Expenses:Cost of real estate sales


95.6



132.7



(37.1
)


(28
)


290.5



380.2



(89.7
)


(24
)Cost of rental revenues


4.4



3.2



1.2



37



12.8



10.3



2.5



24Cost of timber sales


5.3



4.9



0.4



8



17.5



15.1



2.4



16Cost of other revenues


13.0



10.0



3.0



30



33.3



29.8



3.5



11Other operating expenses


21.4



18.9



2.5



13



59.7



52.1



7.6



15Total

$
139.7


$
169.7


$
(30.0
)


(18
)%

$
413.8


$
487.5


$
(73.7
)


(15
)%     Corporate expense.
    Depreciation and amortization.
 24




---



##### Table of Contents



Restructuring charge.
  Other income (expense).
  Equity in income of unconsolidated
    affiliates.
  Income tax expense.
  Discontinued Operations.
  Segment
    Results
  Residential
    Real Estate
       25




---



##### Table of Contents



Three Months Ended


Nine Months EndedSeptember 30,


September 30,2006


2005


2006


2005(In millions)Revenues:Real estate sales

$
120.4


$
164.0


$
372.9


$
497.4Rental revenues


0.6



0.5



1.4



1.2Other revenues


11.1



12.4



30.9



34.4Total revenues


132.1



176.9



405.2



533.0Expenses:Cost of real estate sales


91.9



120.0



280.1



345.7Cost of rental revenues


0.6



0.5



1.4



1.2Cost of other revenues


13.0



10.0



33.3



29.8Other operating expenses


16.4



13.3



43.4



36.3Depreciation and amortization


2.9



2.6



8.2



7.4Restructuring charge


11.9







11.9



Total expenses


136.7



146.4



378.3



420.4Other income


0.2







1.1



0.1Pre-tax income (loss) from
    continuing operations

$
(4.4
)

$
30.5


$
28.0


$
112.7   percentage-of-completion percentage-of-completion 15-day
     26




---



##### Table of Contents



percentage-of-completion
  Northwest
    Florida
              3.5-mile 80-acre
    499-unit
   27




---



##### Table of Contents



Northeast
    Florida
      Central
    Florida
      1,382-unit 325-unit
  Southwest
    Florida
    North and
    South Carolina
    Three
    Months Ended September 30
   28




---



##### Table of Contents



Three Months Ended


Three Months EndedSeptember 30, 2006


September 30, 2005Homes


Home Sites


Total


Homes


Home Sites


Total(Dollars in millions)Sales

$
99.9


$
20.4


$
120.3


$
134.9


$
29.1


$
164.0Cost of sales:Direct costs


70.2



8.2



78.4



94.8



6.4



101.2Selling costs


5.0



0.5



5.5



7.0



1.0



8.0Other indirect costs


7.2



0.8



8.0



10.0



0.8



10.8Total cost of sales


82.4



9.5



91.9



111.8



8.2



120.0Gross profit

$
17.5


$
10.9


$
28.4


$
23.1


$
20.9


$
44.0Gross profit margin


18
%


53
%


24
%


17
%


72
%


27
%    29




---



##### Table of Contents



Three Months Ended September 30, 2006


Three Months Ended September 30, 2005Closed





Cost of


Gross


Closed





Cost of


GrossUnits


Revenues


Sales


Profit


Units


Revenues


Sales


Profit(Dollars in millions)Northwest Florida:ResortSingle-family homes


4


$
4.8


$
4.1


$
0.7



1


$
0.8


$
0.7


$
0.1Multi-family homes


















39



1.4



1.6



(0.2
)Home sites


28



11.2



4.7



6.5



88



25.1



6.6



18.5PrimarySingle-family homes


54



15.9



13.2



2.7



78



20.9



17.1



3.8Townhomes


















38



6.1



5.3



0.8Home sites


39



2.3



1.3



1.0



33



2.3



1.6



0.7Northeast Florida:PrimarySingle-family homes


16



9.0



7.2



1.8



32



13.8



10.4



3.4Home sites


















12



0.9



0.2



0.7Central Florida:PrimarySingle-family homes


48



20.4



15.3



5.1



85



27.1



20.8



6.3Multi-family homes


35



4.2



2.6



1.6



32



10.9



8.5



2.4Townhomes


2



0.6



0.5



0.1



3



1.2



0.9



0.3Home sites


67



6.9



3.7



3.2



5



0.8



(0.2
)


1.0North and South Carolina:PrimarySingle-family homes


148



43.9



38.3



5.6



195



52.7



46.5



6.2Townhomes


6



1.1



1.0



0.1















Total


447


$
120.3


$
91.9


$
28.4



641


$
164.0


$
120.0


$
44.0     percentage-of-completion
 30




---



##### Table of Contents



percentage-of-completion
       31




---



##### Table of Contents



Nine
    Months Ended September 30
    Nine Months Ended


Nine Months EndedSeptember 30, 2006


September 30, 2005Homes


Home Sites


Total


Homes


Home Sites


Total(Dollars in millions)Sales

$
334.3


$
38.5


$
372.8


$
378.1


$
119.0


$
497.1Cost of sales:Direct costs


224.5



13.9



238.4



268.2



23.9



292.1Selling costs


16.8



1.1



17.9



19.8



4.1



23.9Other indirect costs


22.4



1.4



23.8



26.9



2.6



29.5Total cost of sales


263.7



16.4



280.1



314.9



30.6



345.5Gross profit

$
70.6


$
22.1


$
92.7


$
63.2


$
88.4


$
151.6Gross profit margin


21
%


57
%


25
%


17
%


74
%


30
%    32




---



##### Table of Contents



Nine Months Ended September 30, 2006


Nine Months Ended September 30, 2005Closed





Cost of


Gross


Closed





Cost of


GrossUnits


Revenues


Sales


Profit


Units


Revenues


Sales


Profit(Dollars in millions)Northwest Florida:ResortSingle-family homes


11


$
11.5


$
9.0


$
2.5



3


$
2.3


$
1.9


$
0.4Multi-family homes


















39



20.4



12.7



7.7Private Residence Club


















1



0.3



0.1



0.2Home sites


52



22.1



8.3



13.8



248



102.2



22.6



79.6PrimarySingle-family homes


183



56.1



44.2



11.9



225



56.1



47.4



8.7Townhomes


43



6.7



5.4



1.3



108



16.3



14.3



2.0Home sites


94



6.5



3.0



3.5



75



6.8



4.1



2.7Northeast Florida:PrimarySingle-family homes


47



25.1



19.1



6.0



106



43.1



33.6



9.5Home sites


6



1.0



0.4



0.6



32



2.1



0.7



1.4Central Florida:PrimarySingle-family homes


150



68.2



46.2



22.0



259



76.1



63.1



13.0Multi-family homes


100



26.1



17.0



9.1



32



34.7



26.7



8.0Townhomes


48



13.6



11.5



2.1



4



1.7



1.4



0.3Home sites


77



9.0



4.7



4.3



45



7.9



3.3



4.6North and South Carolina:PrimarySingle-family homes


447



125.8



110.3



15.5



502



127.1



113.6



13.5Townhomes


6



1.1



1.0



0.1















Total


1,264


$
372.8


$
280.1


$
92.7



1,679


$
497.1


$
345.5


$
151.6   percentage-of-completion
   33




---



##### Table of Contents



percentage-of-completion
         34




---



##### Table of Contents



Commercial
    Real Estate
      Three Months Ended


Nine Months EndedSeptember 30,


September 30,2006


2005


2006


2005(In millions)Revenues:Real estate sales

$
12.4


$
26.1


$
20.5


$
51.8Rental revenues


9.8



8.2



29.6



25.0Other revenues


0.3



0.3



0.7



0.5Total revenues


22.5



34.6



50.8



77.3Expenses:Cost of real estate sales


2.4



10.8



5.6



28.6Cost of rental revenues


3.9



2.6



11.4



9.0Other operating expenses


1.8



2.1



6.1



6.9Depreciation and amortization


4.9



4.3



15.6



13.0Restructuring charge


0.2







0.2



Total expenses


13.2



19.8



38.9



57.5Other income (expense)


(1.6
)


(0.6
)


(3.3
)


(2.2
)Pre-tax income from continuing
    operations

$
7.7


$
14.2


$
8.6


$
17.6  35




---



##### Table of Contents



Real Estate Sales.
  Number of


Acres


Gross


Gross Price





Pre-Tax GainLand

Sales


Sold


Proceeds


per Acre


Revenue


on Sales(In millions)


(In thousands)


(In millions)


(In millions)Three Months Ended
    September 30, 2006:Northwest Florida


7



53


$
10.8


$
204.0


$
12.4
(a)

$
10.0
(a)Other






















Total/Average


7



53



10.8



204.0



12.4
(a)


10.0
(a)Three Months Ended
    September 30, 2005:Northwest Florida


11



133


$
19.2



144.0



17.4
(c)


13.4
(c)Other


3



19



8.7



454.0



8.7



1.9Total/Average


14



152



27.9



183.0



26.1



15.3Nine Months Ended
    September 30, 2006:Northwest Florida


18



70


$
22.4


$
292.6


$
20.5
(b)

$
14.9
(b)Other






















Total/Average


18



70



22.4



292.6



20.5
(b)


14.9
(b)Nine Months Ended
    September 30, 2005:Northwest Florida


30



199


$
26.8



115.2



25.0
(c)


18.3
(c)Other


7



252



26.8



77.7



26.8



4.6Total/Average


37



451


$
53.6


$
90.0


$
51.8


$
22.9   (a)
    
    Includes previously deferred revenue and gain on sales, based on
    percentage-of-completion
    accounting, of $1.6 million and $0.8 million,
    respectively.(b)
    
    Net of deferred revenue and gain on sales of $1.9 million
    and $0.2 million, respectively.(c)
    
    Net of deferred revenue and gain on sales, based on
    percentage-of-completion
    accounting, of $1.8 million and $1.4 million,
    respectively, for the three months and nine months ended
    September 30, 2005.  year-to-date year-to-date year-to-date year-to-date
   36




---



##### Table of Contents



Commerce
    Parks
    September 30, 2006
  AcresProject


Sold/Under


Current Asking PriceCounty


Acres


Contract


per AcreExisting and Under
    Construction:South Walton Commerce


Walton



39



21


$
300,000 - 450,000Beach Commerce


Bay



157



149



200,000 - 500,000Beach Commerce II


Bay



112



11



200,000 - 250,000Nautilus Court


Bay



11



4



523,000 - 610,000Port St. Joe Commerce II


Gulf



39



9



65,000 - 135,000Airport Commerce


Leon



45



2



75,000 - 260,000Hammock Creek Commerce


Gadsden



165



27



50,000 - 150,000Predevelopment:Cedar Grove Commerce


Bay



51







90,000 - 110,000Mill Creek Commerce


Bay



37







30,000 - 40,000Total






656



223   Rental Revenues. year-to-date year-to-date year-to-date year-to-date
   37




---



##### Table of Contents



September 30, 2006


September 30, 2005Net








NetNumber of


Rentable


Percentage


Number of


Rentable


PercentageProperties


Square Feet


Leased


Properties


Square Feet


LeasedBuildings purchased with
    tax-deferred proceeds by location:FloridaJacksonville


1



136,000



83
%


1



136,000



69
%Northwest Florida


3



156,000



100



3



156,000



95Orlando


2



317,000



94



2



317,000



71Atlanta


8



1,289,000



77



8



1,289,000



73Virginia


3



354,000



96



2



129,000



96Subtotal/Average


17



2,252,000



84
%


16



2,027,000



76
%Development property:FloridaNorthwest Florida


3



67,000



98
%


3



67,000



95
%Subtotal/Average


3



67,000



98
%


3



67,000



95
%Total/Average


20



2,319,000



85
%


19



2,094,000



76
%       Discontinued Operations.
    
    The sale of One Crescent Ridge, with net rentable square feet of
    158,000 in Charlotte, North Carolina, on September 29 for
    proceeds of $31.3 million and a pre-tax gain of
    $10.6 million;
    The sales of Prestige Place One & Two, with net
    rentable square feet of 147,000 in Tampa, Florida sold on June
    28 for proceeds of $18.1 million and a pre-tax gain of
    $4.4 million.    
    1133
    20th Street,
    with 119,000 net rentable square feet in Washington, DC,
    sold on September 29 for proceeds of $46.9 million and a
    pre-tax gain of $19.7 million;
    Lakeview, with 127,000 net rentable square feet in Tampa,
    Florida sold on September 7 for proceeds of $18.0 million
    and a pre-tax gain of $4.1 million;
    Palm Court, with 62,000 net rentable square feet in Tampa,
    Florida sold September 7 for proceeds of $7.0 million and a
    pre-tax gain of $1.8 million; and 38




---



##### Table of Contents




    Harbourside, with 153,000 net rentable square feet in
    Clearwater, Florida sold December 14 for proceeds of
    $21.9 million and a pre-tax gain of $5.2 million.    Land
    Sales
      Three Months Ended


Nine Months EndedSeptember 30,


September 30,2006


2005


2006


2005(In millions)Revenues:Real estate sales

$
16.4


$
16.4


$
58.4


$
44.1Expenses:Cost of real estate sales


1.3



2.0



4.7



6.0Other operating expenses


2.5



2.7



8.2



6.7Depreciation and amortization


0.1







0.2



0.1Restructuring charge


0.3







0.3



Total expenses


4.2



4.7



13.4



12.8Other income (expense)


0.1







0.8



0.2Pre-tax income from continuing
    operations

$
12.3


$
11.7


$
45.8


$
31.5     Number of


Number of


Average Price


GrossSales


Acres


per Acre


Sales Price


Gross Profit(In millions)


(In millions)Three Months Ended:September 30, 2006


20



4,029


$
4,070


$
16.4


$
15.1September 30, 2005


32



6,437


$
2,545


$
16.4


$
14.4Nine Months Ended:September 30, 2006


69



17,479


$
3,341


$
58.4


$
53.7September 30, 2005


108



19,848


$
2,225


$
44.2


$
38.1   Woodlands
   39




---



##### Table of Contents



FloridaWild
    Other
        Forestry
    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2006


2005


2006


2005(In millions)Revenues:Timber sales

$
7.2


$
6.2


$
23.5


$
21.8Expenses:Cost of timber sales


5.2



4.9



17.4



15.1Other operating expenses


0.6



0.6



1.8



1.7Depreciation and amortization


0.7



1.0



2.3



3.2Total expenses


6.5



6.5



21.5



20.0Other income (expense)


0.7



1.0



2.4



2.4Pre-tax income from continuing
    operations

$
1.4


$
0.7


$
4.4


$
4.2   Three
    Months Ended September 30
     40




---



##### Table of Contents



Nine
    Months Ended September 30
      Liquidity
    and Capital Resources
    
    Operations;
    Sales of land holdings, other assets and subsidiaries;
    Borrowings from financial institutions and other debt; and
    Issuances of equity, primarily from the exercise of employee
    stock options.    
    Operations;
    Real estate development;
    Construction and homebuilding;
    Repurchases of our common stock;
    Payments of dividends;
    Repayments of debt;
    Payments of taxes; and
    Investments in joint ventures and acquisitions.  and/or
  Cash
    Flows from Operating Activities
   41




---



##### Table of Contents



Cash
    Flows from Investing Activities
      Cash
    Flows from Financing Activities
       42




---



##### Table of Contents



Accounting for Special
    Assessments and Tax Increment Financing
        Off-Balance
    Sheet Arrangements
  Regulation S-K.
  Contractual
    Obligations and Commercial Commitments
      Form 10-K
 43




---



##### Table of Contents



Item 3.
    Quantitative
    and Qualitative Disclosures About Market Risk    Form 10-K
  Item 4.
    Controls
    and Procedures  Evaluation of Disclosure Controls and
    Procedures. Rules 13a-15(e) 15d-15(e)
  Changes in Internal Controls.
 44




---



##### Table of Contents



PART II 
    OTHER INFORMATION  Item 1.
    Legal
    Proceedings    Item 1A.
    Risk
    Factors  Form 10-K
  Item 2.
    Unregistered
    Sales of Equity Securities and Use of Proceeds  Issuer
    Purchases of Equity Securities
  (c)


(d)Total Number of


Maximum DollarShares Purchased


Amount that(a)


(b)


as Part of Publicly


May Yet BeTotal Number


Average


Announced Plans


Purchased Underof Shares


Price Paid


or Programs


the Plans orPeriod

Purchased


per Share


(1)


Programs(In thousands)Month Ended July 31, 2006





$







$
106,090Month Ended August 30, 2006


115,794
(2)

$
47.87



46,600


$
103,870Month Ended September 30, 2006


2,311
(2)

$
51.59



1,500


$
103,793     (1)
    
    For a description of our Stock Repurchase Program, see
    Part I, Item 2, Liquidity and Capital
    Resources  Cash Flows from Financing Activities.(2)
    
    Includes shares surrendered to the Company by executives as
    payment for taxes due on exercised stock options
    and/or taxes
    due on vested restricted stock equal in the aggregate to
    70,005 shares.  Item 3.
    Defaults
    Upon Senior Securities    Item 4.
    Submission
    of Matters to a Vote of Security Holders    Item 5.
    Other
    Information   45




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##### Table of Contents



Item 6.
    Exhibits  ExhibitNumber

Description3
.1

Restated and Amended Articles of
    Incorporation, as amended (incorporated by reference to
    Exhibit 3.1 of the registrants registration statement
    on
    Form S-3
    (File
    333-116017)).3
.2

Amended and Restated By-laws of
    the registrant (incorporated by reference to Exhibit 3 to
    the registrants Current Report on
    Form 8-k
    dated December 14, 2004).10
.1

Second Amendment to
    Note Purchase Agreements dated July 28, 2006, by and
    among the Company and the holders of the Companys 2002
    Senior Notes party thereto (incorporated by reference to
    Exhibit 10.1 to the registrants Current Report on
    Form 8-K
    filed on July 31, 2006).10
.2

Credit Agreement dated
    July 28, 2006 by and among the Company, Bank of America,
    N.A. and Banc of AmericaSecurities, LLC (incorporated by
    reference to Exhibit 10.3 to the registrants Current
    Report on
    Form 8-K
    filed on July 31, 2006).10
.3

Form of Executive Employment
    Agreement (incorporated by reference to Exhibit 10.4 to the
    registrants Current Report on
    Form 8-K
    filed on July 31, 2006).10
.4

Form of Restricted Stock Agreement
    adopted July 27, 2006 (incorporated by reference to
    Exhibit 10.5 to the registrants Current Report on
    Form 8-K
    filed on July 31, 2006).10
.5

Form of Stock Option Agreement
    adopted July 27, 2006 (incorporated by reference to
    Exhibit 10.6 to the registrants Current Report on
    Form 8-K
    filed on July 31, 2006).10
.6

Form of Amendment to Restricted
    Stock Agreements and Stock Option Agreements.10
.7

Third Amendment to The St. Joe
    Company Supplemental Executive Retirement Plan (incorporated by
    reference to Exhibit 10.1 to the registrants Current
    Report on
    Form 8-K
    filed on September 22, 2006).10
.8

Fourth Amendment to The St. Joe
    Company Deferred Capital Accumulation Plan (incorporated by
    reference to Exhibit 10.2 to the registrants Current
    Report on
    Form 8-K
    filed on September 22, 2006).31
.1

Certification by Chief Executive
    Officer.31
.2

Certification by Chief Financial
    Officer.32
.1

Certification by Chief Executive
    Officer.32
.2

Certification by Chief Financial
    Officer.  46




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##### Table of Contents



SIGNATURES    The St. Joe Company
   
    Chairman and Chief Executive Officer
   
    Chief Financial Officer
  47