##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, 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, 2008o

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

32202(Zip Code)(Address of principal executive
    offices)    (904) 301-4200
 (Registrants telephone number, including area code)
  þ o
  Rule 12b-2
  Large
    accelerated
    filer þ
    Accelerated
    filer o
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   Rule 12b-2 o þ




---



##### 



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


Financial Statements


2Consolidated Balance Sheets 
    September 30, 2008 and December 31, 2007


2Consolidated Statements of Income 
    Three and nine months ended September 30, 2008 and 2007


3Consolidated Statement of Changes in
    Stockholders Equity  Nine months ended
    September 30, 2008


4Consolidated Statements of Cash Flows 
    Nine months ended September 30, 2008 and 2007


5Notes to Consolidated Financial Statements


6Item 2.


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


22Item 3.


Quantitative and Qualitative Disclosures About
    Market Risk


40Item 4.


Controls and Procedures


40PART II Other InformationItem 1.


Legal Proceedings


41Item 1A.


Risk Factors


41Item 2.


Unregistered Sales of Equity Securities and Use
    of Proceeds


41Item 3.


Defaults Upon Senior Securities


41Item 4.


Submission of Matters to a Vote of Security
    Holders


41Item 5.


Other Information


41Item 6.


Exhibits


42Signatures


43EX-10.2 FIRST AMENDMENT TO CREDIT AGREEMENTEX-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




---



##### Table of Contents



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


December 31,2008


2007(Unaudited)ASSETSInvestment in real estate, net

$
930,420


$
944,529Cash and cash equivalents


106,272



24,265Notes receivable


52,050



56,346Pledged treasury securities


29,354



30,671Prepaid pension asset


83,267



109,270Property, plant and equipment, net


20,175



23,693Goodwill, net


18,991



18,991Other intangible assets, net


1,899



2,317Income tax receivable


41,387



Other assets


37,184



45,793Assets held for sale


5,607



8,091$
1,326,606


$
1,263,966LIABILITIES AND STOCKHOLDERS EQUITYLIABILITIES:Debt

$
50,796


$
541,181Accounts payable and other


69,573



77,640Accrued liabilities


60,356



66,607Income tax payable






8,058Deferred income taxes


99,607



83,535Liabilities associated with assets held for sale


255



328Total liabilities


280,587



777,349Minority interest in consolidated subsidiaries


3,053



6,276STOCKHOLDERS EQUITY:Common stock, no par value; 180,000,000 shares authorized;
    122,435,317 and 104,755,826 issued at September 30, 2008
    and December 31, 2007, respectively


911,659



321,505Retained earnings


1,073,921



1,081,883Accumulated other comprehensive income (loss)


(14,252
)


3,275Treasury stock at cost, 30,213,473 and 30,158,370 shares
    held at September 30, 2008 and December 31, 2007,
    respectively


(928,362
)


(926,322
)Total stockholders equity


1,042,966



480,341$
1,326,606


$
1,263,966    2




---



##### Table of Contents



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


Nine Months EndedSeptember 30,


September 30,2008


2007


2008


2007Revenues:Real estate sales

$
13,348


$
56,059


$
161,425


$
227,844Rental revenues


437



416



998



2,370Timber sales


5,884



7,850



19,953



19,425Other revenues


13,167



13,114



34,919



33,726Total revenues


32,836



77,439



217,295



283,365Expenses:Cost of real estate sales


8,685



17,554



48,200



110,468Cost of rental revenues


210



173



417



1,469Cost of timber sales


4,938



5,858



14,780



15,660Cost of other revenues


13,596



13,141



37,614



34,112Other operating expenses


14,383



19,425



43,149



50,456Corporate expense, net


8,008



8,937



25,997



26,068Depreciation and amortization


4,158



5,032



13,305



14,437Impairment losses


1,329



13,021



4,562



13,021Restructuring charges


1,250



(352
)


4,297



2,644Total expenses


56,557



82,789



192,321



268,335Operating (loss) profit


(23,721
)


(5,350
)


24,974



15,030Other (expense) income:Investment income, net


1,685



1,443



4,966



4,111Interest expense


(116
)


(3,493
)


(4,445
)


(14,592
)Other, net


(7,981
)


(3,392
)


(9,118
)


1,218Loss on early extinguishment of debt


(680
)






(30,554
)


Gain on disposition of assets


182



182



546



7,815Total other (expense) income


(6,910
)


(5,260
)


(38,605
)


(1,448
)(Loss) income from continuing operations before equity in loss
    of unconsolidated affiliates, income taxes, and minority interest


(30,631
)


(10,610
)


(13,631
)


13,582Equity in loss of unconsolidated affiliates


(47
)


(999
)


(260
)


(41
)Income tax (benefit) expense


(11,545
)


(4,024
)


(5,553
)


1,816(Loss) income from continuing operations before minority interest


(19,133
)


(7,585
)


(8,338
)


11,725Minority interest in (loss) income


(39
)


112



(536
)


866(Loss) income from continuing operations


(19,094
)


(7,697
)


(7,802
)


10,859Discontinued operations:(Loss) income from discontinued operations, net of tax


(104
)


890



(160
)


27,336Net (loss) income

$
(19,198
)

$
(6,807
)

$
(7,962
)

$
38,195EARNINGS PER SHAREBasic(Loss) income from continuing operations

$
(0.21
)

$
(0.10
)

$
(0.09
)

$
0.15(Loss) income from discontinued operations

$
(0.00
)

$
0.01


$
(0.00
)

$
0.37Net (loss) income

$
(0.21
)

$
(0.09
)

$
(0.09
)

$
0.52Diluted(Loss) income from continuing operations

$
(0.21
)

$
(0.10
)

$
(0.09
)

$
0.15(Loss) income from discontinued operations

$
(0.00
)

$
0.01


$
(0.00
)

$
0.36Net (loss) income

$
(0.21
)

$
(0.09
)

$
(0.09
)

$
0.51    3




---



##### Table of Contents



THE ST.
    JOE COMPANYCONSOLIDATED STATEMENT OF CHANGES IN
    STOCKHOLDERS EQUITY
    (Unaudited)
    (Dollars in thousands)
  AccumulatedCommon Stock





OtherOutstanding





Retained


Comprehensive


TreasuryShares


Amount


Earnings


Income (Loss)


Stock


TotalBalance at December 31, 2007


74,597,456


$
321,505


$
1,081,883


$
3,275


$
(926,322
)

$
480,341Comprehensive (loss) income:Net (loss)










(7,962
)










(7,962
)Amortization of pension and postretirement benefit costs, net














467







467Effect of remeasurement of pension plan funded status, net














(17,994
)






(17,994
)Total comprehensive (loss) income






















(25,489
)Issuances of restricted stock


731,446



















Forfeitures of restricted stock


(253,037
)


















Issuances of common stock, net of offering costs


17,201,082



581,455















581,455Excess tax benefit on options exercised and vested restricted
    stock






(108
)














(108
)Amortization of stock-based compensation






8,807















8,807Purchases of treasury shares


(55,103
)














(2,040
)


(2,040
)Balance at September 30, 2008


92,221,844


$
911,659


$
1,073,921


$
(14,252
)

$
(928,362
)

$
1,042,966    4




---



##### Table of Contents



THE ST.
    JOE COMPANYCONSOLIDATED STATEMENTS OF CASH FLOW
    (Unaudited)
    (Dollars in thousands)
  Nine Months EndedSeptember 30,2008


2007Cash flows from operating activities:Net (loss) income

$
(7,962
)

$
38,195Adjustments to reconcile net (loss) income to net cash provided
    by (used in) operating activities:Depreciation and amortization


13,321



19,104Stock-based compensation


8,807



6,910Minority interest in (loss) income


(536
)


866Equity in loss (income) of unconsolidated joint ventures


260



(161
)Distributions of income from unconsolidated affiliates






710Deferred income tax expense (benefit)


27,337



(126,613
)Loss on early extinguishment of debt


30,554



Impairment losses


4,562



20,417Restructuring charges


4,297



2,644Cost of operating properties sold


42,543



170,004Expenditures for operating properties


(27,657
)


(202,210
)Write-off of previously capitalized home building costs






705Gains on dispositions of assets






(55,384
)Changes in operating assets and liabilities:Notes receivable


3,522



2,494Other assets


5,401



(31,278
)Accounts payable and accrued liabilities


(15,214
)


(68,922
)Income taxes receivable / payable


(49,445
)


(2,877
)Net cash provided by (used in) operating activities


39,790



(225,396
)Cash flows from investing activities:Purchases of property, plant and equipment


(1,291
)


(5,365
)Purchases of investments in real estate






(13,737
)Maturities and redemptions of investments, held to maturity


619



12Proceeds from the disposition of assets






36,000Proceeds from sale of discontinued operations






311,425Investments in unconsolidated affiliates






(496
)Net cash (used in) provided by investing activities


(672
)


327,839Cash flows from financing activities:Net borrowings from revolving credit agreements


35,000



467,000Repayment of borrowings under revolving credit agreements


(167,000
)


(437,000
)Repayments of other long-term debt


(370,000
)


(120,347
)Make whole payment in connection with prepayment of senior notes


(29,690
)


Distributions to minority interest partner


(2,687
)


(4,689
)Proceeds from exercises of stock options


1,653



4,088Issuance of common stock


579,802



Dividends paid to stockholders






(35,637
)Excess tax benefits from stock-based compensation


(108
)


957Taxes paid on behalf of employees related to stock-based
    compensation


(2,041
)


Treasury stock purchases


(2,040
)


(1,845
)Net cash provided by (used in) financing activities


42,889



(127,473
)Net increase (decrease) in cash and cash equivalents


82,007



(25,030
)Cash and cash equivalents at beginning of period


24,265



36,935Cash and cash equivalents at end of period

$
106,272


$
11,905Supplemental disclosures of cash flow information:Cash paid during the nine month period for:Interest

$
11,837


$
31,417Income taxes


16,998



188,879Capitalized interest


1,582



7,395    5




---



##### Table of Contents



THE ST.
    JOE COMPANYNOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS
    (Dollars in thousands, unless otherwise stated)
    (Unaudited)
  1.
    Description
    of Business and Basis of Presentation  Description
    of Business
    Basis
    of Presentation
  Form 10-Q.
    Form 10-K
    New
    Accounting Standards
  Fair Value
    Measurements No. 157-2, Effective Date of FASB Statement No. 157 No. 157-2),
 6




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  FSP No. 157-2. No. 157-2
  Disclosures about Derivative Instruments and Hedging
    Activities  an amendment of FASB Statement
    No. 133 Accounting for Derivative Instruments and Hedging
    Activities
  03-6-1, Determining Whether Instruments Granted in Share-Based
    Payment Transactions are Participating Securities EITF 03-6
  No. 157-3, Determining the Fair Value of a Financial Asset When the
    Market for That Asset Is Not Active (FSP 157-3). FSP 157-3 FSP 157-3 Accounting Changes and Error Corrections FSP 157-3
  2.
    Stock-Based
    Compensation and Earnings (loss) Per Share  Stock-Based
    Compensation
  Share-Based Payment Accounting for
    Stock Issued to Employees
 7




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Stock
    Options and Non-Vested Restricted Stock
  and/or
      Market
    Condition Grants
     8




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Weighted AverageNumber of


Grant Date FairMarket Condition Non-vested Restricted Shares

Shares


ValueBalance at January 1, 2008





$
Granted


603,840



27.31Forfeited


(119,658
)


27.31Vested






Balance at September 30, 2008


484,182


$
27.31       Three Months Ended


Nine Months EndedSeptember 30,


September 30,2008


2007


2008


2007Stock option expense

$
429


$
428


$
909


$
1,399Restricted stock expense


1,962



1,622



7,898



5,511Total

$
2,391


$
2,050


$
8,807


$
6,910     Earnings
    (loss) Per Share
   9




---



##### Table of Contents



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


Nine Months EndedSeptember 30,


September 30,2008


2007


2008


2007Basic average shares outstanding


91,323,588



73,936,181



87,236,860



73,801,129Incremental weighted average effect of stock options














195,420Incremental weighted average effect of non-vested restricted
    stock














306,810Diluted average shares outstanding


91,323,588



73,936,181



87,236,860



74,303,359         3.
    Common
    Stock Offering    4.
    Notes
    Receivable and Other Assets    September 30, 2008


December 31, 2007Saussy Burbank

$
18,028


$
27,202Various builders


17,162



18,608Advantis


7,177



7,015Pier Park Community Development District


2,242



2,028Various mortgages


7,441



1,493Total notes receivable

$
52,050


$
56,346  10




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Monetization





Fair Value


RetainedPeriod Ended(a)

Note Value


Net Proceeds


Net Balance


Adjustment


Interest(b)June 30, 2007

$
46,415


$
(41,511
)

$
4,904


$
(1,235
)

$
3,669September 30, 2007


28,485



(25,370
)


3,115



(1,325
)


1,790March 31, 2008


70,012



(62,094
)


7,918



(4,621
)


3,297June 30, 2008


38,393



(34,004
)


4,389



(3,891
)


498Total Monetized at September 30, 2008

$
183,305


$
(162,979
)

$
20,326


$
(11,072
)

$
9,254   (a)
    
    The period ended date refers to the quarter ended in which the
    timberland sale occurred. The monetization of the notes may have
    occurred in a subsequent quarter.(b)
    
    Recorded as Other assets.  15-year 15-year
  Accounting for
    Transfers and Servicing of Financial Assets and Extinguishments
    of Liabilities
    15-year
   11




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  5.
    Investment
    in Real Estate    September 30, 2008


December 31, 2007Operating property:Residential real estate

$
184,807


$
164,614Rural land sales


139



139Forestry


64,849



85,105Other


338



309Total operating property


250,133



250,167Development property:Residential real estate


632,475



644,745Commercial real estate


58,431



55,368Rural land sales


7,055



7,632Other


1,668



1,542Total development property


699,629



709,287Investment property:Commercial real estate


1,835



1,835Rural land sales


5



126Forestry


522



522Other


5,742



5,948Total investment property


8,104



8,431Investment in unconsolidated affiliates:Residential real estate


3,803



4,063Total real estate investments


961,669



971,948Less: Accumulated depreciation


31,249



27,419Total investment in real estate

$
930,420


$
944,529     6.
    Asset
    Impairments   12




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  7.
    Goodwill
    Impairment    8.
    Restructuring    Residential Real


Commercial Real


Rural LandEstate


Estate


Sales


Forestry


Other


TotalThree months ended September 30, 2008:One-time termination benefits to employees

$
373


$
117


$
14


$
30


$
715


$
1,249Nine months ended September 30, 2008:One-time termination benefits to employees

$
1,189


$
142


$
17


$
150


$
2,798


$
4,296Cumulative restructuring charges, September 30, 2006
    through September 30, 2008

$
17,648


$
653


$
1,661


$
300


$
6,331


$
26,593One-time termination benefits to employees  to be
    incurred during 2008(a)

$
108


$
3


$
3


$



$
40


$
154One-time termination benefits to employees  to be
    incurred during 2009

$
172


$



$
6


$



$
90


$
268Total remaining one-time termination benefits to
    employees  to be incurred

$
280


$
3


$
9


$



$
130


$
422   (a)
    
    Represents costs to be incurred from October 1, 2008
    through December 31, 2008.    Balance at








Balance atDecember 31,


Costs





September 30,


Due within


Due after2007


Accrued


Payments


2008


12 months


12 monthsOne-time termination benefits to employees

$
2,258


$
4,296


$
(4,113
)

$
2,441


$
2,245


$
196  13




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  9.
    Discontinued
    Operations       14




---



##### Table of Contents



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


Nine Months EndedSeptember 30,


September 30,2008


2007


2008


2007Commercial Buildings  Commercial Segment:Aggregate revenues

$



$
1,474


$
17


$
18,392Pre-tax income






471



21



2,637Pre-tax gain on sale






10,150







47,783Income tax expense






8,025



8



20,495Income from discontinued operations, net

$



$
2,596


$
13


$
29,925Saussy Burbank  Residential SegmentAggregate revenues

$



$



$



$
132,992Pre-tax income (loss)






(17
)






1,710Income tax expense (benefit)






(13
)






695Income (loss) from discontinued operations, net

$



$
(4
)

$



$
1,015Sunshine State Cypress  Forestry SegmentAggregate revenues

$
1,164


$
1,646


$
5,263


$
6,498Pre-tax income (loss)


(171
)


(6,962
)


(284
)


(6,073
)Income tax expense (benefit)


(67
)


(5,260
)


(111
)


(2,469
)Income (loss) from discontinued operations

$
(104
)

$
(1,702
)

$
(173
)

$
(3,604
)Total income (loss) from discontinued operations, net

$
(104
)

$
890


$
(160
)

$
27,336   10.
    Debt    September 30, 2008


December 31, 2007Revolving credit facility

$



$
132,000Senior notes






240,000Term loan






100,000Non-recourse defeased debt


29,354



30,671Community Development District debt


12,384



35,671Other


9,058



2,839Total debt

$
50,796


$
541,181      15




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
              and/or
   16




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2008

$
1082009


5,0352010


2,2122011


4982012


523Thereafter


42,420Total

$
50,796   (a)
    
    Includes debt defeased in connection with the sale of the
    Companys office portfolio in the amount of
    $29.3 million.  11.
    Employee
    Benefit Plans    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2008


2007


2008


2007Service cost

$
341


$
1,059


$
1,591


$
3,177Interest cost


1,997



2,074



6,147



6,220Expected return on assets


(4,081
)


(4,247
)


(12,931
)


(12,740
)Prior service costs


193



172



543



514Curtailment charge


446







446



135Settlement charge


1,472







1,472



Net periodic benefit (credit)

$
368


$
(942
)

$
(2,732
)

$
(2,694
)     12.
    Income
    Taxes  Accounting for Uncertainty in Income Taxes, an Interpretation
    of FASB Statement No. 109, Accounting for Income Taxes and/or
   17




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Form 10-K
  13.
    Segment
    Information        Form 10-K.
   18




---



##### Table of Contents



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


Nine Months EndedSeptember 30,


September 30,2008


2007


2008


2007Operating Revenues:Residential real estate

$
22,211


$
31,510


$
61,629


$
113,576Commercial real estate


2,285



6,202



3,193



18,924Rural land sales


2,436



31,883



132,520



131,467Forestry


5,904



7,844



19,953



19,398Consolidated operating revenues

$
32,836


$
77,439


$
217,295


$
283,365(Loss) income from continuing operations before equity in (loss)
    of unconsolidated affiliates, income taxes and minority interest:Residential real estate

$
(13,025
)

$
(26,272
)

$
(45,018
)

$
(32,677
)Commercial real estate


(563
)


2,413



(1,955
)


11,039Rural land sales


2,011



27,741



106,201



75,283Forestry


242



1,313



2,983



2,313Other


(19,296
)


(15,805
)


(75,842
)


(42,376
)Consolidated (Loss) income from continuing operations before
    equity in (loss) of unconsolidated affiliates, income taxes and
    minority interest

$
(30,631
)

$
(10,610
)

$
(13,631
)

$
13,582   September 30, 2008


December 31, 2007Total Assets:Residential real estate

$
877,725


$
901,771Commercial real estate


63,010



60,079Rural land sales


14,434



8,785Forestry


65,668



90,895Corporate


300,162



194,345Assets held for sale(1)


5,607



8,091Total Assets

$
1,326,606


$
1,263,966   (1)
    
    Formerly part of the Forestry segment. 19




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     September 30, 2008


December 31, 2007Assets held for sale:Inventory

$
3,272


$
5,705Investment in real estate


1,141



1,300Other assets


1,194



1,086Total assets held for sale

$
5,607


$
8,091Liabilities associated with assets held for sale:Account payable and accrued liabilities

$
255


$
328Total liabilities associated with assets held for sale

$
255


$
328   14.
    Contingencies  SFAS No. 5,
    Accounting for Contingencies.
           20




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Guarantors
    Accounting and Disclosure Requirements for Guarantees, Including
    Indirect Guarantees of Indebtedness of Others.
    15.
    Fair
    value measurements      Level 2.
    Inputs, other than the quoted prices in active markets, that are
    observable either directly or indirectly; andLevel 3.
    Unobservable inputs in which there is little or no market data,
    which require the reporting entity to develop its own
    assumptions.    Quoted Prices in


Significant Other


SignificantFair Value


Active Markets for


Observable


UnobservableSeptember 30,


Identical Assets


Inputs


Inputs2008


(Level 1)


(Level 2)


(Level 3)Recurring:Investments in money market and short term treasury instruments

$
100,583


$
100,583


$



$
Non recurring:Retained interest in QSPEs


9,254











9,254Total assets at fair value

$
109,837


$
100,583


$



$
9,254   Recognition of Interest Income and Impairment on
    Purchased and Retained Beneficial Interests in Securities and
    Financial Assets
  21




---



##### Table of Contents



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Forward-Looking
    Statements
    
    future operating performance, revenues, earnings, cash flows,
    and short and long-term revenue and earnings growth rates;
    future residential and commercial entitlements;
    expected development timetables and projected timing for sales
    or closing of housing units 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;
    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 levels of resale inventory in our developments and the
    regions in which they are located;
    the development of relationships with strategic partners,
    including homebuilders;
    the pace at which we release new products for sale;
    comparisons to historical projects;
    the amount of dividends, if any, we pay; and
    the number or dollar amount of shares of our stock which may be
    purchased under our existing or future share-repurchase programs.    Form 10-K Form 10-Q,
  
    a continued downturn in the real estate markets in Florida and
    across the nation;
    a continued crisis in the national financial markets and the
    financial services and banking industries;
    a continued decline in national economic conditions;
    changes in economic conditions 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;
    the lack of available mortgage financing, increases in
    foreclosures and changes in interest rates 22




---



##### Table of Contents




    changes in the demographics affecting projected population
    growth in Florida, including the demographic migration of Baby
    Boomers;
    the inability to raise sufficient cash to enhance and maintain
    our operations and to develop our real estate holdings;
    an event of default under our credit agreement, or the
    restructuring of such debt on terms less favorable to us;
    possible future write-downs of the carrying value of our real
    estate assets;
    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;
    a failure to attract homebuilding customers for our
    developments, or their failure to satisfy their purchase
    commitments;
    the failure to attract desirable strategic partners, complete
    agreements with strategic partners
    and/or
    manage relationships with strategic partners going forward;
    natural disasters, including hurricanes and other severe weather
    conditions, and the impact on current and future demand for our
    products in Florida;
    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;
    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;
    the failure to realize significant improvements in job creation
    and public infrastructure in Northwest Florida, including the
    development of a proposed new airport in Bay County, which is
    dependent on the availability of adequate funding and the
    successful resolution of any legal challenges;
    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;
    the prices and availability of labor and building materials;
    changes in insurance rates and deductibles for property in
    Florida, particularly in coastal areas;
    high property tax rates in Florida, and future changes in such
    rates;
    changes in gasoline prices; and
    acts of war, terrorism or other geopolitical events. 23




---



##### Table of Contents



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;
    resort and club operations;
    investments in limited partnerships and joint ventures; and
    brokerage and title issuance fees on certain transactions within
    our residential real estate developments.            Critical
    Accounting Estimates
   24




---



##### Table of Contents



Form 10-K
  Results
    of Operations
    
    loss on early extinguishment of debt of $0.7 million,
    an impairment charge of $1.3 million related to the write
    down of homes in our residential real estate segment,
    $1.9 million related to the write-off of net book value on
    abandoned property,
    $1.3 million restructuring charge and a $1.9 million
    related pension charge, and
    $6.6 million related to a fair value adjustment on retained
    interests of monetized installment notes.      
    loss on early extinguishment of debt of $30.6 million
    related to the prepayment of our $240 million senior notes,
    an impairment charge of $4.6 million consisting of
    $3.8 million related to the write down of homes in our
    residential real estate segment and $0.8 million related to
    the write down of a renegotiated builder note receivable,
    $1.9 million related to the write-off of net book value on
    abandoned property,
    $4.3 million restructuring charge and a $1.9 million
    related pension charge, and
    $8.5 million related to fair value adjustment on retained
    interests of monetized installment notes.   25




---



##### Table of Contents



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


Nine Months Ended September 30,2008


2007


Difference


% Change


2008


2007


Difference


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

$
13.3


$
56.1


$
(42.8
)


(76
)%

$
161.4


$
227.8


$
(66.4
)


(29
)%Rental revenues


0.4



0.4











1.0



2.4



(1.4
)


(58
)Timber sales


5.9



7.8



(1.9
)


(24
)


19.9



19.4



0.5



3Other revenues


13.2



13.1



0.1



1



34.9



33.7



1.2



4Total


32.8



77.4



(44.6
)


(58
)


217.2



283.3



(66.1
)


(23
)Expenses:Cost of real estate sales


8.7



17.5



(8.8
)


(50
)


48.2



110.5



(62.3
)


(56
)Cost of rental revenues


0.2



0.2











0.4



1.5



(1.1
)


(73
)Cost of timber sales


4.9



5.8



(0.9
)


(16
)


14.8



15.7



(0.9
)


(6
)Cost of other revenues


13.6



13.1



0.5



4



37.6



34.1



3.5



10Other operating expenses


14.4



19.4



(5.0
)


(26
)


43.1



50.4



(7.3
)


(14
)Total

$
41.8


$
56.0


$
(14.2
)


(25
)%

$
144.1


$
212.2


$
(68.1
)


(32
)%     Corporate expense.
  Impairment Losses.
 26




---



##### Table of Contents



Restructuring charge.
  Other (expense) income.
      Equity in (loss) income of unconsolidated
    affiliates.
 27




---



##### Table of Contents



Income tax (benefit) expense.
  Discontinued Operations.
  Segment
    Results
  Residential
    Real Estate
       28




---



##### Table of Contents



Three Months Ended


Nine Months EndedSeptember 30,


September 30,2008


2007


2008


2007(In millions)Revenues:Real estate sales

$
8.7


$
18.1


$
25.8


$
79.0Rental revenue


0.3



0.3



0.9



1.0Other revenues


13.1



13.1



34.9



33.6Total revenues


22.1



31.5



61.6



113.6Expenses:Cost of real estate sales


6.6



12.0



22.1



49.6Cost of rental revenue


0.2



0.1



0.4



0.5Cost of other revenues


13.6



13.1



37.6



34.1Other operating expenses


11.6



16.6



34.7



40.9Depreciation and amortization


2.8



3.1



8.8



8.8Restructuring charge


0.4



(0.3
)


1.2



0.8Impairment charge


1.3



13.0



4.6



13.0Total expenses


36.5



57.6



109.4



147.7Other income (expense)


1.4



(0.2
)


2.8



1.3Pre-tax (loss) from continuing operations before equity in
    (loss) of unconsolidated affiliates, income taxes and minority
    interest

$
(13.0
)

$
(26.3
)

$
(45.0
)

$
(32.8
)     Three
    Months Ended September 30, 2008 and 2007
    Three Months Ended September 30, 2008


Three Months Ended September 30, 2007Homes


Home-Sites


Total


Homes


Home-Sites


Total(Dollars in millions)Sales

$
2.3


$
6.0


$
8.3


$
9.6


$
8.4


$
18.0Cost of sales:Direct costs


1.9



3.9



5.8



6.5



3.3



9.8Selling costs


0.1



0.2



0.3



0.4



0.3



0.7Other indirect costs


0.1



0.4



0.5



1.1



0.4



1.5Total cost of sales


2.1



4.5



6.6



8.0



4.0



12.0Gross profit

$
0.2


$
1.5


$
1.7


$
1.6


$
4.4


$
6.0Gross profit margin


9
%


25
%


21
%


17
%


52
%


33
%    29




---



##### Table of Contents



Three Months Ended September 30, 2008


Three Months Ended September 30, 2007Closed





Cost of


Gross


Closed





Cost of


GrossUnits


Revenues


Sales


Profit


Units


Revenues


Sales


Profit(Dollars in millions)Northwest Florida:Resort and Seasonal:Single-family homes





$
1.2


$
1.1


$
0.1



5


$
4.3


$
3.6


$
0.7Home sites


12



3.3



1.7



1.6



10



5.7



2.1



3.6Primary:Single-family homes


















1



0.2



0.0



0.2Townhomes






























Home sites


21



1.1



0.9



0.2



34



2.5



1.6



0.9Northeast Florida:Primary:Single-family homes


















2



0.9



0.8



0.1Home sites






























Central Florida:Primary:Single-family homes


1



0.5



0.4



0.1



5



2.4



2.0



0.4Multi-family homes


1



0.4



0.4







3



1.2



1.1



0.1Townhomes


1



0.2



0.2







1



0.6



0.5



0.1Home sites


41



1.6



1.9



(0.3
)


5



0.2



0.3



(0.1
)Total


77


$
8.3


$
6.6


$
1.7



66


$
18.0


$
12.0


$
6.0            30




---



##### Table of Contents



Nine
    Months Ended September 30, 2008 and 2007
    Nine Months Ended September 30, 2008


Nine Months Ended September 30, 2007Homes


Home-Sites


Total


Homes


Home-Sites


Total(Dollars in millions)Sales

$
16.6


$
8.7


$
25.3


$
41.7


$
37.3


$
79.0Cost of sales:Direct costs


13.1



5.1



18.2



25.0



13.8



38.8Selling costs


2.1



0.4



2.5



2.0



1.4



3.4Other indirect costs


0.9



0.5



1.4



5.7



1.7



7.4Total cost of sales


16.1



6.0



22.1



32.7



16.9



49.6Gross profit

$
0.5


$
2.7


$
3.2


$
9.0


$
20.4


$
29.4Gross profit margin


3
%


31
%


13
%


22
%


55
%


37
%    31




---



##### Table of Contents



Nine Months Ended September 30, 2008


Nine Months Ended September 30, 2007Closed





Cost of


Gross


Closed





Cost of


GrossUnits


Revenues


Sales


Profit


Units


Revenues


Sales


Profit(Dollars in millions)Northwest Florida:Resort and Seasonal:Single-family homes


7


$
8.2


$
7.8


$
0.4



10


$
13.3


$
10.1


$
3.2Multi-family homes


















1



0.9



0.6



0.3Home sites


19



5.7



3.0



2.7



41



23.0



7.5



15.5Primary:Single-family homes


















13



3.9



3.1



0.8Townhomes


















4



0.9



0.6



0.3Home sites


21



1.1



0.9



0.2



171



13.5



8.8



4.7Northeast Florida:Primary:Single-family homes


2



0.9



1.1



(0.2
)


9



4.3



4.0



0.3Home sites


3



0.2



0.1



0.1



2



0.3



0.2



0.1Central Florida:Primary:Single-family homes


8



4.0



3.8



0.2



19



11.4



8.9



2.5Multi-family homes


9



3.1



3.0



0.1



28



2.0



1.6



0.4Townhomes


2



0.4



0.4







9



5.0



3.8



1.2Home sites


42



1.7



2.0



(0.3
)


6



0.5



0.4



0.1Total


113


$
25.3


$
22.1


$
3.2



313


$
79.0


$
49.6


$
29.4            32




---



##### Table of Contents



Discontinued
    Operations
      Three Months Ended


Nine Months EndedSeptember 30, 2007


September 30, 2007(In millions)Saussy BurbankAggregate revenues

$



$
133.0Pre-tax income






1.7Income tax expense






0.7Income from discontinued operations, net

$



$
1.0   Commercial
    Real Estate
    33




---



##### Table of Contents



Three Months Ended


Nine Months EndedSeptember 30,


September 30,2008


2007


2008


2007(In millions)Revenues:Real estate sales

$
2.2


$
6.1


$
3.1


$
17.4Rental revenues


0.1



0.1



0.1



1.4Other revenues














0.1Total revenues


2.3



6.2



3.2



18.9Expenses:Cost of real estate sales


2.0



2.5



2.3



9.9Cost of rental revenues










0.1



1.0Other operating expenses


1.2



1.5



3.3



4.4Depreciation and amortization














0.6Restructuring charge


0.1







0.1



Total expenses


3.3



4.0



5.8



15.9Other income


0.5



0.2



0.7



8.0Pre-tax (loss) income from continuing operations

$
(0.5
)

$
2.4


$
(1.9
)

$
11.0   Real Estate Sales.
  Number of


Acres


Average Price


Gross





Gross ProfitLand

Sales


Sold


per Acre(1)


Proceeds


Revenue


on Sales(In millions, except average price per acre)Three Months Ended September 30, 2008


3



32


$
78.0


$
2.5


$
0.6
(2)

$
0.5
(2)Three Months Ended September 30, 2007


10



20


$
309.0


$
6.2


$
6.1
(3)

$
3.6
(3)Nine Months Ended September 30, 2008


4



34


$
81.2


$
2.8


$
0.7
(2)

$
0.9
(2)Nine Months Ended September 30, 2007


30



80


$
217.1


$
17.5


$
17.4
(3)

$
7.5
(3)   (1)
    
    Average price per acre in thousands.(2)
    
    Includes previously deferred revenue and gain on sales, based on
    percentage-of-completion accounting, of $0.1 million and
    zero, respectively, for the three months ended
    September 30, 2008. The nine months ended
    September 30, 2008 includes previously deferred revenue and
    gain on sales, based on percentage-of-completion accounting, of
    $0.4 million and $0.1 million, respectively.(3)
    
    Includes deferred revenue and gain on sales, based on
    percentage-of-completion accounting, of $0.1 million and
    $0.1 million, respectively, for the three months ended
    September 30, 2007. The nine months ended
    September 30, 2007 include previously deferred revenues and
    gain on sales of $0.1 and $0.2 million, respectively.  Discontinued
    Operations
   34




---



##### Table of Contents



Three Months Ended


Nine Months EndedSeptember 30, 2007


September 30, 2007(In millions)Commercial Buildings:Aggregate revenues

$
1.5


$
18.4Pre-tax income


0.5



2.6Pre-tax gain on sale


10.2



47.8Income tax expense


8.0



20.5Income from discontinued operations, net

$
2.7


$
29.9   Rural
    Land Sales
      Three Months Ended


Nine Months EndedSeptember 30,


September 30,2008


2007


2008


2007(In millions)Revenues:Real estate sales

$
2.4


$
31.9


$
132.5


$
131.5Expenses:Cost of real estate sales






3.0



23.8



51.1Other operating expenses


1.0



1.1



3.5



3.9Depreciation and amortization






0.1



0.1



0.2Restructuring charge














1.3Total expenses


1.0



4.2



27.4



56.5Other income


0.6







1.1



0.3Pre-tax income from continuing operations

$
2.0


$
27.7


$
106.2


$
75.3     Number of


Number of


Average Price


Gross Sales


GrossSales


Acres


per Acre


Price


Profit(In millions)


(In millions)Three Months Ended:September 30, 2008


5



346
(a)

$
7,045


$
2.4


$
2.4
(a)September 30, 2007


7



21,073


$
1,513


$
31.9


$
28.9Nine Months Ended:September 30, 2008


15



87,179


$
1,520


$
132.5


$
108.7September 30, 2007


33



87,098


$
1,509


$
131.5


$
80.4   (a)
    
    Amount includes the exchange of 160 acres with related
    recognized revenue and gross profit of $0.3 million. 35




---



##### Table of Contents




    23,743 acres in Liberty County for $36.3 million, or
    an average of $1,530 per acre.
    2,784 acres in Taylor County for $12.5 million, or an
    average of $4,500 per acre.  
    29,742 acres primarily within Liberty and Wakulla counties
    for $39.5 million, or an average of $1,330 per acre.  
    29,343 acres primarily within Leon County, Florida and
    Stewart County, Georgia, for $38.4 million, or an average
    of $1,308 per acre.      Forestry
      Three Months Ended


Nine Months EndedSeptember 30,


September 30,2008


2007


2008


2007(In millions)Revenues:Timber sales

$
5.9


$
7.8


$
19.9


$
19.4Expenses:Cost of timber sales


4.9



5.8



14.8



15.7Other operating expenses


0.4



0.4



1.5



1.2Depreciation and amortization


0.6



0.8



1.9



2.0Restructuring charge










0.1



Total expenses


5.9



7.0



18.3



18.9Other income


0.3



0.5



1.4



1.8Pre-tax income from continuing operations

$
0.3


$
1.3


$
3.0


$
2.3   Three
    Months Ended September 30, 2008 and 2007
     36




---



##### Table of Contents



Nine
    Months Ended September 30, 2008 and 2007
      Discontinued
    Operations
    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2008


2007


2008


2007(In millions)Sunshine State CypressAggregate revenues

$
1.2


$
1.6


$
5.3


$
6.5Pre-tax income (loss)


(0.2
)


(7.0
)


(0.3
)


(6.1
)Income tax expense (benefit)


(0.1
)


(5.3
)


(0.1
)


(2.5
)Income (loss) from discontinued operations, net

$
(0.1
)

$
(1.7
)

$
(0.2
)

$
(3.6
)   Liquidity
    and Capital Resources
    
    Sales of land holdings and other assets;
    Operations;
    Borrowings from financial institutions; and
    Issuances of equity from the sale of stock and exercise of
    employee stock options.    
    Operations;
    Real estate development and construction;
    Repayments of debt; and
    Payments of taxes     37




---



##### Table of Contents



Cash
    Flows from Operating Activities
      15-year
  Cash
    Flows from Investing Activities
    Cash
    Flows from Financing Activities
      91-10, Accounting for Special Assessments and Tax Increment
    Financing
   38




---



##### Table of Contents



and/or
  Off-Balance
    Sheet Arrangements
  15-year Accounting for Transfers and Servicing of Financial Assets
    and Extinguishments of Liabilities.
  Recognition
    of Interest Income and Impairment on Purchased and Retained
    Beneficial Interests in Securities and Financial
    Assets
 39




---



##### Table of Contents



Contractual
    Obligations and Commercial Commitments
    Item 3.
    Quantitative
    and Qualitative Disclosures About Market Risk    Item 4.
    Controls
    and Procedures  Rules 13a-15(e) 15d-15(e)
   40




---



##### Table of Contents



PART II 
    OTHER INFORMATION  Item 1.
    Legal
    Proceedings    Item 1A.
    Risk
    Factors  Form 10-K Form 10-Q
  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 Dollar(a)





Shares Purchased


Amount thatTotal Number


(b)


as Part of Publicly


May Yet Beof Shares


Average


Announced Plans


Purchased UnderPurchased


Price Paid


or Programs


the Plans orPeriod

(1)


per Share


(2)


Programs(In thousands)Month Ended July 31, 2008





$







$
103,793Month Ended August 31, 2008


36,931


$
34.74






$
103,793Month Ended September 30, 2008


14,451


$
42.49






$
103,793   (1)
    
    Represents shares surrendered by executives as payment for the
    strike prices and taxes due on exercised stock options and/or
    taxes due on vested restricted stock.  Item 3.
    Defaults
    Upon Senior Securities    Item 4.
    Submission
    of Matters to a Vote of Security Holders    Item 5.
    Other
    Information     41




---



##### 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
    filed on December 17, 2004).10
.1

Credit Agreement dated September 19, 2008 by and among the
    registrant and Branch Banking and Trust Company, as agent
    and lender, and BB&T Capital Markets, as lead arranger
    ($100 million credit facility) (incorporated by reference
    to Exhibit 10.1 to the registrants Current Report on
    Form 8-K
    filed on September 24, 2008).10
.2

First Amendment to Credit Agreement dated October 30, 2008
    by and among the registrant and Branch Banking and
    Trust Company, as agent and lender.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.  42




---



##### Table of Contents



SIGNATURES    The St. Joe CompanyDate: November 4, 2008

/s/  Wm.
    Britton GreeneWm. Britton GreeneChief Executive OfficerDate: November 4, 2008

/s/  Janna
    L. ConnollyJanna L. ConnollyChief Accounting Officer  43