Everyone please standby we are about to begin. Good day everyone and welcome to the St. Joe Company's First Quarter 2008 Earnings Conference Call. Today's call is being recorded. At this time for opening remarks and introduction, I will turn the call over turn the Chairman and Chief Executive Officer of St. Joe Company, Mr. Peter Rummel. Please go ahead sir.

Thank you Good morning. Welcome to the St. Joe Company's conference call for 2008 first quarter. I am Peter Rummell, Chairman and CEO of JOE and joining me this morning is our President and soon to be CEO, Britt Greene; our CFO, Bill McCalmontand and Chief strategy Officer, Chris Corr. Before we begin, let me remind everybody about our forward-looking statements. Matters discussed on this call that are not historic facts are forward-looking statements that are based on our current expectations. Actual results may differ materially. forward-looking statements are subject to certain risks and uncertainties that are described in today's earnings release and in our SEC filings, which are on our website at joe.com. For the first quarter JOE's net income was $32.1 million, or a $0.40. This compared to net income of $19.7 million, or $0.27 in first quarter last year. The largest contributor to net income was strong rural land sales, in contrast, as we reported for these resort and residential real estate markets remain weak. JOE's first quarter results included pre-tax impairment charges of $2.3 million, or $0.02 of share after-tax. As a result of continuing declines in sales and listing prices in our primary communities. Also included in first quarter results our pre-tax restructuring in charges of $0.5 million, or less than $0.01 per share after-tax, compared to $3.2 million or $0.03 a share after tax in 2007. Nationally, consumer confidence is low and many consumers seem to be differing residential real estate purchases until there is more economic clarity. As we've anticipated JOE's residential real estate sales reflect to broader markets. Commercial land sales have also become impacted by the weakening demand by national retailers. As our first quarter results indicate demand for rural land remains strong and we are having success selling non-strategic rural…

Thank you, Peter. As Peter noted earlier, we anticipated difficult from challenging quarter and we had one. The market place for residential real estate in Florida markets remains weak. During the first quarter we have successfully implemented the rural land sales program, we announced in the fourth quarter of 2007. I am please to report that the man from both large and small tracks of rural land has helped... held up well during this current market downturn. I also want to stress at these land sales are part of what we have previously designated as our harvest assets. They are clearly non-strategic assets that make's sense monetize today. We continue to see interest from large owners recreational land buyers, conservation land buyers and pension funds. In contrast to rural land, resort and primary residential markets remain very weak. Resort and primary residential sales generated in the first quarter were $9.7 million in revenue. We did not close any commercial land fields during the force, pardon me, during the first quarter. Due to the challenges facing national retailers in the nature of commercial land transactions, we expect revenue from commercial land sales to remain lumpy through the year. However, it is worth noting that we continue to see interest in strategically located commercial and industrial properties. We have had solid interest from prospective users and strategic partners for property located in and around the West Bay sector near the new airport. However, we are going to be strategic in how best to realize this land's value and we are evaluating ways to build sustainable recurring income streams from commercial development on this very valuable land. Moving forward, we will continue to tighten our focus on our most valuable land holdings. At the end of the first quarter, JOE owned approximately 638,000…

Thanks Britt. We continue to make rise with time on our side during this economic downturn by focusing on approving our balance sheet and by reducing capital expenditures, SG&A and interest. With respect to the balance sheet, on March 3rd we sold just over 17 million shares of common stock, approximately $580 million of net proceeds from the public offerings were used to repay substantially all of JOE's outstanding indebtedness. This successful equity offering has dramatically increased our financial flexibility in weathering the current market downturn and as we move forward, we are committed to maintaining a strong balance sheet. In early April, we paid off $240 million of senior notes making us virtually debt free and at the end of the first quarter, we had no cash drawn on our line and had approximately $480 million of available capacity, under this $500 million revolving credit facility. From a capital perspective, we are continuing to focus on reducing our capital expenditures, in the first quarter of this year, we spent approximately $18 million, compared to approximately $75 million in last year's first quarter and a 1$84 million in the first quarter of 2006. We continued to expect capital expenditures in 2008 to be about $90 million and even lower in 2009. These expenditures are primarily in our RiverTown, Victoria Park and WindMark Beach communities [ph]. We also continue to focus our cash SG&A. In the fourth-quarter 2007 we announced a restructuring plan to dramatically reduce on employee headcount. As a result of this restructuring and a continued focus on cost, our total cash overhead for the combination of corporate overhead, field overhead and capitalized overhead, declined by about $5 million or 16% during the quarter, compared to the first quarter of 2007. This reduction in cash SG&A was achieved despite an increase in property taxes approximately $1 million. Looking ahead, the virtual lamination of debt service and that the declining operating overhead provides more flexibility going forward in the volume, timing and pricing of our non-strategic land sales. We expect these non-strategic land sales will be the primary source of revenue for the near to intermediate term and will continue to be lumpy. Given that the current environment has quite significant financial stress and what we would consider the traditional buyer for our residential and commercial land parcels, we expect these segment to continue to be challenging. In these segments, we believe the current demand environment is characterized more by opportunistic value buyers, we are less likely to provide attractive offers at this time. Peter, back to you.

Thanks, for now and foreseeable future, Florida real estate markets are facing extremely challenging times, as you've heard all three of us saying. Resort and residential markets are particularly weak, inventories remain high. Inventories seem to be ranging from, anywhere from 12 to 48 months supply, depending on what part of the stage you're talking about and the specific market. And looking ahead, we think there is a convergence of events to that we will see in 2010, there will be an important and telling moment for Northwest Florida and for JOE. On this conference call, two years from today, we will be talking about the grand opening and first flights for the new Panama City Airport. And by that time, 24 months from now many economists think that economic conditions in general will be improving. Our job between now and then is to continue making the company more efficient and work with a broad range of strategic allies. From state economic development organizations to third-party developers to ensure West Bay and the new airport are a success and that the entire region maximizes that benefit. Let me make one final comment. As most of you know next week in our annual meeting Britt will take over and will assume the position of CEO and I will continue as Chairman of the Board. Most of us like to think about ourselves as irreplaceable, but in fact one of the lessons we learn in maturity is that one, that's not true and two, a major part of our job, particularly as a CEO is to make sure that that's not true. I think we are all very proud that Britt comes from within the organization and will provide stability and context as JOE moves forward. But at the same time, certainly will be his own man. He has more than 25 years of real estate experience and he is a proven leader. I am confident Britt will be an outstanding CEO and he has a strong and experience team that will grow with him. So with that let's open it up to questions about this or anything else. Question And Answer

Thank you Mr. Rummell. Ladies and gentlemen our question and answer session is conducted electronically. [Operator instructions] And we'll go first today to Buck Horne with Raymond James.

Good morning.

Good morning.

Could you walk us through a little bit more detail exactly, the economics of commercial land venture, how that might look and what kind of equity position you can get and how would any income stream you get out of that be treated for tax purposes?

Bill, you want to do that? Well, let me key it up and maybe Bill can follow up on it. First of all, any one of them can take in to obviously a number of different looks in terms of the scenario what the national deal would play out, but whether it's a ground lease opportunity or a venture with a partner who would do both horizontal and vertical where we might share in the percentage of the rent being associated with that commercial development or combination of ground lease with vertical participation or a portion of it's sale with participation. I mean there is multiple ways, Buck that can play out depending on the user or the size of the particular project and where it's located and the timing as that, so Bill if you want to add to that.

Yes from a tax perspective to the extent that we have leased our land we expect to incur taxable income at the time we receive payments under a land lease and to the extent that we participate in a joint venture and as Britt said this land is our currency to gain an equity position in that joint venture, we reduce the carryover basis in land and then not realize taxable event till we received income, either part of residual sale or for current income during the coarse of the joined ventures operation of whatever the asset and the case may be. So we view that as a very efficient use of our land from a tax planning perspective.

Okay it's very helpful. On the deferred tax benefits in the quarter that you were able to recapture as of rural land sales, seems like you've got a pretty high capture rate on those deferred tax cash flows would we... could you expect to see similar types of capture rates on that going forward?

Yes, our goal is to execute our installment. I mean our rural land sale program primarily using installment sales and by virtue of the installment sales methodology we are able to differ that income taxes for 15 years. So other than smaller track land sales, we will expect largest track to be executed using installment sales methodology.

Great, thank you very much

We'll take our next question from Sheila McGrath with KBW. Sheila McGrath - Keefe, Bruyette & Woods: Good morning. I was wondering on the residential side, if you could walk through your perception, are the market deteriorate... getting worst or are they just kicking along the bottom and if you could differentiate primary, versus resort for us?

Sheila, it is... I will ask Britt to respond too. The... what we... you have to be very specific in this and I am going to limit this. This is not a Florida comment, this is in our-market's comment and I want to be specific about that. Within our markets, what we have seen is number one resale inventories have stopped growing which is the first thing that has to happen and that's happened over the last eight months, ten months, something like that. And that I think is an important fact. The second thing, we've seen is that we have seen resale pricing which is what we use as a benchmark and I have said that for the last couple years. We've seen resale pricing firm and you have heard Britt say that for a built product that tends to be in the low 20s and for the and for lots, it tends to be in the high 20s or as much as 30%. Also, to be original November, August '05 high, so from the Apex in August of '05 we've seen residential product and I wouldn't differentiate too between first and second home here. Four, built for sale product is off in 22% to 23%, something like that, lots or little bit more, probably somewhere around 30%, but that deterioration has been holding for about the last 10 months. We have not seen prices go down further, so inventories has quit growing and resale pricing is starting to firm. So I think those are the first things that has to happen. So the question now becomes if we are exact on the floor of the valley, the question is how wide is the valley? And that's sort of everybody's question, but I, so I am... we are not allowing ourselves to be optimistic, but those in fact are facts. And I think those are the first sort of pieces that will probably have to fall on the place. Do you want to add to that?

No I think that's pretty well stated Peter. It's just the stability of those two elements has been trending and holding, so I think we are looking out and start seeing as we move forward to those inventory levels to actually start going down and sales start to affect eating into those inventories that sit there.

I will give you an editorial comment and that is that we have... we have trained people to expect that prices are going to be lower tomorrow than today, if they just wait and so now people are going to have to learn that they've gotten to that point and in essence, have to sort of retrain buyers to finally acknowledge that they are at that point and that they need to start making decisions. Sheila McGrath - Keefe, Bruyette & Woods: Okay on another it's kind of big picture question. There were a number of articles in the paper today on potentially a new road going from Bay County up to Alabama and I was wondering if you could comment on that and is that the same road that's discussed going from the airport towards WaterSound or are those two different roads?

No, no those are very different. That is, the one you are talking about is an east-west road that's in some of the master plans. The road that you... the one that you saw mentioned in the news clips is a idea that's been around for, literally a couple of decades, but it's gotten some new visibility, because there are group of people who are now trying to get a finance as a toll road. It's an interesting idea. We've been involved in the conversations. I think it's the idea of connecting the Alabama and Florida Interstate systems is a great idea that we're proponent for it, but an awful lot has to happen before anything... before you're going to be able to drive on anything.

May be Peter I'd just add to that. Our focus and attention really is around the airport and the road servicing that airport state road 77 state road, 79 which have already been widened to Highway 20 and the effort to get them widened up to I-10 are really our focus and attention that connects and built interstate, interstate and then intrastate are difficult long term efforts. And we'll watch what happens, but for right now our focus is on economics around the airport. Sheila McGrath - Keefe, Bruyette & Woods: Okay, thank you.

[Operator Instructions] We will go next to David Cohen with Morgan Stanley.

Hey, good morning. Peter good luck. I hope we continue to hear you on these calls. Just want to ask you talked about the different industry groups that you think would be potentially big drivers of the area the aerospace international trade and energy. What is the local region or and I guess state government's doing to kind of attract those types of industry groups into the regional? Are they doing enough in your mind? Will there be incentives for them in terms of taxes and other incentives that will cause them to come down there?

That's a good question. Florida, historically has not done much because they haven't had to. Jeb Bush specifically felt very strongly that there was so much organic growth that it wasn't the best use of dollars. I think the fact is that the world has changed, that things are softer now and there is... there've been some high visibility efforts to help, the clinic that... what the Palm Beach... Scripps went to Palm Beach, and there have been couple of others like that. So there are examples of the state helping. I think that current administration realizes that in a soft economy you have to do more, than when everything was working. The budget is leaner than it was and so there is not a huge bucket of money around, but the administration has said if there are interesting opportunities that they are attending, then I think, while there are no guarantees I think there more attending than they have been in the past.

Just let me, if I can answer that Peter. On the side of government, military being part of government, military has done a tremendous part in between Eglin Air Force Base Tindel [ph] and the Navy Coastal System stations in terms of R&D work. And those three facilities has really grown a private contract for base in the region, which I think is somewhere in access of 340-350 private contractors working within Northwest Florida and growing, as these facilities start to grow in their R&D research so, there is an opportunity to start to use that as a driver to private growth and economic development in area and certainly the new airport helps to promote that.

And one of those three segments that Britt talked about is only a segment of interest because of the military presence.

Right.

Okay and then just a follow up you talked about the Coastal Vision 3000, trying to get kind of more airlines into the new airport, and better air service, other than the larger, the longer runways, what are the other things that are potentially going to draw the airlines in. I mean when you look at usage of the old airport and the potential usage of the new airport, I mean what are the other things that the airlines are... is that Coastal Vision 3000 is pushing and what type of success are they having there?

They did a good deal of research and some smart market research, and one of the things we found was that the definition, the area that this can really feedback from the airlines, the definition of the area has been redefined and you are going to start seeing an advertising campaign... is this all right to talk about.

Yes.

We are going to start seeing an advertising campaign that talks about the beach and that term is going to become a term of art. You are going to start seeing it in Northeastern airports and that is in fact about a 120 miles stretch that goes from Destin on the west to Port St. Joe on the east, and you are going to see a regional marking focus around that and the budget behind it that hasn't been there in the past. The other thing you have to keep in mind is when you define that region the way I just did from Destin to Port St. Joe, there are about 60,000 rooms in that market. So this is no backwards place. This is an area with an enormous concentration of rentable units and the airlines have focused on that. There are efforts now been put together to do smart packaging between the hotel operators and the airlines. It is just a much more aggressive regional effort underway than ever was done in the past.

Okay, just final question the... you previously had talked about the 1200 homes, the 190 homes and then 1,200 units I think units that you were going to price to sell. You have made some progress, but I do not think you sold that much of that stuff in this quarter and what is your strategy going forward, It seems like it's tough to sell anything right now, so are you closing on to that?

Yes we are, where we have had success in moving some product, we've obviously adjusted our price to continue to see if we can gain momentum, but and certainly we are finishing up some Phase 1s at WindMark Beach and RiverTown which have added lots into the system. So as we --

Lots; not homes.

Lots; not homes, we have had some success in reducing the home inventory, but we've been very cautious not to try to be lead the lead and chase the price down, but to be mindful of that there is a resale market out there, see where that sits, see if we can get activity by adjusting our pricing more appropriate and Bill I don't know if you want to add any thing to that, but you will see that number fluctuate and I think through the course of the year, we are not intending to produce any more completed product, we have a little bit, we have some kind condos at WindMark Beach being finished up in Phase 1 and another than that our lot development is coming to a close with our Phase 1 development and WindMark and RiverTown and so in WaterSound. So we are going to see that steady out and then we will see the reduction come from sales activity, as we go forward.

And as you know we are now entering the primary selling season in West Florida through Labor Day and so you should see the results of our efforts in the second and third quarter scales activities.

Alright, okay and then the impairment charges, I mean, does that have any... where does that come?

Those were... yes those were primarily in our communities and Central Florida where we built homes on non-legacy land, so primarily Central Florida.

Got it, thank you.

This does conclude the question and answer session. Mr. Rummell, I'll turn it back to you for closing remarks.

Very good. Thank you all very much. Thanks for your continued interest and we will talk to you next quarter. Have a great day.

Ladies and gentlemen, thank you so much for your participation. This does conclude today's conference and you may now disconnect your phone lines.