ARVIDA JMB PARTNERS L P - 10-K Annual Report

Back to GetFilings.com

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

For the Fiscal Year
Ended December 31, 2003 Commission file no. 0-16976

ARVIDA/JMB PARTNERS, L.P.
(Exact name of registrant as specified in its charter)

Delaware 36-3507015
(State of organization) (IRS Employer Identification No.)

900 N. Michigan Ave., Chicago, IL 60611
(Address of principal executive office) (Zip Code)

Registrant's telephone number, including area code 312/915-1987

Securities registered pursuant to Section 12(b) of the Act:

Name of each exchange on
Title of each Class which registered
- ------------------- ------------------------

None None

Securities registered pursuant to Section 12(g) of the Act:

LIMITED PARTNERSHIP INTERESTS
AND ASSIGNEE INTERESTS THEREIN
(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 (the "Act") during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [ X ] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K [ X ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [ ] No [ X ]

State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the
common equity was last sold, or the average bid and asked price of such
common equity, as of the last business day of the registrant's most
recently completed second fiscal quarter. Not applicable.

Documents Incorporated by Reference

Certain portions of the Prospectus of the registrant dated September 16,
1987, and filed with the Commission pursuant to Rules 424(b) and 424(c)
under the Securities Act of 1933 are incorporated by reference in Part III
of this Annual Report on Form 10-K.

TABLE OF CONTENTS

Page
----
PART I

Item 1. Business . . . . . . . . . . . . . . . . . . . . . 1

Item 2. Properties . . . . . . . . . . . . . . . . . . . . 5

Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . 5

Item 4. Submission of Matters to a
Vote of Security Holders . . . . . . . . . . . . . 9

PART II

Item 5. Market for the Registrant's Common Equity,
Related Security Holder Matters and
Issuer Purchases of Equity Securities. . . . . . . 10

Item 6. Selected Financial Data. . . . . . . . . . . . . . 11

Item 7. Management's Discussion and
Analysis of Financial Condition and
Results of Operations. . . . . . . . . . . . . . . 14

Item 7A. Quantitative and Qualitative
Disclosures About Market Risk. . . . . . . . . . . 21

Item 8. Financial Statements and
Supplementary Data . . . . . . . . . . . . . . . . 22

Item 9. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure . . . . . . . . . . . . . . . 52

Item 9A. Controls and Procedures. . . . . . . . . . . . . . 52

PART III

Item 10. Director and Executive Officers of
the Registrant . . . . . . . . . . . . . . . . . . 53

Item 11. Executive Compensation . . . . . . . . . . . . . . 55

Item 12. Security Ownership of Certain Beneficial
Owners and Management and Related Security
Holder Matters . . . . . . . . . . . . . . . . . . 56

Item 13. Certain Relationships and
Related Transactions . . . . . . . . . . . . . . . 57

Item 14. Principal Accountant Fees and Services . . . . . . 59

PART IV

Item 15. Exhibits, Financial Statement
Schedules, and Reports on Form 8-K . . . . . . . . 60

SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . 62

i

PART I

ITEM 1. BUSINESS

All references to "Notes" are to Notes to Consolidated Financial
Statements contained in this report.

The registrant, Arvida/JMB Partners, L.P. (the "Partnership"), is a
limited partnership formed in 1987 and currently governed under the Revised
Uniform Limited Partnership Act of the State of Delaware. The Partnership
was formed to own and develop substantially all of the assets of Arvida
Corporation (the "Seller"), a subsidiary of The Walt Disney Company, which
were acquired by the Partnership from the Seller on September 10, 1987. On
September 16, 1987, the Partnership commenced an offering to the public of
up to $400,000,000 in Limited Partnership Interests and assignee interests
therein ("Interests") pursuant to a Registration Statement on Form S-1
under the Securities Act of 1933 (No. 33-14091). A total of 400,000
Interests were sold to the public (at an offering price of $1,000 per
Interest before discounts) and the holders of 400,000 Interests were
admitted to the Partnership in October 1987. The offering terminated
October 31, 1987. In addition, a holder (an affiliate of the dealer-
manager of the public offering) of 4,000 Interests was admitted to the
Partnership in October 1987. Subsequent to admittance to the Partnership,
no holder of Interests (a "Holder" or "Holder of Interests") has made any
additional capital contribution. The Holders of Interests of the
Partnership generally share in their portion of the benefits of ownership
of the Partnership's real property investments and other assets according
to the number of Interests held.

Pursuant to Section 5.5J of the Partnership's Amended and Restated
Agreement of Limited Partnership (the "Partnership Agreement"), on October
23, 1997, the Board of Directors of the General Partner met and approved a
resolution selecting the option set forth in Section 5.5J(i)(c) of the
Partnership Agreement for the Partnership to commence an orderly
liquidation of its remaining assets that was to be completed by October
2002. In October 2002, the Partnership commenced a solicitation for
consents to an amendment (the "Amendment") to the Partnership Agreement
providing for an extension of the term of the Partnership's liquidation
period to not later than October 31, 2005. In addition, under the terms of
the Amendment, Arvida/JMB Managers, Inc., the General Partner of the
Partnership, is authorized, in its sole discretion, to complete the
liquidation of the Partnership by forming a liquidating trust (the
"Liquidating Trust") and contributing any remaining Partnership assets to
the Liquidating Trust subject to all outstanding obligations and
liabilities of the Partnership. In November 2002, the Holders of a
majority of the outstanding Interests gave their consent to the Amendment,
which became effective October 29, 2002, and, accordingly, the term of the
Partnership's liquidation period has been extended.

As noted above, under the terms of the Amendment, the General Partner
is authorized, in its sole discretion, to complete the termination of the
Partnership by forming a Liquidating Trust. The trustee or trustees of the
Liquidating Trust could be an officer or officers of the General Partner.
The remaining Partnership assets would be contributed to the Liquidating
Trust subject to all outstanding obligations and liabilities of the
Partnership. The General Partner, Associate Limited Partners and Holders
of Interests would receive beneficial interests in the Liquidating Trust in
proportion to their respective interests in the Partnership. Subsequently,
after liquidating any remaining non-cash assets and providing for the
payment or satisfaction of all such obligations and liabilities, the
trustee(s) of the Liquidating Trust would distribute any remaining proceeds
to the General Partner, Associate Limited Partners and Holders of Interests
in proportion to their respective interests in the Liquidating Trust.

Pending the completion of the liquidation, winding up and termination
of the Partnership (or if applicable, the Liquidating Trust), it is
anticipated that the Partnership (or the Liquidating Trust, as the case may
be) will retain a substantial amount of funds in reserve to provide for the
payment of, the defense against, or other satisfaction or resolution of
obligations, liabilities (including contingent liabilities) and current and
possible future claims, including those for possible construction repairs,
homeowner warranty claims, completion of work for certain homeowner
associations and master associations and pending and possible future
litigation and environmental matters. The amount of funds to be retained
in reserve for these purposes has not yet been determined. The Partnership
currently expects that those available funds in excess of the amount
determined to be held in reserve would be distributed during 2004 and 2005
to the partners and Holders of Interests. That portion, if any, of the
funds held in reserve that are not ultimately used to pay, defend or
otherwise resolve or satisfy obligations, liabilities or claims would
subsequently be distributed to the partners and Holders of Interests as a
final liquidating distribution at a later date.

The assets of the Partnership have consisted principally of interests
in land developed into master-planned residential communities (the
"Communities"), and, to a lesser extent, commercial properties; accounts
receivable; construction, brokerage and other support businesses; real
estate assets held for investment and certain club and recreational
facilities. The Partnership has been principally engaged in the
development of comprehensively planned resort and primary home Communities
containing a diversified product mix designed for the middle and upper
income segments of the various markets in which the Partnership operated.
The Communities were located primarily throughout the State of Florida,
with Communities also located near Atlanta, Georgia and Highlands, North
Carolina. In addition, the Partnership, directly or through certain
subsidiaries, has provided development and management services to the
homeowners associations within the Communities.

The Partnership has completed construction and closed on the sale of
all remaining housing units to be built by the Partnership. The
Partnership's remaining assets include, in addition to its cash and cash
equivalents, tangible personal property including vehicles and furniture,
fixtures and equipment used in the Partnership's operations, receivables,
and certain contract rights, including an interest in a joint venture that
owns a 2.5 acre commercial parcel in Ocala, Florida. The Partnership
expects to sell all of its remaining tangible saleable assets in 2004.
However, there can be no assurance this sale will take place.

During 2003 the Partnership closed on the sale of 128 townhomes in the
Partnership's Weston Community, which were the last remaining housing units
to be built by the Partnership. During 2003 the Partnership also sold The
Shoppes of Town Center (the "Shoppes"), a mixed-use retail/office plaza
consisting of approximately 158,000 net leasable square feet in Weston, a
land parcel adjacent to the Shoppes, two commercial office building units
in Weston, a small land parcel in Boca Raton, Florida and two small land
parcels located in the City of Weston, Florida, each containing a billboard
monument sign.

In 1996 the Partnership obtained, or caused to be obtained, certain
permits from the United States Army Corps of Engineers (the "Corps"), the
Florida Department of Environmental Protection ("FDEP") and the Broward
County Department of Natural Resource Protection ("BCDNRP") in connection
with the Partnership's development of approximately 1,166 acres in
Increment III of the Weston Community, certain portions of which were
environmentally sensitive and had been subject to protection as wetlands.
The Partnership was named as a co-permittee along with the Indian Trace
Development District (the predecessor to the City of Weston) on the permits

issued by the Corps and BCDNRP, with the Indian Trace Development District
named as sole permittee on the permit issued by FDEP. In order to obtain
these permits, the Partnership developed a plan for mitigation of
approximately 1,553 other acres of wetlands. The mitigation plan requires
improvement of the function and value of the wetlands, including
development of refuge habitat areas, and ongoing maintenance and monitoring
of the same. In general, the permits require, among other things, the
achievement in each of three consecutive years of specific amounts of
wetlands functional value credits in the five parcels included in the
mitigation area. Under an agreement entered into with the City of Weston
(as the successor to the Indian Trace Development District, the original
party to the agreement), in general, the Partnership contributed the land
for the mitigation area and has been providing the technical expertise
necessary to obtain the permits and implement their conditions to achieve
the specified wetlands functional value credits for the mitigation area.
The City of Weston has agreed to pay development costs and assume perpetual
maintenance of the mitigation area.

During at least the 18 consecutive months ending in the Fall 2003, the
most recent period for which information has been compiled, each of the
five parcels in the mitigation area has achieved wetlands functional value
credits equal to or in excess of the required amount for such parcel.
(During the 12 months (the "Spring 2002 Period") preceding this 18-month
period, the five parcels collectively, and most, but not all, of the five
parcels individually, achieved wetlands functional value credits equal to
or in excess of the required amounts.) The Partnership currently expects
that the mitigation area (including each of its parcels) will achieve the
requisite wetland functional value credits for the three consecutive years
ending in the Spring 2005. In addition, the Partnership may seek a waiver
under each of the permits determining that the substantial compliance
during the Spring 2002 Period satisfies the requirements for that annual
period under the permits and obtain a determination that the three-year
period ending Spring 2004 satisfies the permit requirements for achievement
of the wetland functional value credits. In either event, the Partnership
expects to seek a termination of its involvement under the permits and the
mitigation area through an acknowledgment of the Partnership's release by
the Corps and BCDNRP under their respective permits and an acknowledgment
by the City of Weston of its responsibility for perpetual maintenance of
the mitigation area. The Partnership does not expect that the cost to
achieve the remaining wetlands functional value credits and satisfy other
requirements under the Corps and BCDNRP permits will be a material expense
to the Partnership. However, there is no assurance in regard to the timing
of the Partnership's release under the Corps and BCDNRP permits, including
whether the mitigation area will achieve the requisite wetlands functional
value credits for the three-year period ending in the Spring 2005 (or
whether the Partnership will be able to obtain a waiver for the Spring 2002
Period and have the three-year period ending Spring 2004 satisfy the permit
requirements). In addition, there is no assurance in regard to the timing
or possible expense that may be involved in obtaining an acknowledgment by
the City of Weston of its obligation for the perpetual maintenance of the
mitigation area.

Pursuant to a management agreement with the Partnership, through
December 31, 1997, Arvida Company ("Arvida"), an affiliate of the General
Partner, provided development and management supervisory and advisory
services and the personnel therefor to the Partnership for all of its
projects and operations, subject, in each case, to the overall control of
the General Partner on behalf of the Partnership. Arvida entered into a
sub-management agreement with St. Joe/Arvida Company, LP ("St.
Joe/Arvida"), effective January 1, 1998, whereby St. Joe/Arvida provides
(and is reimbursed for) a substantial portion of the development and
management supervisory and advisory services (and personnel with respect
thereto) to the Partnership that Arvida would have otherwise provided
pursuant to its management agreement with the Partnership. Effective

January 1, 1998, St. Joe/Arvida employed most of the same personnel
previously employed by Arvida, and the services provided to the Partnership
pursuant to the sub-management agreement generally have been provided by
the same personnel. Affiliates of JMB Realty Corporation owned a minority
interest in St. Joe/Arvida until July 2003, when they sold their minority
interest to an affiliate of the St. Joe Company. Such sale did not involve
the sale of any assets of the Partnership, the sale of the General
Partner's interest in the Partnership, nor a change in the submanagement
agreement for the services provided to the Partnership by St. Joe/Arvida.

The business of the Partnership has been cyclical in nature and
certain aspects of the development of Community projects were to some
degree seasonal. Such seasonality did not have a material impact on its
business. A presentation of information about industry segments,
geographic regions or raw materials is not applicable and would not be
material to an understanding of the Partnership's business taken as a
whole.

In developing the infrastructure and amenities of its Communities and
building its own housing products, the Partnership generally has functioned
as a general contractor. The Partnership generally followed the practice
of hiring subcontractors, architects, engineers and other professionals on
a project-by-project basis rather than maintaining in-house capabilities,
principally to be able to select the subcontractors and consultants it
believed were most suitable for a particular development project and to
control fixed overhead costs. The Partnership has not been faced with any
significant material or labor shortages.

The Partnership's real properties were subject to competition from
similar types of properties in the vicinities in which they are located,
including properties owned, advised or managed by affiliates of the General
Partner. The Partnership's principal markets have been in Florida,
particularly in or near Jacksonville, Tampa, Longboat Key, Boca Raton and
Broward County, Florida and, to a lesser extent, in or near Atlanta,
Georgia and the Highlands, North Carolina. In general, the Partnership has
competed with other real estate projects primarily on the basis of the
location and quality of its real estate developments and, in the case of
its Community developments, the type and quality of its amenities. The
Partnership has no real estate assets located outside of the United States.

At March 1, 2004, the Partnership had 7 employees as compared to 80
employees at March 1, 2003. The reduction in employees is consistent with
the orderly liquidation of the Partnership's remaining assets currently in
process.

The Partnership currently owns no patents, trademarks, licenses or
franchises other than those trademarks and tradenames in respect of the
names of certain of its Communities. The Arvida name and the service marks
with respect to the Arvida name were owned by Arvida, subject to the
Partnership's non-exclusive right to use the Arvida name and service marks
under a license agreement with Arvida (and subject to the non-exclusive
rights of certain third parties to the use of the name). St. Joe/Arvida
owns the Arvida name and service marks with respect to the Arvida name.
The Partnership has a license agreement with St. Joe/Arvida to use the
Arvida name.

The terms of transactions between the Partnership and the General
Partner and its affiliates are set forth in Items 11 and 13 filed with this
annual report to which reference is hereby made for a description of such
terms and transactions.

ITEM 2. PROPERTIES

The Partnership has completed construction and closed on the sale of
all remaining housing units to be built by the Partnership and has sold or
otherwise disposed of virtually all of its other real estate assets.
Through a joint venture, the Partnership owns a 2.5 acre commercial parcel
in Ocala Florida. A visitor information center is located on the property,
which is leased to an unaffiliated third party. The Partnership is
currently in discussions to sell its ownership interest in this joint
venture to its joint venture partner in 2004. However, there can be no
assurance this sale will take place.

ITEM 3. LEGAL PROCEEDINGS

The Partnership has been named a defendant in a purported class action
entitled Lakes of the Meadow Village Homes Condominium Nos. One, Two,
Three, Four, Five, Six, Seven, Eight and Nine Maintenance Associations,
Inc., v. Arvida/JMB Partners, L.P. and Walt Disney World Company, Case No.
95-23003-CA-08, filed in the Circuit Court of the Eleventh Judicial Circuit
in and for Miami-Dade County, Florida. The original complaint was filed on
or about November 27, 1995 and an amended complaint, which purports to be a
class action, was filed on or about February 28, 1997. In the amended
complaint, plaintiffs have sought unspecified damages, attorneys' fees and
costs, recission of specified releases, and all other relief that
plaintiffs may be entitled to at equity or at law on behalf of the 460
building units they allegedly represent for, among other things, alleged
damages discovered in the course of making Hurricane Andrew repairs.
Plaintiffs have alleged that Walt Disney World Company is responsible for
liabilities that may arise in connection with approximately 80% of the
buildings at the Lakes of the Meadow Village Homes and that the Partnership
is potentially liable for the approximately 20% remaining amount of the
buildings. In the three count amended complaint, plaintiffs allege breach
of building codes and breach of implied warranties. In addition,
plaintiffs seek recission and cancellation of various general releases
obtained by the Partnership allegedly in the course of the turnover of the
Community to the residents. Plaintiffs have indicated that they may seek
to hold the Partnership responsible for the entire amount of alleged
damages owing as a result of the alleged deficiencies existing throughout
the entire development. The Partnership has tendered this matter to The
Walt Disney Company (n/k/a Disney Enterprises, Inc., "Disney") pursuant to
the Partnership's indemnification rights and has filed a third-party
complaint against it pursuant to the Partnership's rights of contractual
indemnity. The Partnership has also answered the amended complaint and has
filed a cross-claim against Disney's affiliate, Walt Disney World Company,
for common law indemnity and contribution. The discovery cut-off in this
litigation has expired; however, discovery is ongoing but proceeding to
conclusion. No trial date has been set. This case is subject to pending
settlements discussed below. The Partnership is currently being defended
by counsel paid for by U.S. Fire as well as additional counsel engaged by
the Partnership.

In a matter related to the Lakes of the Meadow development, the Miami-
Dade County Building Department ("Building Department") retained the
services of an engineering firm, All State Engineering, to inspect the
condominiums that are the subject of the lawsuit. On February 27, 2002,
the Building Department apparently advised condominium owners throughout
the development that it found serious life-safety building code violations
in the original construction of the structures and on May 29, 2002, issued
notices of violation under the South Florida Building Code. The
condominium owners were further advised that the notices of violation would
require affirmative action on their part to respond to the notices through
administrative proceedings and/or by addressing the alleged deficiencies.

On August 8, 2002, the Partnership attended a mediation with
representatives of Lakes of the Meadow Village Homes Condominium Nos. One
through Seven and Nine Maintenance Associations (collectively, "Association
Nos. 1-7 and 9"). As a result of this and subsequent mediation sessions
and other discussions among the parties, and without admitting any
liability, the Partnership has entered into an agreement with Association
Nos. 1-7 and 9 and their members for a settlement that received preliminary
approval of the Court on February 12, 2004. A final hearing on the
fairness, reasonableness and adequacy of the settlement is scheduled to be
held on April 30, 2004. The settlement agreement provides, among other
things, for a release by Association Nos. 1-7 and 9 and their members of
all manner of actions, claims and damages arising out of or relating to the
subject matters of the lawsuit; any order of the Miami-Dade County, Florida
Unsafe Structures Board relating to the units in the condominiums of
Association Nos. 1-7 and 9; any remediation action undertaken in regard to
those units; the failure of any of Association Nos. 1-7 and 9 to undertake
appropriate or timely remediation; or the past, present or future
governance of Association Nos. 1-7 and 9. Under the terms of the
settlement agreement, the claims of Association Nos. 1-7 and 9 and their
members would be dismissed, each side bearing its own fees and costs. The
Partnership would pay $5.5 million to Association Nos. 1-7 and 9 as part of
the settlement. The Partnership would reserve its right to pursue claims
for indemnity or contribution against The Walt Disney Company or its
affiliates in connection with the condominium units that were constructed
in whole or in part prior to September 10, 1987 (the date that the
Partnership acquired the assets of Arvida Corporation from The Walt Disney
Company) but were sold by the Partnership on or after that date.
Completion of the settlement is subject to the satisfaction of certain
conditions, including an order by the Court of final approval of the
settlement, with no reversal or material modification of such final
approval order on an appeal, if any, taken from such order. There is no
assurance that the settlement will receive final approval of the Court or
that all other conditions for its completion will be satisfied. If the
settlement is not completed, the litigation brought by Association Nos. 1-7
and 9 against the Partnership may continue.

During 2001, the Partnership settled the claims brought in the lawsuit
by Lakes of the Meadow Village Homes Condominium No. Eight Maintenance
Association, Inc. ("Association No. 8") for a payment of $155,000 funded by
U.S. Fire. Representatives of the Partnership have discussed with
representatives of Association No. 8 issues raised by the Building
Department's notices of violations for that Association's condominium
units. Association No. 8 submitted construction plans to address the
issues raised by the Building Department notices of violations and comments
received by the plan reviewers for that Association's units. On February 7,
2003, Association No. 8 received permits approving its plans for most of
its condominium units and is in the process of engaging a general
contractor for the work. Association No. 8 asked the Partnership to pay
the cost to remediate the units in its condominium. On March 9, 2004, the
Partnership entered into a separate settlement agreement with Association
No. 8 and its members. Under the terms of that settlement agreement, the
Partnership would pay $1,385,000 in exchange for a release of all of the
claims of Association No. 8 and its members. On March 15, 2004, the Court
entered an order dismissing the claims of Association No. 8 and its members
in the lawsuit. That order is subject to appeal for 30 days after its date
of entry. Completion of the settlement with Association No. 8 and its
members is subject to the satisfaction of certain conditions, including no
reversal or material modification of the Court's order dismissing the
claims of Association No. 8 and its members on appeal, if any, taken from
such order. There is no assurance that all conditions for completion of
the settlement with Association No. 8 and its members will be satisfied.
The Partnership intends to pursue claims for indemnity or contribution
against The Walt Disney Company or its affiliates in connection with the
units in the condominium of Association No. 8 that were constructed in
whole or in part prior to September 10, 1987 but were sold by the
Partnership on or after that date.

The Partnership has applied the accounting rules concerning loss
contingencies in regard to the treatment of this matter for financial
reporting purposes.

The Partnership is seeking payment or reimbursement of all or most of
the foregoing settlement amounts from U.S. Fire and an excess insurance
carrier. On August 9, 2002, the Partnership received a reservation of
rights letter from U.S. Fire, by which it purports to limit its exposure
with regard to the Lakes of the Meadow matter and to reserve its rights to
deny coverage and/or defense under the policy and/or applicable law and
with respect to defense costs incurred or to be incurred in the future, to
be reimbursed and/or obtain an allocation of attorney's fees and expenses
if it is determined there is no coverage.

As a result of, among other things, this reservation of rights letter
on November 20, 2002, the Partnership filed a four count complaint,
Arvida/JMB Managers, Inc. on behalf of Arvida/JMB Partners, L.P. v. United
States Fire Insurance Company in the Circuit Court of Cook County,
Illinois, Chancery Division, 02CH21001, for declaratory relief and damages
("Illinois action"). In the complaint, the Partnership seeks, among other
things, a declaration that U.S. Fire is obligated to indemnify the
Partnership for the Lakes of the Meadow litigation including amounts
expended and to be expended in connection with the complete resolution of
the construction issues for Association No. 8 (hereinafter, the "Lakes of
the Meadow Matter"); actual damages, including full indemnification for the
Lakes of the Meadow Matter; such other direct and consequential damages as
are proven at trial; prejudgment interest as permitted by law; and any
other legal and equitable relief that the court deems just and proper under
the circumstances.

In a December 20, 2002 letter, the Partnership's excess insurance
carrier, The Home Insurance Company (the "Home"), and its agent, Risk
Enterprise Management Limited ("REM"), advised the Partnership of Home's
position that the Home policy provides coverage for the Lakes of the Meadow
Matter only in the event that the U.S. Fire policy provides coverage and
that U.S. Fire pays the limits under its policy. Given Home's position,
the Partnership amended its Illinois action to add Home and REM as
defendants in order to obtain, among other things, a declaration that Home
is obligated to defend and indemnify the Partnership for the Lakes of the
Meadow Matter; actual damages; such other direct and consequential damages
as proven at trial; prejudgment interest; and any other legal and equitable
relief that the court deems just and proper under the circumstances.

In a separate proceeding on March 5, 2003, a superior court judge for
the State of New Hampshire entered an order placing Home under an order of
rehabilitation in order to preserve and protect the interests and assets of
Home. Subsequently, the court overseeing the rehabilitation issued an
order to liquidate Home. The order provides, among other things, for the
appointment of a liquidator, the cancellation of all in-force contracts of
insurance, the securing of all of Home's assets, the abatement of all
actions and all proceedings against Home, whether pending in the State of
New Hampshire or elsewhere, and an injunction against the commencement or
continuance of actions against Home. The Partnership is evaluating the
effect, if any, that this order may have on the continued prosecution of
the Illinois action as well as the existence of coverage provided by Home,
generally. Given the pending liquidation, the Partnership believes that it
is doubtful that any substantial recoveries from Home will be obtained.

The Partnership strongly disagrees with the positions taken by U.S.
Fire and Home regarding coverage under the relevant insurance policies and
believes that it is covered under the terms of those policies. However,
for reasons cited above, and others, the Partnership can give no assurances
as to the ultimate portion of the expenses, fees, settlement amounts and/or
damages allegedly relating to the Lakes of the Meadow Matter, if any, which
will be covered by its insurance.

The Partnership, the General Partner and certain related parties as
well as other unrelated parties have been named defendants in an action
entitled Rothal v. Arvida/JMB Partners Ltd. et al, Case No. 03010709, filed
in the Circuit Court of the 17th Judicial Circuit in and for Broward
County, Florida. In this suit that was filed on or about June 20, 2003,
plaintiff purports to bring a class action allegedly arising out of
construction defects occurring during the development of Camellia Island in
Weston, which has approximately 150 homes. Plaintiff has filed a fourteen
count complaint seeking unspecified general damages, special damages,
statutory damages, prejudgment and post-judgment interest, costs,
attorneys' fees, and such other relief as the court may deem just and
proper. Plaintiff complains, among other things, that the homes were not
built of high quality and adequate construction, that the homes were not
built in conformity with the South Florida Building Code and plans on file
with Broward County, Florida, that the roofs were not properly attached or
were inadequate, that the truss systems and installation were improper, and
that the homes suffer from improper shutter storm protection systems. The
Arvida defendants believe that they have meritorious defenses and intend to
vigorously defend themselves. Due to, among other things, the early stage
of the litigation, the Partnership has not determined what, if any, loss
exposure that it may have for this matter, and the accompanying
consolidated financial statements do not reflect any accruals related to
this matter. This case has been tendered to one of the Partnership's
insurance carriers, Zurich American Insurance Company (together with its
affiliates collectively, "Zurich"), for defense and indemnity. Zurich is
providing a defense of this matter under a reservation of rights. The
Partnership is unable to determine the ultimate portion of the expenses,
fees and damages, if any, which will be covered by its insurance.

The following three lawsuits in large part allegedly arise out of
landscaping issues at certain subdivisions in the Weston Community. These
lawsuits are collectively referred to as the "landscape cases."

The Partnership has been named a defendant in a lawsuit entitled, The
Ridges Maintenance Association, Inc. v. Arvida/JMB Partners, Arvida/JMB
Managers, Inc., Arvida Management Limited Partnership, and CCL Consultants,
Inc., Case No. 0310189 (the "Ridges Case"), filed on or about June 6, 2003
in the Circuit Court of the 17th Judicial Circuit in and for Broward
County, Florida. Plaintiff is alleged to be a homeowners' association
representing the owners of approximately 1,500 homes and extensive common
areas in the Ridges subdivision in Weston. In this six count complaint for
breach of implied warranty of merchantability, breach of implied warranty
of fitness, breach of express warranty, fraudulent misrepresentation and
concealment, negligent design, construction and/or maintenance and breach
of fiduciary duty, plaintiff seeks an unspecified dollar amount of
compensatory damages, interest, court costs and such other relief as the
court may deem just and proper. Plaintiff alleges that it evaluated the
condition of the common areas after the turnover of the community in
January 2000 and discovered numerous construction, design and maintenance
defects and deficiencies including, but not limited to, improper planting
of inferior quality/grade of landscaping contrary to prevailing government
codes, shallow planting of landscaping, landscape planting in inappropriate
areas, and the planting of landscaping that would uproot sidewalks.
Plaintiff also alleges that prior to the turnover of the community, the
Arvida defendants engaged in a series of actions that amounted to a breach
of their fiduciary duties to plaintiff by, among other things, improperly
failing to pay for all of the common expenses actually incurred prior to
turnover in excess of the assessment for common expenses and any other
funds including working capital, executing pre-turnover amendments to the
declarations of the association for the Arvida defendants' sole benefit and
to the financial detriment of the plaintiff, engaging in acts which
constituted a conflict of interest, and allegedly improperly transferring
funds by and between plaintiff and a non-party, The Town Foundation, Inc.,
which was also allegedly under the control of one or more of the Arvida
defendants, all in breach of defendants' alleged fiduciary duties. The
Arvida defendants believe that they have meritorious defenses and intend to
vigorously defend themselves.

The Partnership has been named a defendant in a case entitled The
Falls Maintenance Association, Inc. v. Arvida/JMB Partners, Arvida/JMB
Managers, Inc., CCL Consultants, Inc. and Stiles Corporation f/k/a Stiles
Landscape Service Co., Case No. 0302577 (the "Falls Maintenance Case"),
filed on or about February 10, 2003, in the 17th Judicial Circuit in and
for Broward County, Florida. Plaintiff is alleged to be the homeowners'
association responsible for the maintenance, repair, and replacement of the
common areas within the Falls subdivision in Weston. Plaintiff complains
that on turnover of the Falls subdivision, it discovered numerous
construction, design and maintenance defects and deficiencies including,
but not limited to, the quality/grade of the landscaping, landscaping
planted too shallow, landscaping planted too deep, landscaping planted in
narrow swale areas, landscaping planted in shallow soil areas, poor
fertility of road rock under locations where landscaping is planted and
poor maintenance. Plaintiff has filed a six count complaint with five
counts against the Partnership for breach of implied warranty of
merchantability, breach of implied warranty of fitness, breach of express
warranty, fraudulent misrepresentation/concealment, and negligent design,
construction and/or maintenance. Plaintiff seeks an unspecified amount of
compensatory damages, interest, costs, and such other and further relief as
is just and equitable. The Arvida defendants believe that they have
meritorious defenses and intend to vigorously defend themselves.

On October 22, 2003, a case entitled Weston Lakes Maintenance
Association v. Arvida/JMB Partners and Arvida/JMB Managers, Inc., Case No.
0318490, was filed in the Circuit Court of the Seventeenth Judicial Circuit
in and for Broward County, Florida Civil Division. In the four-count
complaint, which was served on the Partnership in February 2004, plaintiff,
Weston Lakes Maintenance Association, alleges that defendants negligently
selected and installed inferior landscaping materials in the common areas
and elements of the Weston Lakes subdivision. Plaintiff alleges that
defendants' actions have caused higher than expected maintenance fees and
that the landscaping is causing injury and damage to sidewalks and roadways
that must be repaired or replaced. Plaintiff alleges that an unspecified
large sum of money will be required to replace the alleged substandard
landscaping and that significant expense for remedial maintenance, repair
and replacement of elements throughout the community will be incurred. The
four-count complaint is for negligent construction and design of
landscaping allegedly based on a violation of a Broward County ordinance
regarding plant materials, common law negligence, breach of implied
warranty of fitness, and breach of implied warranty of merchantability.
Plaintiff seeks a judgment in an unspecified amount and type of damages,
attorney's fees and such other relief as the court may deem proper.
Defendants believe they have meritorious defenses and intend to vigorously
defend themselves. The case is in its preliminary stages.

Due to, among other things, the early stages of litigation, the
Partnership has not determined what, if any, loss exposure that it may have
for the landscape cases, and the accompanying consolidated financial
statements do not reflect any accruals related to the landscape cases.
Each of the landscape cases has been tendered to Zurich for defense and
indemnity. Zurich is providing a defense of each of the landscape cases.
Zurich has issued letters purporting to reserve its rights in the Ridges
and Falls Maintenance Cases. The Partnership is unable to determine the
ultimate portion of the expenses, fees and damages allegedly relating to
the landscape cases, if any, which will be covered by its insurance.

Other than as described above, the Partnership is not subject to any
material legal proceedings, other than ordinary routine litigation
incidental to the business of the Partnership.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of security holders during
the fourth quarter of 2003.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED SECURITY
HOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

As of January 1, 2004, there were 16,137 record holders of the 404,000
Interests outstanding in the Partnership. There is no public market for
Interests, and it is not anticipated that a public market for Interests
will develop. Consequently, a Holder may not be able to readily sell his
Interests and may not be able to obtain a price that reflects the full
value of the underlying assets. Upon request, the General Partner may
provide information relating to a prospective transfer of Interests to an
investor desiring to transfer his Interests. The price to be paid for the
Interests, as well as any other economic aspects of the transaction, will
be subject to negotiation by the investor. However, there are restrictions
governing the transferability of these Interests set forth in the
Partnership Agreement and the Assignment Agreement. In addition, no
transfer will be effective until the first day of the next succeeding
calendar quarter after the requisite transfer form satisfactory to the
General Partner has been received by the General Partner. The transferee
consequently will not be entitled to receive any cash distributions or any
allocable share of profits or losses for tax purposes until such next
succeeding calendar quarter. Profits or losses of the Partnership for a
calendar year in which a transfer occurs will, to the extent permitted by
law, be allocated between the transferor and the transferee based upon the
number of quarterly periods for which each was recognized as the Holder of
the Interests, without regard to the results of the Partnership's
operations during particular quarterly periods and without regard to
whether cash distributions were made to the transferor or transferee. Cash
distributions to a Holder of Interests will be distributed to the person
recognized as the Holder of the Interests as of the last day of the
quarterly period preceding the quarter in which such distribution is made.

Reference is made to Item 6. Selected Financial Data for a discussion
of cash distributions made to the Holders of Interests. For a description
of the provisions of the Partnership Agreement relating to cash
distributions, see Note 12.

Reference is made to Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations for a discussion of the
Partnership's retention of cash reserves to pay or resolve obligations and
liabilities of, and claims asserted against, the Partnership and possible
future cash distribution(s).

ITEM 6. SELECTED FINANCIAL DATA

ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

DECEMBER 31, 2003, 2002, 2001, 2000 AND 1999

(NOT COVERED BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT'S REPORT)

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

LIQUIDITY AND CAPITAL RESOURCES

This report, including this Management's Discussion and Analysis of
Financial Condition and Results of Operations, contains forward-looking
statements. Words like "believes," "expects," "anticipates," "likely" and
similar expressions used in this report are intended to identify forward-
looking statements. These forward-looking statements give the
Partnership's current estimates or expectations of future events,
circumstances or results, including statements concerning possible future
distributions and the amount of time and money that may be involved in
completing the liquidation, winding up and termination of the Partnership
(or, if applicable, a Liquidating Trust as a successor to the Partnership).

Any forward-looking statements made in this report are based upon the
Partnership's understanding of facts and circumstances as they exist on the
date of this report, and therefore such statements speak only as of that
date. In addition, the forward-looking statements contained in this report
are subject to risks, uncertainties and other factors that may cause the
actual events or circumstances, or the results or performances of the
Partnership, to be materially different from those estimated or expected,
expressly or implicitly, in the forward-looking statements. In particular,
but without limitation, the accuracy of statements concerning possible
future distributions to the Holders of Interests or the timing or costs
associated with completion of a liquidation, winding up and termination may
be adversely affected by, among other things, various factors discussed
below.

Pursuant to Section 5.5J of the Partnership Agreement, on October 23,
1997, the Board of Directors of the General Partner met and approved a
resolution selecting the option set forth in Section 5.5J(i)(c) of the
Partnership Agreement for the Partnership to commence an orderly
liquidation of its remaining assets that was to be completed by October
2002. In November 2002 the Holders of a majority of the outstanding
Interests gave their consent to an amendment (the "Amendment") to the
Partnership Agreement providing for an extension of the term of the
Partnership's liquidation period to not later than October 31, 2005.
Accordingly, the term of the Partnership's liquidation period has been
extended.

In addition, under the terms of the Amendment, the General Partner is
authorized in its sole discretion, to complete the termination of the
Partnership by forming a Liquidating Trust. The remaining Partnership
assets would be contributed to the Liquidating Trust subject to all
outstanding obligations and liabilities of the Partnership. Subsequently,
after liquidating any remaining non-cash assets and providing for the
payment or satisfaction of all such obligations and liabilities, the
trustee(s) of the Liquidating Trust would distribute any remaining proceeds
to the General Partner, Associate Limited Partners and Holders of Interests
in proportion to their respective interests in the Liquidating Trust. The
General Partner has not yet determined whether or when to form the
Liquidating Trust.

Pending the completion of the liquidation, winding up and termination
of the Partnership (or if applicable, the Liquidating Trust), it is
anticipated that the Partnership (or the Liquidating Trust, as the case may
be) will retain a substantial amount of funds in reserve to provide for the
payment of, the defense against, or other satisfaction or resolution of
obligations, liabilities (including contingent liabilities) and current and
possible future claims, including those for possible construction repairs,
homeowner warranty claims, completion of work for certain homeowner
associations and master associations and pending and possible future
litigation and environmental matters. The amount of funds to be retained
in reserve for these purposes has not yet been determined. However, the
Partnership intends to take a cautious approach in determining the amount
of funds to be retained in reserve since it is not possible to estimate
with preciseness the amount of time or money that it will take to effect
the Partnership's (or, if applicable, the Liquidating Trust's) liquidation,
winding up and termination. The Partnership currently expects that those
available funds in excess of the amount determined to be held in reserve
would be distributed during 2004 and 2005 to the partners and Holders of
Interests. That portion, if any, of the funds held in reserve that are not
ultimately used to pay, defend or otherwise resolve or satisfy obligations,
liabilities or claims would subsequently be distributed to the partners and
Holders of Interests as a final liquidating distribution at a later date.

Various factors may affect the timing of completing the liquidation,
winding up and termination of the Partnership (and, if applicable, the
Liquidating Trust) and the amount of a final liquidating distribution of
funds, if any, out of those retained in reserve. These factors include the
time and expense to resolve all obligations, liabilities and claims,
including contingent liabilities and claims that are not yet asserted but
may be made in the future. Among other things, additional or unanticipated
remedial construction or development costs, contingencies (including,
without limitation, contingencies relating to potential homeowner warranty
or other homeowner or homeowners' association claims), delays in resolving
pending or threatened litigation or other asserted claims, delays in
satisfying conditions or obligations under permits obtained by the
Partnership, including those for mitigation for the Weston Increment III
area, a delay in obtaining an acknowledgement from the City of Weston of
its responsibility for maintenance of the Weston Increment III mitigation
area, currently unasserted claims that arise in the future and other
factors could require increases in reserves and a reduction in future
distributions to Holders of Interests and could extend the time, and
significantly increase the cost, to complete the liquidation, winding up
and termination.

At December 31, 2003, 2002 and 2001, the Partnership had unrestricted
cash and cash equivalents of approximately $65,450,000, $88,969,000 and
$124,357,000, respectively. At February 29, 2004, the Partnership had
unrestricted cash and cash equivalents of approximately $64,604,000. Cash
and cash equivalents are available for remaining operations (including
warranty work), costs of winding up, reserves and distributions to partners
and Holders of Interests. The source of both short-term and long-term
future liquidity is expected to be derived from cash on hand since the
Partnership has no continuing business operations.

At December 31, 2003, the Partnership was contingently liable under
certain performance bonds for approximately $8,018,000. During the first
quarter of 2004 approximately $4,451,000 of such performance bonds were
released and returned to the Partnership. The Partnership has
substantially completed the work for which the remaining performance bonds
have been posted and expects these bonds to be released and returned.

At December 31, 2003, the Partnership had the known contractual
obligations set forth in the following table:

Payments Due by Period
---------------------------------------------
Less More
Contractual Than 1-3 3-5 Than
Obligations Total 1 Year Years Years 5 years
- ----------- --------- -------- ------- ------- -------

Long-term debt
obligations. . . . . . . --
Capital lease
obligations. . . . . . . --
Operating lease
obligations. . . . . . . 1,206,600 426,900 376,400 403,300 --
Purchase obligations . . . --
Other long-term
liabilities reflected
on the Partnership's
balance sheet under
GAAP. . . . . . . . . . . --
--------- ------- ------- ------- ------
Total. . . . . . . . . 1,206,600 426,900 376,400 403,300 --
========= ======= ======= ======= ======

The largest remaining operating lease is the lease of office space in
Boca Raton, Florida. As of January 1, 2004, the Partnership assigned its
rights and obligations in the office lease to St. Joe/Arvida. The total
contractual obligations without the office space noted above is $108,900,
with only $17,700 in the 1-3 year category and the remaining amount in the
less than 1 year category. Reference is made to note 8 of the financial
statements for further discussion of the relationship between the
Partnership and St. Joe/Arvida.

The Partnership has completed construction and closed on the sale of
all remaining housing units to be built by the Partnership. The
Partnership's remaining assets include, in addition to its cash and cash
equivalents, tangible personal property including vehicles and furniture,
fixtures and equipment used in the Partnership's operations, receivables,
and certain contract rights, including an interest in a joint venture that
owns a 2.5 acre parcel in Ocala, Florida. The Partnership expects to sell
all of its remaining tangible saleable assets in 2004, however, there can
be no assurance these assets will be sold.

During each of the preceding five years in the period ended December
31, 2002, the Partnership was able to generate significant cash flow before
debt service. The Partnership utilized this cash flow to pay off its term
loan and finance its operations, make distributions to its partners and
Holders of Interests, and establish certain cash reserves. During December
2003, the Partnership made a distribution of $20,200,000 to its Holder of
Interest ($50 per Interest) and $2,244,444 to its General Partner and
Associate Limited Partners, collectively. During February 2003, the
Partnership made a distribution for 2002 of $20,200,000 to its Holders of
Interest ($50 per Interest) and $2,244,444 to its General Partner and
Associate Limited Partners, collectively. During 2002, the Partnership
made aggregate distributions of approximately $151,500,000 to its Holders
of Interests (approximately $375 per Interest) and approximately
$16,833,000 to the General Partner and Associate Limited Partners,
collectively. During 2001, the Partnership made aggregate distributions of
approximately $80,800,000 to its Holders of Interests (approximately $200
per Interest) and approximately $8,978,000 to its General Partner and
Associate Limited Partners, collectively.

Included in Accrued expenses and other liabilities on the accompanying
consolidated balance sheets at December 31, 2003 and 2002, is an accrual of
approximately $7.6 million relating to certain contingent liabilities for
litigation involving the Lakes of the Meadow Village Homes condominiums.
In the first quarter of 2004 the Partnership entered into two separate
agreements to settle the claims of the condominium associations and their
members that are the plaintiffs in this litigation for aggregate payments
of approximately $6.9 million. Completion of each of these settlements,
which would occur no earlier than the second quarter of 2004, is subject to
the satisfaction of certain conditions, and there is no assurance that
either of these settlements will be completed. The Partnership is seeking
to recover from its insurance carriers all or most of the amounts the
Partnership would have to pay for the settlements and has initiated a
lawsuit against them for this purpose. Reference is made to Item 3, Legal
Proceedings elsewhere in this report for further information concerning the
Partnership's insurance and the Lakes of the Meadow Matter. There is no
assurance regarding what amount, if any, will be covered by the
Partnership's insurance.

At December 31, 2003, the Partnership recorded an asset impairment of
$523,721 to the carrying value of the furniture and equipment remaining at
its corporate office in Boca Raton, Florida. This loss was determined
based upon an analysis by an unaffiliated appraiser and recorded based upon
the difference between the carrying value of the assets as compared to
their appraised fair value.

On December 8, 2003, the Partnership, through certain consolidated
entities, closed on the sale of two small land parcels each containing a
billboard monument sign located in the City of Weston to an unaffiliated
third party. The gross sales price of the land parcel was $1,750,000. Net
cash proceeds received from the sale after proration, closing costs and
other expenses totaled approximately $1,306,000. The sale resulted in a
gain of $1,306,000 for financial reporting purposes and federal income tax
purposes.

On September 12, 2003, the Partnership, through certain consolidated
entities, closed on the sale of a land parcel in Boca Raton to an
unaffiliated third party. The gross sales price of the land parcel was
$231,118. There were no related costs associated with the sale of this
parcel resulting in net cash proceeds from the sale of $231,118, and a gain
of $231,118 for financial reporting purposes and for Federal income tax
purposes.

On May 23, 2003, the Partnership, through certain consolidated
entities, closed on the sale of a land parcel adjacent to the Shoppes
("Town Center Parcel") and on the sale of two commercial office building
units in Weston. The gross sale price of the Town Center Parcel was
$1,200,000. Net cash proceeds received from the sale after prorations and
closing costs totaled approximately $982,000. The sale resulted in a gain
of approximately $354,000 for financial reporting purposes and Federal
income tax purposes. The gross sales price of the two commercial office
building units was $348,000. Net cash proceeds received from the sale
after proration and closing costs totaled approximately $312,000. The sale
resulted in a loss of approximately $177,000 for financial reporting
purposes and Federal income tax purposes.

On February 7, 2003, the Partnership through certain consolidated
entities, closed on the sale of The Shoppes of Town Center (the "Shoppes").

The gross sale price for the Shoppes was $34,330,000. Net cash proceeds
received from the sale, after prorations, credits, closing costs, amounts
escrowed and the settlement of the outstanding loan balance totaled
approximately $18,198,000. The outstanding principal and interest on the
mortgage loan secured by the property was approximately $13,848,000.
Proceeds of the mortgage loan had been used to pay construction and
development costs for the Shoppes. The net book value and net cash
proceeds received from the sale represented approximately 22% and 13%,
respectively, of the Partnership's total consolidated assets for financial
reporting purposes at December 31, 2002. The sale resulted in a gain of
approximately $1,990,000 for financial reporting purposes and a gain of
approximately $2,460,000 for Federal income tax purposes.

In December 2002, the Partnership, through certain consolidated
entities, closed on the sale of the Ocala Parcel and on the sale of the
Waterways II Parcel. The gross sale price of the Ocala Parcel was
$1,400,000. Net cash proceeds received from the sale, after prorations and
closing costs totaled approximately $1,266,000. The sale resulted in a
loss of approximately $380,000 for financial reporting purposes and a loss
of approximately $2,610,000 for Federal income tax purposes. The
Partnership was constructing a shopping center on the Waterways II Parcel
at the time of its sale which was not completed. Under the terms of the
agreement, the seller assigned to the buyer the seller's rights and
obligations under the construction contract and the plans and
specifications for construction, as well as an agreement for parking. The
gross sale price of the Waterways II Parcel was $5,151,000. Net cash
proceeds received from the sale, after prorations and closing costs totaled
approximately $4,588,000. The sale resulted in a gain of approximately
$1,170,000 for financial reporting and Federal income tax purposes.

On October 1, 2002, the Partnership, through certain consolidated
entities, closed on the sale of Weston Hills Country Club (the "Country
Club") to an unaffiliated third party. Under the sale and purchase
agreement, the seller made certain representations, warranties and
indemnities for the benefit of the purchaser that survived for one year
from the date of the closing. In accordance with the sale and purchase
agreement, $1,000,000 of the sale price had been placed in escrow to pay
possible claims or demands of the purchaser arising from the sale during
the one-year period. The Partnership received the $1,000,000 in escrowed
funds during December 2003. The gross cash sale price for the Country Club
was $23,500,000 plus approximately $224,000 for existing consumable and
saleable inventory. Net cash proceeds received from the sale, after
prorations, closing costs and payment of funds into escrow, totaled
approximately $19,348,000. The sale resulted in a gain of approximately
$6,980,000 for financial reporting purposes and a loss of approximately
$6,106,000 for Federal income tax purposes.

In September 2001, the Partnership recorded an asset impairment of
$2.5 million to the carrying value of the Weston Athletic Club (the "Weston
Club"). The loss was recorded based upon the difference between the
carrying value of the Weston Club and its fair value less costs to sell as
determined by an agreement to purchase signed by the Partnership and an
unaffiliated third party purchaser during September 2001. During October
2001, the Partnership closed on the sale of the Weston Club to an
unaffiliated third party for a total sale price of $4.25 million. The sale
resulted in a loss of approximately $30,000 for financial reporting
purposes and a loss of approximately $3,710,000 for Federal income tax
purposes.

RESULTS OF OPERATIONS

The results of operations for the years ended December 31, 2003, 2002
and 2001 are primarily attributable to the development and sale or
operation of the Partnership's assets during its continuing orderly
liquidation. See Note 1 for a discussion regarding the recognition of
profit from sales of real estate.

For the year ended December 31, 2003, the Partnership (including its
consolidated ventures and its unconsolidated ventures accounted for under
the equity method) closed on the sale of 128 housing units, the sale of the
Shoppes, (the Town Center Parcel), a land parcel in Boca Raton, two
commercial office building units in Weston, and two small land parcels in
Weston each containing a billboard monument. This compares with closings
in 2002 of 812 housing units, two commercial office building units, a land
parcel in Ocala (the Ocala Parcel), a commercial parcel in Weston, and the
Country Club. Closings in 2001 were for 1,356 housing units, seven
homesites, five commercial office building units, two one-story commercial
office buildings, a commercial and residential parcel in the Weston
Community, a land parcel in Dade County, and the Weston Club.

The Partnership has completed construction and closed on the sale of
all its remaining housing units. The Partnership closed on the sale of its
final 128 townhomes, which were in the Partnership's Weston Community
located in Broward County, Florida during 2003. Revenues for 2003 and 2002
were impacted as a result of the lower levels of inventories available for
sale as the Partnership's remaining Weston Community completed its final
phase.

Revenues from housing and homesite activities generally were
recognized upon the closing of homes built by the Partnership and developed
lots, respectively, within the Partnership's Communities. Historically, a
substantial portion of the Partnership's housing revenues during the first
six months of a given year were generated from the closing of units
contracted in the prior year. Land and property revenues and Gain on sale
of assets held for sale were generated from the closing of developed and
undeveloped residential and/or commercial land tracts and the sale of
operating properties within the Partnership's Communities.

Cost of revenues pertaining to the Partnership's housing sales reflect
the cost of the acquired assets as well as development and construction
expenditures, certain capitalized overhead costs, capitalized interest,
real estate taxes and marketing, as well as disposition costs. The costs
related to the Partnership's homesite sales reflect the cost of the
acquired assets, related development expenditures, certain capitalized
overhead costs, capitalized interest and real estate taxes, as well as
disposition costs. Land and property costs reflect the cost of the
acquired assets, certain development and construction costs and related
disposition costs, as well as the cost associated with the sale of equity
memberships.

Housing revenues and gross operating profit margins from housing
operations decreased for 2003 as compared to 2002 due to the significant
decrease in the number of units closed in the Partnership's Weston
Community, a change in the estimate for future warranty costs resulting in
an increase of approximately $468,000 in the estimated warranty reserve,
additional costing of construction overheads incurred which exceeded
previously used estimates by approximately $577,000, and a change in the
mix of product sold. Housing revenues and gross operating profit margin
decreased for 2002 as compared to 2001 due primarily to a decrease in the
number of units closed and an aggregate accrual of approximately $7.6
million relating to certain contingent liabilities for litigation involving
the Lakes of the Meadow Village Homes condominiums, which is included in
cost of revenues for 2002. Revenues generated from the closings of units
in Weston account for approximately 100%, 100% and 99% of the housing
revenues recognized for the years ended December 31, 2003, 2002 and 2001,
respectively.

Sales of the Partnership's remaining lot inventory closed in 2001
resulting in no homesite revenues generated during 2002 and 2003. The
Partnership's plan for the Weston Community included an increase in its
home building operations, which resulted in a reduced number of lots
available for sale to third-party builders.

Effective January 1, 2002, the Partnership adopted SFAS No. 144
Accounting for the Impairment or Disposal of Long-Lived Assets.
Accordingly, operations and gain on sales of the Shoppes, the Country Club,
the Ocala Parcel, the Waterways II Parcel, certain commercial office
building units in Weston and certain land parcels which meet the criteria
for Assets held for sale have been accounted for as Net income from
operations of assets held for sale and Gain on sale of assets held for
sale. The results of operations for those assets have been excluded from
continuing operations in the consolidated statements of operations for all
periods presented. Operating property revenues and related cost of
revenues for 2001 were generated primarily from the Weston Club, which was
sold prior to the adoption of SFAS No. 144.

Land and property revenues for 2001 were generated primarily from the
sale of five commercial office building units, two one-story commercial
office buildings, a commercial and residential parcel in the Weston
Community, a land parcel in Dade County, the sale of the Weston Club and
the recognition of profits from land sales closed in prior years which had
been deferred until the accounting criteria for profit recognition had been
met.

Brokerage and other operations represents activity from the sale of
unaffiliated third-party builders' homes within the Partnership's
communities, fees earned from the Partnership's mortgage brokerage
operations within the Weston Community, proceeds from the Partnership's
property management activities, and fees earned from various management
agreements with joint ventures. Revenues from brokerage and other
operations decreased in 2003 as compared to 2002 and in 2002 as compared to
2001 due primarily to a decrease in brokerage commissions earned in Weston
resulting from a reduced number of units closed by third party builders
within the Community and a decrease in fees earned from the Partnership's
mortgage brokerage operations due to a decrease in the number of housing
units closed.

Selling, general and administrative expenses include all marketing
costs, with the exception of those costs capitalized in conjunction with
the construction of housing units, as well as project and general
administrative costs. These expenses are net of the marketing fees
received from third party builders. Selling, general and administrative
expenses decreased for 2003 as compared with 2002 and 2001 due primarily to
decreased marketing, project administration and support service costs
resulting from the close out of several of the Partnership's Communities
and the final stage of development of its Weston Community. A greater
decline over the periods presented would have resulted had it not been
critical to the Partnership's operations to retain employees of the
Partnership and St. Joe/Arvida through incentive compensation and retention
awards as the Partnership completes the liquidation of its assets.

Interest income decreased for 2003 as compared to 2002 and 2001 due
primarily to the decline in interest rates on invested funds.

Gain on sale of assets held for sale during 2003 included the gains
recognized from the sales of the Town Center Parcel, the Shoppes, two small
land parcels each containing a billboard monument and a land parcel in Boca
Raton, partially offset by a loss on the sale of two commercial office
building units in Weston. Gain on sale of assets held for sale during
2002 included the Country Club in Weston and the Waterways II Parcel,
partially offset by a loss on the sale of the Ocala Parcel.

Net Income from operations of assets held for sale decreased in 2003
as compared to 2002 primarily due to the sale of the Shoppes during
February 2003 and the sale of the Country Club in October 2002. Net Income
from operations of assets held for sale increased in 2002 as compared to
2001 primarily due to a full year of revenues from the Shoppes which began
generating rental income during May of 2001.

As the Partnership undertook development of the final phases of its
remaining Communities, a larger portion of real estate taxes and interest
expense incurred became eligible for capitalization, and there has been a
reduction of the overall amount of real estate taxes assessed and interest
expense incurred. There was also a refund in March 2003, of a tax
overpayment made by the Partnership in 2002. These are the causes for the
decrease in interest and real estate taxes, net of amounts capitalized, on
the accompanying consolidated statements of operations for 2003 as compared
to 2002 and for 2002 as compared to 2001.

INFLATION

The relatively low rates of inflation in recent years generally have
not had a material effect on the Community development business and
inflation in future periods is not likely to adversely affect the
Partnership since its assets consist primarily of cash and cash
equivalents.

CRITICAL ACCOUNTING POLICIES

The discussion and analysis of the Partnership's financial condition
and results of operations are based upon the Partnership's consolidated
financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States. The
preparation of these financial statements requires management to make
estimates and judgements that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosures of contingent
assets and liabilities. These estimates are based on historical experience
and on various assumptions that management believes are reasonable under
the circumstances; additionally management evaluates these results on an
on-going basis. Management's estimates form the basis for making
judgements about the carrying values of assets and liabilities that are not
readily apparent from other sources. Different estimates could be made
under different assumptions or conditions, and in any event, actual results
may differ from the estimates.

The Partnership relies on certain estimates to determine the
construction and land costs and resulting gross margins. The Partnership's
land and construction costs are comprised of direct and allocated costs,
including estimated costs for future warranties. Warranty reserves are
established by charging cost of sales and recognizing a liability for the
estimated warranty costs for each home that is closed. The Partnership
monitors this reserve on a quarterly basis by evaluating the historical
warranty experience and the reserve is adjusted as appropriate for current
quantitative and qualitative factors. Actual future warranty costs could
differ from the currently estimated amounts. Land, land development and
other common costs are assigned to individual components based on specific
identification or other allocation methods. Land and land development
costs generally include interest incurred until development is
substantially completed.

The Partnership also reviews its tangible assets for impairment of
value.

There are various judgments and uncertainties affecting the
application of these and other accounting policies, and materially
different amounts may be reported under different circumstances or if
different assumptions were used.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

INDEX

Report of Independent Certified Public Accountants

Consolidated Balance Sheets, December 31, 2003 and 2002

Consolidated Statements of Operations for the years ended
December 31, 2003, 2002 and 2001

Consolidated Statements of Changes in Partners' Capital Accounts
for the years ended December 31, 2003, 2002 and 2001

Consolidated Statements of Cash Flows for the years ended
December 31, 2003, 2002 and 2001

Notes to Consolidated Financial Statements

SCHEDULES NOT FILED:

All schedules have been omitted as the required information is
inapplicable or immaterial, or the information is presented in the
consolidated financial statements or related notes.

REPORT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Partners
ARVIDA/JMB PARTNERS, L.P.

We have audited the accompanying consolidated balance sheets of
Arvida/JMB Partners, L.P. and Consolidated Ventures (the "Partnership"), as
of December 31, 2003 and 2002, and the related consolidated statements of
operations, changes in partners' capital accounts, and cash flows for each
of the three years in the period ended December 31, 2003. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with auditing standards
generally accepted in the United States. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated financial
position of Arvida/JMB Partners, L.P. and Consolidated Ventures at
December 31, 2003 and 2002, and the consolidated results of their
operations and their cash flows for each of the three years in the period
ended December 31, 2003, in conformity with accounting principles generally
accepted in the United States.

Ernst & Young LLP
Miami, Florida
February 25, 2004, except for note 8
as to which is March 1, 2004, and
note 9 as to which is March 15, 2004

ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2003 AND 2002

ASSETS
------

ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)

AND CONSOLIDATED VENTURES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) OPERATIONS AND BASIS OF ACCOUNTING

Operations

The assets of Arvida/JMB Partners, L.P. (the "Partnership") have
consisted principally of interests in land developed into master-planned
residential communities (the "Communities") and, to a lesser extent,
commercial properties; accounts receivable; construction, brokerage and
other support businesses; real estate assets held for investment and
certain club and recreational facilities. The Partnership's Communities
have contained a diversified product mix with both resort and primary homes
designed for the middle and upper income segments of the various markets in
which the Partnership operated.

Within the Communities, the Partnership has constructed, or caused to
be constructed, a variety of products, including single-family homes, town-
houses and condominiums to be developed for sale, as well as related
commercial and recreational facilities. The Communities were located
primarily throughout the State of Florida, with Communities also located
near Atlanta, Georgia; and Highlands, North Carolina. Additional
properties owned by the Partnership in or near its Communities have been
developed as retail and/or office properties. The Partnership has also
owned or managed certain club and recreational facilities within certain of
its Communities. In addition, the Partnership has sold individual
residential lots and parcels of partially developed and undeveloped land.

Pursuant to Section 5.5J of the Partnership Agreement, on October 23,
1997, the Board of Directors of the General Partner met and approved a
resolution selecting the option set forth in Section 5.5J(i)(c) of the
Partnership Agreement for the Partnership to commence an orderly
liquidation of its remaining assets that was to be completed by October
2002. In October 2002 the Partnership commenced a solicitation for
consents to an amendment (the "Amendment") to the Partnership's Amended and
Restated Agreement of Limited Partnership providing for an extension of the
term of the Partnership's liquidation period to not later than October 31,
2005. In addition, under the terms of the Amendment, the General Partner
is authorized, in its sole discretion to complete the liquidation of the
Partnership by forming a liquidating trust (the "Liquidating Trust") and
contributing any remaining Partnership assets to the Liquidating Trust
subject to all outstanding obligations and liabilities of the Partnership.
In November 2002 the Holders of a majority of the outstanding Interests
gave their consent to the Amendment, which became effective October 29,
2002, and, accordingly, the term of the Partnership's liquidation period
has been extended.

Principles of Consolidation

The consolidated financial statements include the accounts of the
Partnership and its consolidated ventures. All material intercompany
balances and transactions have been eliminated in consolidation. The
equity method of accounting has been applied in the accompanying
consolidated financial statements with respect to those investments where
the Partnership's ownership interest is 50% or less.

Recognition of Profit from Sales of Real Estate

For sales of real estate, profit is recognized in full when the
collectability of the sales price is reasonably assured and the earnings
process is virtually complete. When the sale does not meet the require-
ments for recognition of income, profit is deferred until such requirements
are met. In certain circumstances, contracts for sales of real estate
contain provisions which allow the Partnership to repurchase the real
estate in the event certain conditions are not met. Profits generated from
sales subject to these provisions are generally deferred until the
Partnership no longer has any repurchase rights. For sales of residential
units, profit is recognized at the time of closing or if certain criteria
are met, on the percentage-of-completion method.

Use of Estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to
make estimates and assumptions that affect the amounts reported or
disclosed in the financial statements and accompanying notes. Actual
results could differ from those estimates.

Real Estate Inventories and Cost of Real Estate Revenues

Real estate inventories are carried at cost, including capitalized
interest and property taxes. The total cost of land, land development and
common costs are apportioned among the projects on the relative sales value
method. Costs pertaining to the Partnership's housing, homesite, and land
and property revenues reflect the cost of the acquired assets as well as
development costs, construction costs, capitalized interest, capitalized
real estate taxes and capitalized overhead. Certain marketing costs
relating to housing projects, including exhibits and displays, and certain
planning and other pre-development activities, excluding normal period
expenses, are capitalized and charged to housing cost of revenues as
related units are closed. Provisions for value impairment are recorded
whenever the estimated future undiscounted cash flows from operations and
projected net sales proceeds are less than the net carrying value plus
estimated costs to complete development. A warranty reserve is provided as
residential units are closed. This reserve is reduced by the cost of
subsequent work performed.

Capitalized Interest and Real Estate Taxes

Interest and real estate taxes are capitalized to qualifying assets,
principally real estate inventories. Such capitalized interest and real
estate taxes are charged to cost of revenues as sales of real estate
inventories are recognized. Interest, including the amortization of loan
fees, of $84,676, $582,281 and $1,196,539 was incurred for the years ended
December 31, 2003, 2002 and 2001, respectively, all of which was
capitalized. The decrease in interest incurred for the year ended
December 31, 2003 as compared to 2002 is due primarily to the payment in
February 2003 of the outstanding principal balance of approximately
$13,801,000 out of the proceeds from the sale of the Shoppes of Town Center
(the "Shoppes"), and the decrease in interest incurred for 2002 as compared
to 2001 is due primarily to a decline in interest rates. Interest
payments, including amounts capitalized, of $47,101, $630,775 and $939,725
were made for the years ended December 31, 2003, 2002 and 2001,
respectively.

A net real estate tax credit of $134,170 and expenses of $1,604,389
and $2,728,091 were incurred for the years ended December 31, 2003, 2002
and 2001, respectively, of which $0, $1,498,463 and $2,553,320 were
capitalized. The net tax credit for the year ended December 31, 2003,
resulted from the refund in March 2003, of a tax overpayment paid by the
Partnership in 2002. Real estate tax payments of $155,299, $1,623,615 and
$2,992,032 were made for the years ended December 31, 2003, 2002 and 2001,
respectively. In addition, real estate tax reimbursements totaling
$289,469, $20,214 and $269,864 were received from the Partnership's escrow
agent during 2003, 2002 and 2001, respectively. The preceding analysis of
real estate taxes does not include real estate taxes incurred or paid with
respect to the Partnership's club facilities and other operating
properties, as these taxes are included in Cost of revenues for operating
properties, or in Net income from operations of assets held for sale.

Property and Equipment and Other Assets

Property and equipment are carried at cost less accumulated
depreciation and are depreciated on the straight-line method over the
estimated useful lives of the assets, which range from two to five years.
Expenditures for maintenance and repairs are charged to expense as
incurred. Costs of major renewals and improvements which extend useful
lives are capitalized.

Other assets are amortized on the straight-line method, which
approximates the effective interest method, over the useful lives of the
assets, which range from one to five years. Amortization of other assets,
excluding loan origination fees, of approximately $0, $0 and $230,000 was
recorded for the years ended December 31, 2003, 2002 and 2001,
respectively. Amortization of loan origination fees, which is included in
interest expense, of approximately $0, $50,000 and $146,000 was recorded
for the years ended December 31, 2003, 2002 and 2001, respectively.

Discontinued Operations

Effective January 1, 2002, the Partnership adopted SFAS No. 144
Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS
No. 144 requires that long-lived assets that are to be disposed of by sale
be measured at the lower of book value or fair value less cost to sell.
Additionally SFAS No. 144 expands the scope of discontinued operations to
include all components of an entity with operations that (1) can be
distinguished from the rest of the entity and (2) will be eliminated from
the ongoing operations of the entity in a disposal transaction.
Accordingly, operations of The Shoppes of Town Center (the "Shoppes"), the
Weston Hills Country Club (the "Country Club"), the AOK Group, which owned
an approximate 46 acre parcel (the "Ocala Parcel") near Ocala, Florida,
Waterways II, which owned an approximate 4.6 acre parcel in Weston (the
"Waterways II Parcel") on which a shopping center containing approximately
31,300 square feet of rentable space was being constructed, commercial
office units in Weston, and certain land parcels, which met the criteria
for assets held for sale, have been accounted for as net income from
operations of assets held for sale, and the results of operations for those
assets have been excluded from continuing operations in the consolidated
statements of operations for all periods presented.

Condensed financial information relating to Assets held for sale is as
follows:

December 31, December 31,
2003 2002
------------ ------------
Assets held for sale:
Property and equipment, net . . . $ -- 30,776,784
Other assets. . . . . . . . . . . -- 2,024,248
----------- -----------

Total assets . . . . . . . . . -- 32,801,032
----------- -----------

December 31, December 31,
2003 2002
------------ ------------
Liabilities related to assets
held for sale:
Notes and Mortgages payable . . . -- 13,800,753
Other liabilities . . . . . . . . -- 515,923
----------- -----------
Total liabilities. . . . . . . -- 14,316,676
----------- -----------
Net Assets held for sale. . . . . . $ -- 18,484,356
=========== ===========

Investments in and Advances to Joint Ventures, Net

In general, the equity method of accounting has been applied in the
accompanying consolidated financial statements with respect to those joint
venture investments where the Partnership's ownership interest is 50% or
less.

Investments in the remaining joint ventures are carried at the
Partnership's proportionate share of the ventures' assets, net of their
related liabilities and adjusted for any basis differences. Basis
differences result from the purchase of interests at values which differ
from the recorded cost of the Partnership's proportionate share of the
joint ventures' net assets.

Interest Rate Swaps

The Partnership had entered into interest rate swap agreements to
manage its exposure to market risks related to changes in interest rates
associated with its variable rate debt under its credit facility. As of
July 31, 2001, all interest rate swap agreements had expired. The
interest-rate swap agreements were in effect with respect to the term loan
which was paid off in December 2000. The swap agreements were amortized
annually through the scheduled maturity of the term loan. These agreements
involved the exchange of amounts based on fixed interest rates for amounts
based on variable interest rates over the life of the loan without an
exchange of the notional amount upon which the payments are based. The
differential was paid or received as interest rate changes were calculated
and paid monthly by the appropriate party. Prior to 2001, such payments or
receipts were recorded as adjustments to interest expense in the periods in
which they were incurred. Subsequent to December 31, 2000, and upon the
adoption of SFAS 133, the Partnership recognized a net loss of $127,101
related to the ineffectiveness of the hedging instrument. This amount is
included in interest expense in the accompanying consolidated statement of
operations for 2001.

Partnership Records

The Partnership's records are maintained on the accrual basis of
accounting as adjusted for Federal income tax reporting purposes. The
accompanying consolidated financial statements have been prepared from such
records after making appropriate adjustments where applicable to reflect
the Partnership's accounts in accordance with GAAP and to consolidate the
accounts of the ventures as described above. Such GAAP and consolidation
adjustments are not reflected on the records of the Partnership. The net
effect of these items is summarized as follows:

2003 2002
------------------------- ------------------------
TAX BASIS TAX BASIS
GAAP BASIS (UNAUDITED) GAAP BASIS (UNAUDITED)
------------ ----------- ----------- -----------

Total assets . . . . $ 67,744,573 68,268,294 138,074,785 139,543,607

Partners' capital
accounts:
General Partner
and Associate
Limited
Partners . . . . 6,344,100 5,471,173 10,846,920 10,028,270
Holders of
Interests. . . . 44,131,061 88,381,341 85,213,686 132,123,537

Net (loss) income:
General Partner
and Associate
Limited
Partners . . . . (13,931) (68,208) 17,355,556 17,355,363
Holders of
Interests. . . . (682,625) (3,342,197) 36,387,872 30,795,265

Net (loss) income
per Interest . . . (1.69) (8.28) 90.07 76.23

Reference is made to note 12 for further discussion of the allocation
of profits and losses to the General Partner, Associate Limited Partners
and Holders of Interests.

Reclassifications

Certain reclassifications have been made to the 2002 and 2001
financial statements to conform to the 2003 presentation.

Income Taxes

No provision for state or Federal income taxes has been made as the
liability for such taxes is that of the partners rather than the
Partnership. However, in certain instances, the Partnership has been
required under applicable state law to remit directly to the state tax
authorities amounts representing withholding on applicable taxable income
allocated to the General Partner, Associate Limited Partners and Holders of
Interests. Such payments on behalf of the General Partner, Associate
Limited Partners and Holders of Interests are deemed distributions to them.

The cash distributions per Interest made during the years ended
December 31, 2003, 2002 and 2001 include $0, $0 and $.06, respectively,
which represent each Holder's share of a North Carolina non-resident
withholding tax paid directly to the state tax authorities on behalf of the
Holders of Interests for the 2003, 2002 and 2001 tax years, respectively.

Recent Accounting Pronouncements

In May 2003, the FASB issued Statement No. 150 ("SFAS 150"),
"Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity." SFAS 150 addresses financial accounting and
reporting for certain financial instruments with characteristics of both
liabilities and equity. This statement requires that an issuer classify a
financial instrument that is within its scope as a liability (or an asset
in some circumstances) because that financial instrument embodies an
obligation of the issuer. Although SFAS 150 was originally effective
July 1, 2003, the FASB has indefinitely deferred certain provisions related
to classifications and measurement requirements for mandatorily redeemable
financial instruments that become subject to SFAS 150 solely as a result of
consolidation. The adoption of SFAS 150 will not have a material impact on
the accompanying consolidated financial statements.

In April 2003, the FASB issued Statement No. 149 ("SFAS 149"),
"Amendment of Statement 133 on Derivative Instruments and Hedging
Activities." This statement amends SFAS 133 to provide clarification on
the financial accounting and reporting of derivative instruments and
hedging activities and requires contracts with similar characteristics to
be accounted for on a comparable basis. The Partnership does not have any
derivative instruments or hedging activities and, therefore, adoption of
SFAS 149, which is effective for contracts entered into or modified after
September 30, 2003 is not applicable.

In January 2003, FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities" ("FIN 46"), as further clarified and amended by
the FASB's issuance of a revision to FIN 46 in December 2003. FIN 46
requires the consolidation of entities in which an enterprise absorbs a
majority of the entity's expected losses, receives a majority of the
entity's expected residual returns, or both, as a result of ownership,
contractual or other financial interests in the entity. Prior to the
issuance of FIN 46, entities were generally consolidated by an enterprise
when it had a controlling financial interest through ownership of a
majority voting interest in the entity. FIN 46 applied immediately to
variable interests created after January 31, 2003, and with respect to
variable interests created before February 1, 2003, FIN 46 will apply in
the Partnership's first quarter ending March 31, 2004, as deferred by the
FASB in December 2003. The Partnership has completed its assessment of FIN
46 implications and determined it does not have any interests in variable
interest entities.

In November 2002, FASB issued Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others" ("FIN 45"), which expands on the
guidance for the accounting and disclosure of guarantees. Each guarantee
meeting the characteristics described in FIN 45 is to be recognized and
initially measured at fair value. In addition, guarantors are required to
make significant new disclosures, even if the likelihood of the guarantor
making payments under the guarantee is remote, which represents another
change from general previous practice. The disclosure requirements are
effective for financial statements ending after December 15, 2002, while
the initial recognition and initial measurement provisions are applicable
on a prospective basis to guarantees issued or modified after December 31,
2002. The impact of FIN 45 is described below.

Warranty Reserves

In the normal course of business, the Partnership will incur warranty
related costs associated with homes which have previously closed. Warranty
reserves are established by charging cost of sales and recognizing a
liability for the estimated warranty costs for each home that is closed.
The Partnership monitors this reserve on a quarterly basis by evaluating
the historical warranty experience and the reserve is adjusted as
appropriate for current quantitative and qualitative factors. Actual
future warranty costs could differ from the currently estimated amounts.

For the years ended December 31, 2003 and 2002, changes in the
warranty accrual consisted of the following:

2003 2002
----------- ----------
Accrued warranty costs,
beginning of year. . . . . . . . . . $ 2,162,000 3,042,000
Estimated liability recorded . . . . . 2,283,000 3,201,000
Payments made. . . . . . . . . . . . . (2,876,000) (4,081,000)
----------- ----------
Accrued warranty costs,
end of year. . . . . . . . . . . . . $ 1,569,000 2,162,000
=========== ==========

Accrued warranty costs are included in Accrued expenses and other
liabilities on the accompanying consolidated balance sheets.

Obligations Under Sale Agreements

In connection with the sale of The Shoppes in Weston on February 7,
2003, certain consolidated entities of the Partnership undertook certain
indemnity obligations to the purchaser or its lender. In general, these
obligations relate to indemnification against loss, costs or expenses
arising out of a breach of representation or warranty, possible claims of
tenants, certain rent obligations, restrictions on the leasing or use of
the property, litigation relating to the property, claims occurring or
accruing prior to the closing and certain other usual and customary
matters. Some of these indemnity obligations terminate as to claims made
after the first anniversary date of the sale while other of these indemnity
obligations have no specified termination. In accordance with such
indemnification, the seller deposited $100,000 and the buyer deposited
$50,000 in escrow to secure the obligation to indemnify the buyer's lender
for such claims. The Partnership received $50,000 of the $100,000 noted
above during 2003. The seller also deposited $50,000 in escrow as security
for completion of remediation work for compliance with the Americans with
Disabilities Act. The remediation work has been completed and the
Partnership anticipates the release of this deposit. Due to the different
circumstances that could cause the indemnity obligations to arise, the
Partnership is not able to estimate the maximum potential amount of these
indemnity obligations, although the Partnership currently does not believe
that individually or collectively these indemnity obligations will have a
material adverse effect on its financial condition or results of
operations. The Partnership has a remaining liability of approximately
$79,000 for these indemnity obligations at December 31, 2003. This
liability is included in Accrued expenses and other liabilities on the
accompanying consolidated balance sheet at December 31, 2003.

In connection with the sale of the Weston Hills Country Club (the
"Country Club") on October 1, 2002, certain consolidated entities of the
Partnership (i) made certain representations, warranties and covenants for
the benefit of the purchaser concerning the sellers and the Country Club
and its business and operations and (ii) agreed to indemnify the purchaser
against third party claims or causes of actions in connection with the
sellers' ownership or operation of the Country Club and occurring or
accruing prior to the closing as well as against certain other usual and
customary matters. In general, the representations, warranties and
covenants survived for one year from the date of closing while the
indemnity obligations have no express termination. The maximum potential
amount of these obligations was in general $1,000,000. In accordance with
the sale and purchase agreement, $1,000,000 of the sale price was placed in
escrow to pay possible claims or demands of the purchaser arising from the
sale during the one-year period after the sale. The Partnership received
the $1,000,000 in escrowed funds during December 2003.

Indemnification of Certain Persons

Under certain circumstances, the Partnership indemnifies the General
Partner and certain other persons performing services on behalf of the
Partnership for liability they may incur arising out of the indemnified
persons' activities conducted on behalf of the Partnership. There is no
limitation on the maximum potential payments under these indemnification
obligations, and, due to the number and variety of events and circumstances
under which these indemnification obligations could arise, the Partnership
is not able to estimate such maximum potential payments. However,
historically the Partnership has not made payments in material amounts
under such indemnification obligations, and no amount has been recorded in
the accompanying consolidated financial statements for these
indemnification obligations of the Partnership.

(2) INVESTMENT PROPERTIES

The Partnership has completed construction and closed on the sale of
all remaining housing units. The Partnership closed on the sale of its
final 128 townhomes during 2003. The units were in the Partnership's
Weston Community, located in Broward County and the Partnership's largest
community.

On December 8, 2003, the Partnership, through certain consolidated
entities closed on the sale of two small land parcels each containing a
billboard monument sign located in the City of Weston to an unaffiliated
third party. The gross sales price of the land parcels was $1,750,000.
Net cash proceeds received from the sale after proration, closing costs and
other expenses totaled approximately $1,306,000. The sale resulted in a
gain of $1,306,000 for financial reporting purposes and Federal income tax
purposes.

On September 12, 2003, the Partnership, through certain consolidated
entities, closed on the sale of a land parcel in Boca Raton to an
unaffiliated third party. The gross sales price of the land parcel was
$231,118. There were no related costs associated with the sale of this
parcel resulting in net cash proceeds from the sale of $231,118, and a gain
of $231,118 for financial reporting purposes and Federal income tax
purposes.

On May 23, 2003, the Partnership, through certain consolidated
entities, closed on the sale of a land parcel adjacent to the Shoppes
("Town Center Parcel") to an unaffiliated third party. The gross sale
price of the Town Center Parcel was $1,200,000. Net cash proceeds received
from the sale after prorations and closing costs totaled approximately
$982,000. The sale resulted in a gain of approximately $354,000 for
financial reporting purposes and Federal income tax purposes.

On May 23, 2003, the Partnership, through certain consolidated
entities, closed on the sale of two commercial office building units in
Weston. The gross sales price of the units was approximately $348,000.
Net cash proceeds received from the sale after proration and closing costs
totaled approximately $312,000. The sale resulted in a loss of
approximately $177,000 for financial reporting purposes and Federal income
tax purposes.

On February 7, 2003, the Partnership through certain consolidated
entities, closed on the sale of the Shoppes to unaffiliated third parties.
The gross sale price for the Shoppes was $34,330,000. Net cash proceeds
received from the sale, after prorations, credits, closing costs, amounts
escrowed and the settlement of the seller's outstanding loan balance
totaled approximately $18,198,000. The net book value and net cash
proceeds received from the sale represented approximately 22% and 13%,
respectively, of the Partnership's total consolidated assets for financial
reporting purposes at December 31, 2002. The sale resulted in a gain of
approximately $1,990,000 for financial reporting purposes and a gain of
approximately $2,460,000 for Federal income tax purposes.

On October 1, 2002, the Partnership, through certain consolidated
entities closed on the sale of the Country Club to an unaffiliated third
party. The gross cash sale price for the Country Club was $23,500,000 plus
approximately $224,000 for existing consumable and saleable inventory. Net
cash proceeds received from the sale, after prorations, closing costs and
payment of funds into escrow, totaled approximately $19,348,000. The sale
resulted in a gain of approximately $6,980,000 for financial reporting
purposes and a loss of approximately $6,106,000 for Federal income tax
purposes.

On December 4, 2002, the Partnership, through certain consolidated
entities, closed on the sale of the Waterways II Parcel to an unaffiliated
third party. The Partnership was constructing a shopping center on the
Waterways II Parcel which was not completed on the date of the sale. Under
the terms of the agreement, the seller assigned to the buyer the seller's
rights and obligations under the construction contract and the plans and
specifications for construction as well as an agreement for parking. The
gross sale price of the Waterways II Parcel was $5,151,000. Net cash
proceeds received from the sale, after prorations and closing costs totaled
approximately $4,588,000. The sale resulted in a gain of approximately
$1,170,000 for both financial reporting and Federal income tax purposes.

On December 27, 2002, the Partnership, through certain consolidated
entities, closed on the sale of the Ocala Parcel to an unaffiliated third
party for a gross sale price of $1,400,000. Net cash proceeds received
from the sale, after prorations and closing costs totaled approximately
$1,266,000. The sale resulted in a loss of approximately $380,000 for
financial reporting purposes and a loss of approximately $2,610,000 for
income tax purposes.

Reference is made to note 13 for a discussion regarding the sale of
the Weston Athletic Club.

(3) CASH, CASH EQUIVALENTS AND RESTRICTED CASH

Cash and cash equivalents may consist of U.S. Government obligations
with original maturities of three months or less, money market demand
accounts and repurchase agreements, the cost of which approximates market
value. Included in Restricted cash are amounts restricted under various
escrow agreements as well as cash which collateralizes letters of credit as
discussed in note 7. Credit risk associated with cash, cash equivalents
and restricted cash is considered low due to the high quality of the
financial institutions in which these assets are held.

(4) REAL ESTATE INVENTORIES

Real estate inventories at December 31, 2003 and 2002 are summarized
as follows:
2003 2002
------------ -----------
Community development inventory:
Work in progress and land improvements . . . $ -- 8,102,696
------------ -----------
Real estate inventories . . . . . . . . . $ -- 8,102,696
============ ===========

Reference is made to notes 1 and 13 for a discussion regarding the
impairment of long-lived assets.

(5) PROPERTY AND EQUIPMENT

Property and equipment at December 31, 2003 and 2002 are summarized as
follows:
2003 2002
----------- ----------
Buildings and leasehold
improvements . . . . . . . . . . . . . $ -- 3,234,892
Equipment and furniture. . . . . . . . . 3,797,368 4,097,868
Construction in progress . . . . . . . . -- 178,576
----------- ------------
Total . . . . . . . . . . . . . . . 3,797,368 7,511,336
Accumulated depreciation
and impairment. . . . . . . . . . (3,652,452) (6,188,463)
----------- ------------
Property and equipment, net . . . . $ 144,916 1,322,873
=========== ============

At December 31, 2003, the Partnership recorded an asset impairment of
approximately $524,000 to the carrying value of the remaining furniture and
equipment at its corporate office in Boca Raton. This loss was determined
based upon an analysis by an unaffiliated appraiser and recorded based upon
the difference between the carrying value of the assets as compared to
their appraised fair value.

Depreciation expense of approximately $538,000, $1,429,000 and
$2,558,000 was incurred for the years ended December 31, 2003, 2002 and
2001, respectively.

Reference is made to notes 1 and 13 for a further discussion regarding
the impairment of long-lived assets.

(6) INVESTMENTS IN AND ADVANCES TO JOINT VENTURES, NET

The Partnership has or had investments in real estate joint ventures
with ownership interests of 50%. The Partnership's joint venture interests
accounted for under the equity method in the accompanying consolidated
financial statements are as follows:

LOCATION OF
NAME OF VENTURE % OF OWNERSHIP PROPERTY
- --------------- -------------- ------------

A&D Title, L.P. 50 Florida

Arvida Pompano Associates
Joint Venture 50 Florida

Ocala 202 Joint Venture 50 Florida

The following is combined unaudited summary financial information of
joint ventures accounted for under the equity method.

ASSETS
------

DECEMBER 31, DECEMBER 31,
2003 2002
------------ ------------
Real estate inventories. . . . . . . . . . $ 104,450 104,450
Other assets . . . . . . . . . . . . . . . 144,393 172,165
----------- -----------

Total assets . . . . . . . . . . $ 248,843 276,615
=========== ===========

LIABILITIES AND PARTNERS' CAPITAL
---------------------------------

Accounts payable, deposits and
other liabilities. . . . . . . . . . . . $ 139,831 129,691
----------- -----------

Total liabilities. . . . . . . . 139,831 129,691

Venture partners' capital. . . . . . . . . 54,506 73,462
Partnership's capital. . . . . . . . . . . 54,506 73,462
----------- -----------

Total liabilities and
partners' capital. . . . . . . $ 248,843 276,615
=========== ===========

COMBINED RESULTS OF OPERATIONS
------------------------------

DECEMBER 31, DECEMBER 31, DECEMBER 31,
2003 2002 2001
----------- ------------ -------------

Revenues . . . . . . . . . . $ 232,927 1,731,139 2,158,997
=========== ============ ============

Net income . . . . . . . . . $ 77,462 566,033 867,378
=========== ============ ============

Partnership's propor-
tionate share of
net income . . . . . . . . $ 38,731 283,017 433,689
=========== ============ ============

Partnership's equity in
earnings of uncon-
solidated ventures . . . . $ 20,545 329,509 317,607
=========== ============ ============

The following is a reconciliation of the Partnership's capital
accounts within the joint ventures to its investments in and advances to
joint ventures as reflected on the accompanying consolidated balance
sheets:

DECEMBER 31, DECEMBER 31,
2003 2002
------------ ------------

Partnership's capital, equity method . . . $ 54,506 73,462
Basis difference . . . . . . . . . . . . . 127,931 191,002
----------- ------------
Investments in and advances to
joint ventures, net . . . . . . . . $ 182,437 264,464
=========== ============

The Partnership's share of net income is based upon its ownership
interest in investments in joint ventures which are accounted for in
accordance with the equity method of accounting. Equity in earnings of
unconsolidated ventures represents the Partnership's share of each
venture's net income, and may reflect a component of purchase price
adjustments included in the Partnership's basis. Such adjustments are
generally amortized to income in relation to the cost of revenue of the
underlying real estate assets. These factors contribute to the
differential in the Partnership's proportionate share of the net income or
loss of the joint ventures and its Equity in earnings of unconsolidated
ventures as well as to the basis differential between the Partnership's
investments in joint ventures and its equity in underlying net assets, as
shown above.

There are certain risks associated with the Partnership's investments
made through joint ventures including the possibility that the
Partnership's joint venture partners in an investment might become unable
or unwilling to fulfill their financial or other obligations, or that such
joint venture partners may have economic or business interests or goals
that are inconsistent with those of the Partnership. In addition, under
certain circumstances, either pursuant to the joint venture agreements or
due to the Partnership's obligations as a general partner, the Partnership
may be required to make additional cash advances or contributions to
certain of the ventures.

(7) NOTES AND MORTGAGES PAYABLE

Notes and mortgages payable at December 31, 2003 and 2002 (included in
Liabilities related to assets held for sale) are summarized as follows:

2003 2002
----------- -----------
Construction loan of $20,000,000
(repaid in full in February
2003) . . . . . . . . . . . . . . . . . . $ -- $13,800,753
=========== ===========

In May 2000, the Partnership closed on a $20 million loan with First
Union National Bank for the development and construction of the Shoppes, a
mixed use retail/office plaza consisting of approximately 158,000 net
leasable square feet. At December 31, 2002, the balance outstanding on the
loan was approximately $13,800,800. This amount is included in Liabilities
related to assets held for sale on the accompanying consolidated balance
sheet at December 31, 2002. Interest on the loan (as modified effective
May 31, 2001 and further modified effective December 31, 2001) was based on
the relevant LIBOR rate plus 1.8% per annum. Monthly payments of interest
only were required during the first twenty-five months of the loan. On
July 1, 2002, the maturity date for the loan was extended for eleven months
and monthly payments of principal and interest were due based upon a 25
year loan amortization schedule and an assumed interest rate based on the
ten-year treasury bond rate plus 2.5% per annum. The outstanding principal
balance and accrued and unpaid interest of approximately $13,848,000 were
paid in February 2003 out of the proceeds from the sale of the Shoppes.

(8) TRANSACTIONS WITH AFFILIATES

Fees, commissions and other expenses paid or payable by the
Partnership to affiliates of the General Partner for the years ended
December 31, 2003, 2002 and 2001 are as follows:

2003 2002 2001
---------- ---------- ----------
Insurance commissions. . . . . . . . . $ 104,542 312,711 284,474
Reimbursement (at cost) for
accounting services . . . . . . . . . 55,908 111,967 159,366
Reimbursement (at cost) for
treasury, legal and
corporate services. . . . . . . . . . 287,491 684,233 473,048
---------- ---------- ----------
$ 447,941 1,108,911 916,888
========== ========== ==========

The Partnership receives reimbursements from or reimburses other
affiliates of the General Partner engaged in real estate activities for
certain general and administrative costs including, and without limitation,
salary and salary-related costs relating to work performed by employees of
the Partnership and certain out-of-pocket expenditures incurred on behalf
of such affiliates. For the year ended December 31, 2003 the amount of
such costs incurred by the Partnership on behalf of these affiliates
totaled approximately $46,900. Approximately $630 was outstanding at
December 31, 2003, all of which was received as of March 1, 2004. For the
years ended December 31, 2002 and 2001, the Partnership was entitled to
receive reimbursements of approximately $188,400 and $315,500,
respectively.

Pursuant to a sub-management agreement between Arvida Company
("Arvida") and St. Joe/Arvida Company, L.P. ("St. Joe/Arvida"), effective
January 1, 1998, St. Joe/Arvida provides (and is reimbursed for) a
substantial portion of the development and management supervisory and
advisory services (and personnel with respect thereto) to the Partnership
that Arvida would otherwise provide pursuant to its management agreement
with the Partnership. St. Joe/Arvida is reimbursed for such services and
personnel on the same basis as Arvida under the management agreement, and
such reimbursements are made directly by the Partnership. The Partnership
also receives reimbursement from St. Joe/Arvida for certain general and
administrative costs including, and without limitation, salary and salary-
related costs relating to work performed by employees of the Partnership on
behalf of St. Joe/Arvida. Charges and related reimbursements between the
Partnership and St. Joe/Arvida are determined on a consistent basis using
various methodologies depending upon the nature of the services provided.
Such charges, whether incurred directly by the Partnership or St.
Joe/Arvida, may include salaries and salary related costs, as well as
burdens for administrative and office overheads. Methodologies used to
apportion costs between entities include, but are not limited to, charges
based upon percentages of (i) time spent on each entity relative to total
hours worked; (ii) cash expenditures by entity relative to total
expenditures; and (iii) real estate sales and closings by entity relative
to total sales and closings. Affiliates of JMB Realty Corporation owned a
minority interest in St. Joe/Arvida until July 2003, when they sold their
minority interest to an affiliate of The St. Joe Company. Affiliates of
The St. Joe Company currently own all of the interests in St. Joe/Arvida.

For the years ended December 31, 2003, 2002 and 2001, the Partnership
reimbursed St. Joe/Arvida or its affiliates approximately $7,073,000,
$3,399,000 and $4,446,000, respectively, for the services provided to the
Partnership by St. Joe/Arvida personnel pursuant to the sub-management
agreement discussed above. Such reimbursements included amounts owing in
connection with the Partnership's achievement of certain profit and cash
flow levels prior to 2003. On January 1, 2003, certain employees of the
Partnership became employees of St. Joe/Arvida. Therefore, a significant
portion of the expense related to this reimbursement to St. Joe/Arvida in
2003 was a direct operating expense of the Partnership in prior years. In
addition, at December 31, 2003, the Partnership owed St. Joe/Arvida
approximately $20,800 for general and administrative costs pursuant to the
sub-management agreement including, and without limitation, salary and
salary-related costs relating to work performed by employees of St.
Joe/Arvida on behalf of the Partnership, all of which was paid as of
March 1, 2004. For the years ended December 31, 2003, 2002 and 2001, the
Partnership received approximately $5,154,000, $6,045,800 and $4,244,000,
respectively, from St. Joe/Arvida or its affiliates. In addition, $326,700
was owed to the Partnership at December 31, 2003, all of which was received
as of March 1, 2004.

The Partnership received reimbursement from St. Joe/Arvida and its
affiliates for the use of certain equipment and property owned or leased by
the Partnership. In addition, in July 2003, the Partnership assigned its
rights as licensee in certain software licenses to The St. Joe Company in
consideration of a payment for the assignment. The Partnership remains
contingently liable to the software licensor for performance of the
obligations under the software licenses and retains certain rights to use
the software licenses. The net reimbursement and payment received for
these items by the Partnership for years ended December 31, 2003 and 2002
was approximately $194,000 and $0, respectively.

Based upon discussions held in the first quarter of 2004, the
Partnership anticipates selling the furniture and equipment remaining in
its Boca Raton office to the St. Joe Company in the second quarter of 2004
for its fair market value as determined by an independent appraisal.

The Partnership pays for certain general and administrative costs on
behalf of its clubs, homeowners associations and maintenance associations
(including salary and salary-related costs and legal fees). The
Partnership receives reimbursements from these entities for such costs.
For the year ended December 31, 2003, the Partnership was entitled to
receive approximately $0 from these entities. For the years ended
December 31, 2002 and 2001, the Partnership was entitled to reimbursements
of approximately $0 and $110,600, respectively, from these entities.

The Partnership, pursuant to certain agreements, provides management
and other personnel and services to certain of its equity clubs and
homeowners associations. Pursuant to these agreements, the Partnership is
entitled to receive management fees for the services provided to these
entities. Due to the timing of the cash flows generated from these
entities' operations, such fees are typically paid in arrears. For the
years ended December 31, 2003, 2002 and 2001, the Partnership was entitled
to receive approximately $65,710, $464,943 and $375,500, respectively. At
December 31, 2003, no amount was owed to the Partnership.

In February 2003, the General Partner and Associate Limited Partners,
collectively, received cash distributions in the aggregate amount of
$2,244,444. In December 2003, the General Partner and Associate Limited
Partners, collectively, received cash distributions in the aggregate amount
of $2,244,444.

In January 2002, the General Partner and Associate Limited Partners,
collectively, received cash distributions in the aggregate amount of
$8,977,778. In April 2002, the General Partner and Associate Limited
Partners, collectively, received cash distributions in the aggregate amount
of $3,366,667. In October 2002, the General Partner and Associate Limited
Partners, collectively, received cash distributions in the aggregate amount
of $4,488,889.

In January 2001, the General Partner and Associate Limited Partners,
collectively, received cash distributions in the aggregate amount of
$4,488,889. In May 2001, the General Partner and Associate Limited
Partners, collectively, were entitled to a distribution of $2,545 on their
behalf for the 2000 North Carolina non-resident withholding tax. In July
2001, the General Partner and Associate Limited Partners, collectively,
received cash distributions in the aggregate amount of $4,488,889.

Amounts receivable from or payable to the General Partner, St.
Joe/Arvida or their respective affiliates do not bear interest.

(9) COMMITMENTS AND CONTINGENCIES

As security for performance of certain development obligations, the
Partnership is contingently liable under standby letters of credit and
bonds for approximately $0 and $8,018,000, respectively, at December 31,
2003 and 2002. In addition, a certain joint venture in which the
Partnership holds an interest is contingently liable under bonds for
approximately $306,000 at December 31, 2003.

On August 29, 2002, the Partnership entered into an agreement with St.
Joe/Arvida for the prospective assignment to and assumption by St.
Joe/Arvida of the Partnership's rights and obligations under the lease for
its offices (approximately 19,100 rentable square feet of space) in Boca
Raton, Florida. The assignment and assumption was made effective
January 1, 2004.

Rental expense of $996,878, $1,637,360 and $1,788,703 was incurred for
the years ended December 31, 2003, 2002 and 2001, respectively.

The Partnership was named a defendant in a number of homeowner
lawsuits, certain of which purported to be class actions, that allegedly in
part arose out of or related to Hurricane Andrew, which on August 24, 1992
resulted in damage to a former community development known as Country Walk.

Other than the Juarez and Lakes of the Meadow lawsuits discussed
below, these lawsuits have been settled, and United States Fire Insurance
Company (whether acting on its own behalf or for its affiliates, "U.S.
Fire"), one of the Partnership's insurance carriers that has paid for
settlements of these lawsuits, has in some, but not all, instances,
provided the Partnership with written reservation of rights letters. The
aggregate amount of the settlements funded by this carrier is approximately
$10.1 million. U.S. Fire has stated that it has funded these settlements
pursuant to various non-waiver agreements. U.S Fire's position was that
these non-waiver agreements permitted the carrier to fund the settlements
without preventing it from raising insurance coverage issues or waiving
such coverage issues. On May 23, 1995, U.S. Fire rescinded the various
non-waiver agreements in effect regarding certain of these lawsuits,
allegedly without waiving any future coverage defenses, conditions,
limitations, or rights. For this and other reasons, the extent to which
U.S. Fire may recover any of its settlement payments or associated fees and
costs from the Partnership is uncertain. The Partnership believes that a
material loss for the Partnership as a result of U.S. Fire's reservations
of rights and its funding of the settlement payments is remote, although
there is no assurance that the Partnership will not ultimately pay or
reimburse the insurance carrier for some portion of the settlement payments
or associated fees or costs. The accompanying consolidated financial
statements do not reflect any accrual related to this matter.

The Partnership is a defendant in an insurance subrogation matter. On
or about May 10, 1996, a subrogation claim entitled Juarez v. Arvida
Corporation et al., Case No. 96-09372 CA13 was filed in the Circuit Court
of the Eleventh Judicial Circuit in and for Miami-Dade County, Florida.
Plaintiffs filed this suit for the use and benefit of American Reliance
Insurance Company ("American Reliance"). In this suit, plaintiffs seek to
recover damages, pre-and post-judgment interest, costs and any other relief
the court may deem just and proper in connection with $3,200,000 American
Reliance allegedly paid on specified claims at Country Walk in the wake of
Hurricane Andrew. The Walt Disney Company (n/k/a Disney Enterprises, Inc.,
"Disney") is also a defendant in this suit. The Partnership filed a motion
to dismiss this action that has been pending since 1996. The Partnership
is advised that the amount of this claim that allegedly relates to units it
sold is a range of approximately $350,000 to $650,000. The Partnership is
being defended by U.S. Fire. The Partnership believes that a material loss
for the Partnership as a result of this lawsuit is remote. The
accompanying consolidated financial statements do not reflect any accruals
related to this matter.

The Partnership has been named a defendant in a purported class action
entitled Lakes of the Meadow Village Homes Condominium Nos. One, Two,
Three, Four, Five, Six, Seven, Eight and Nine Maintenance Associations,
Inc., v. Arvida/JMB Partners, L.P. and Walt Disney World Company, Case No.
95-23003-CA-08, filed in the Circuit Court of the Eleventh Judicial Circuit
in and for Miami-Dade County, Florida. The original complaint was filed on
or about November 27, 1995 and an amended complaint, which purports to be a
class action, was filed on or about February 28, 1997. In the amended
complaint, plaintiffs have sought unspecified damages, attorneys' fees and
costs, recission of specified releases, and all other relief that
plaintiffs may be entitled to at equity or at law on behalf of the 460
building units they allegedly represent for, among other things, alleged
damages discovered in the course of making Hurricane Andrew repairs.
Plaintiffs have alleged that Walt Disney World Company is responsible for
liabilities that may arise in connection with approximately 80% of the
buildings at the Lakes of the Meadow Village Homes and that the Partnership
is potentially liable for the approximately 20% remaining amount of the
buildings. In the three count amended complaint, plaintiffs allege breach
of building codes and breach of implied warranties. In addition,
plaintiffs seek recission and cancellation of various general releases
obtained by the Partnership allegedly in the course of the turnover of the

Community to the residents. Plaintiffs have indicated that they may seek
to hold the Partnership responsible for the entire amount of alleged
damages owing as a result of the alleged deficiencies existing throughout
the entire development. The Partnership has tendered this matter to Disney
pursuant to the Partnership's indemnification rights and has filed a third-
party complaint against it pursuant to the Partnership's rights of
contractual indemnity. The Partnership has also answered the amended
complaint and has filed a cross-claim against Disney's affiliate, Walt
Disney World Company, for common law indemnity and contribution. Discovery
cut-off in this litigation has expired; however, discovery is ongoing but
proceeding to a conclusion. No trial date has been set. This case is
subject to pending settlements discussed below. The Partnership is being
defended by counsel paid for by U.S. Fire as well as additional counsel
engaged by the Partnership.

In a matter related to the Lakes of the Meadow development, the Miami-
Dade County Building Department ("Building Department") retained the
services of an engineering firm, All State Engineering, to inspect the
condominiums that are the subject of the lawsuit. On February 27, 2002,
the Building Department apparently advised condominium owners throughout
the development that it found serious life-safety building code violations
in the original construction of the structures and on May 29, 2002, issued
notices of violation under the South Florida Building Code. The
condominium owners were further advised that the notices of violation would
require affirmative action on their part to respond to the notices through
administrative proceedings and/or by addressing the alleged deficiencies.

On August 8, 2002, the Partnership attended a mediation with
representatives of Lakes of the Meadow Village Homes Condominium Nos. One
through Seven and Nine Maintenance Associations (collectively, "Association
Nos. 1-7 and 9"). As a result of this and subsequent mediation sessions
and other discussions among the parties, and without admitting any
liability, the Partnership has entered into an agreement with Association
Nos. 1-7 and 9 and their members for a settlement that received preliminary
approval of the Court on February 12, 2004. A final hearing on the
fairness, reasonableness and adequacy of the settlement is scheduled to be
held on April 30, 2004. The settlement agreement provides, among other
things, for a release by Association Nos. 1-7 and 9 and their members of
all manner of actions, claims, and damages arising out of or relating to
the subject matters of the lawsuit; any order of the Miami-Dade County,
Florida Unsafe Structures Board relating to the units in the condominiums
of Association Nos. 1-7 and 9; any remediation action undertaken in regard
to those units; the failure of any of Association Nos. 1-7 and 9 to
undertake appropriate or timely remediation; or the past, present or future
governance of Association Nos. 1-7 and 9. Under the terms of the
settlement agreement, the claims of Association Nos. 1-7 and 9 and their
members would be dismissed, each side bearing its own fees and costs. The
Partnership would pay $5.5 million to Association Nos. 1-7 and 9 as part of
the settlement. The Partnership would reserve its right to pursue claims
for indemnity or contribution against The Walt Disney Company or its
affiliates in connection with the condominium units that were constructed
in whole or in part prior to September 10, 1987 (the date that the
Partnership acquired the assets of Arvida Corporation from The Walt Disney
Company) but were sold by the Partnership on or after that date.
Completion of the settlement is subject to the satisfaction of certain
conditions, including an order by the Court of final approval of the
settlement, with no reversal or material modification of such final
approval order on an appeal, if any, taken from such order. There is no
assurance that the settlement will receive final approval of the Court or
that all other conditions for its completion will be satisfied. If the
settlement is not completed, the litigation brought by Association Nos. 1-7
and 9 against the Partnership may continue.

During 2001, the Partnership settled the claims brought in the lawsuit
by Lakes of the Meadow Village Homes Condominium No. Eight Maintenance
Association, Inc. ("Association No. 8") for a payment of $155,000 funded by
U.S. Fire. Representatives of the Partnership have discussed with
representatives of Association No. 8 issues raised by the Building
Department's notices of violations for that Association's condominium
units. Association No. 8 submitted construction plans to address the
issues raised by the Building Department notices of violations and comments
received by the plan reviewers for that Association's units. On February
7, 2003, Association No. 8 received permits approving its plans for most of
its condominium units and is in the process of engaging a general
contractor for the work. Association No. 8 asked the Partnership to pay
the cost to remediate the units in its condominium. On March 9, 2004, the
Partnership entered into a separate settlement agreement with Association
No. 8 and its members. Under the terms of that settlement agreement, the
Partnership would pay $1,385,000 in exchange for a release of all of the
claims of Association No. 8 and its members. On March 15, 2004, the Court
entered an order dismissing the claims of Association No. 8 and its members
in the lawsuit. That order is subject to appeal for 30 days after its date
of entry. Completion of the settlement with Association No. 8 and its
members is subject to the satisfaction of certain conditions, including no
reversal or material modification of the Court's order dismissing the
claims of Association No. 8 and its members on appeal, if any, taken from
such order. There is no assurance that all conditions for completion of
the settlement with Association No. 8 and its members will be satisfied.
The Partnership intends to pursue claims for indemnity or contribution
against The Walt Disney Company or its affiliates in connection with the
units in the condominium of Association No. 8 that were constructed in
whole or in part prior to September 10, 1987 but were sold by the
Partnership on or after that date.

The Partnership has applied the accounting rules concerning loss
contingencies in regard to the treatment of this matter for financial
reporting purposes.

The Partnership is seeking payment or reimbursement of all or most of
the foregoing settlement amounts from U.S. Fire, which has issued a
reservation of rights letter with respect to the claims in the lawsuit
against the Partnership, and from the Partnership's excess insurance
carrier, The Home Insurance Company, which is subject to a liquidation
proceeding. The Partnership can give no assurances as to the ultimate
portion of the expenses, fees and damages allegedly relating to the Lakes
of the Meadow matter, if any, which will be covered by its insurance.
Reference is made to Item 3, Legal Proceedings elsewhere in this report for
further information concerning the Partnership's insurance and the Lakes of
the Meadow matter.

The Partnership, the General Partner and certain related parties as
well as other unrelated parties have been named defendants in an action
entitled Rothal v. Arvida/JMB Partners Ltd. et al, Case No. 03010709, filed
in the Circuit Court of the 17th Judicial Circuit in and for Broward
County, Florida. In this suit that was filed on or about June 20, 2003,
plaintiff purports to bring a class action allegedly arising out of
construction defects occurring during the development of Camellia Island in
Weston, which has approximately 150 homes. Plaintiff has filed a fourteen
count complaint seeking unspecified general damages, special damages,
statutory damages, prejudgment and post-judgment interest, costs,
attorneys' fees, and such other relief as the court may deem just and
proper. Plaintiff complains, among other things, that the homes were not
built of high quality and adequate construction, that the homes were not
built in conformity with the South Florida Building Code and plans on file
with Broward County, Florida, that the roofs were not properly attached or
were inadequate, that the truss systems and installation were improper, and
that the homes suffer from improper shutter storm protection systems. The
Arvida defendants believe that they have meritorious defenses and intend to

vigorously defend themselves. Due to, among other things, the early stage
of the litigation, the Partnership has not determined what, if any, loss
exposure that it may have for this matter, and the accompanying
consolidated financial statements do not reflect any accruals related to
this matter. This case has been tendered to one of the Partnership's
insurance carriers, Zurich American Insurance Company (together with its
affiliates collectively, "Zurich") for defense and indemnity. Zurich is
providing a defense of this matter under a purported reservation of rights.

The Partnership is unable to determine the ultimate portion of the
expenses, fees and damages, if any, which will be covered by its insurance.

The following three lawsuits in large part allegedly arise out of
landscaping issues at certain subdivisions in the Weston Community. These
lawsuits are collectively referred to as the "landscape cases."

The Partnership has been named a defendant in a lawsuit entitled, The
Ridges Maintenance Association, Inc. v. Arvida/JMB Partners, Arvida/JMB
Managers, Inc., Arvida Management Limited Partnership, and CCL Consultants,
Inc., Case No. 0310189 (the "Ridges Case"), filed on or about June 6, 2003
in the Circuit Court of the 17th Judicial Circuit in and for Broward
County, Florida. Plaintiff is alleged to be a homeowners' association
representing the owners of approximately 1,500 homes and extensive common
areas in the Ridges subdivision in Weston. In this six count complaint for
breach of implied warranty of merchantability, breach of implied warranty
of fitness, breach of express warranty, fraudulent misrepresentation and
concealment, negligent design, construction and/or maintenance and breach
of fiduciary duty, plaintiff seeks an unspecified dollar amount of
compensatory damages, interest, court costs and such other relief as the
court may deem just and proper. Plaintiff alleges that it evaluated the
condition of the common areas after the turnover of the community in
January 2000 and discovered numerous construction, design and maintenance
defects and deficiencies including, but not limited to, improper planting
of inferior quality/grade of landscaping contrary to prevailing government
codes, shallow planting of landscaping, landscape planting in inappropriate
areas, and the planting of landscaping that would uproot sidewalks.
Plaintiff also alleges that prior to the turnover of the community, the
Arvida defendants engaged in a series of actions that amounted to a breach
of their fiduciary duties to plaintiff by, among other things, improperly
failing to pay for all of the common expenses actually incurred prior to
turnover in excess of the assessment for common expenses and any other
funds including working capital, executing pre-turnover amendments to the
declarations of the association for the Arvida defendants' sole benefit and
to the financial detriment of the plaintiff, engaging in acts which
constituted a conflict of interest, and allegedly improperly transferring
funds by and between plaintiff and a non-party, The Town Foundation, Inc.,
which was also allegedly under the control of one or more of the Arvida
defendants, all in breach of defendants' alleged fiduciary duties. The
Arvida defendants believe that they have meritorious defenses and intend to
vigorously defend themselves.

The Partnership has been named a defendant in a case entitled The
Falls Maintenance Association, Inc. v. Arvida/JMB Partners, Arvida/JMB
Managers, Inc., CCL Consultants, Inc. and Stiles Corporation f/k/a Stiles
Landscape Service Co., Case No. 0302577 (the "Falls Maintenance Case"),
filed on or about February 10, 2003, in the 17th Judicial Circuit in and
for Broward County, Florida. Plaintiff is alleged to be the homeowners'
association responsible for the maintenance, repair, and replacement of the
common areas within the Falls subdivision in Weston. Plaintiff complains
that on turnover of the Falls subdivision, it discovered numerous
construction, design and maintenance defects and deficiencies including,
but not limited to, the quality/grade of the landscaping, landscaping
planted too shallow, landscaping planted too deep, landscaping planted in
narrow swale areas, landscaping planted in shallow soil areas, poor
fertility of road rock under locations where landscaping is planted and
poor maintenance. Plaintiff has filed a six count complaint with five
counts against the Partnership for breach of implied warranty of
merchantability, breach of implied warranty of fitness, breach of express

warranty, fraudulent misrepresentation/concealment, and negligent design,
construction and/or maintenance. Plaintiff seeks an unspecified amount of
compensatory damages, interest, costs, and such other and further relief as
is just and equitable. The Arvida defendants believe that they have
meritorious defenses and intend to vigorously defend themselves.

On October 22, 2003, a case entitled Weston Lakes Maintenance
Association v. Arvida/JMB Partners and Arvida/JMB Managers, Inc., Case No.
0318490, was filed in the Circuit Court of the Seventeenth Judicial Circuit
in and for Broward County, Florida Civil Division. In the four-count
complaint, which was served on the Partnership in February 2004, plaintiff,
Weston Lakes Maintenance Association, alleges that defendants negligently
selected and installed inferior landscaping materials in the common areas
and elements of the Weston Lakes subdivision. Plaintiff alleges that
defendants' actions have caused higher than expected maintenance fees and
that the landscaping is causing injury and damage to sidewalks and roadways
that must be repaired or replaced. Plaintiff alleges that an unspecified
large sum of money will be required to replace the alleged substandard
landscaping and that significant expense for remedial maintenance, repair
and replacement of elements throughout the community will be incurred. The
four-count complaint is for negligent construction and design of
landscaping allegedly based on a violation of a Broward County ordinance
regarding plant materials, common law negligence, breach of implied
warranty of fitness, and breach of implied warranty of merchantability.
Plaintiff seeks a judgment in an unspecified amount and type of damages,
attorney's fees and such other relief as the court may deem proper.
Defendants believe they have meritorious defenses and intend to vigorously
defend themselves. The case is in its preliminary stages.

Due to, among other things, the early stages of litigation, the
Partnership has not determined what, if any, loss exposure that it may have
for the landscape cases, and the accompanying consolidated financial
statements do not reflect any accruals related to the landscape cases.
Each of the landscape cases has been tendered to Zurich for defense and
indemnity. Zurich is providing a defense of each of the landscape cases.
Zurich has issued letters purporting to reserve its rights in the Ridges
and Falls Maintenance Cases. The Partnership is unable to determine the
ultimate portion of the expenses, fees and damages allegedly relating to
the landscape cases, if any, which will be covered by its insurance.

The Partnership is also a defendant in several other actions brought
against it arising in the normal course of business. It is the belief of
the General Partner, based on knowledge of facts and advice of counsel,
that the claims made against the Partnership in such actions will not
result in any material adverse effect on the Partnership's consolidated
financial position or results of operations.

(10) TAX INCREMENT FINANCING ENTITIES

In connection with the development of the Partnership's Weston
Community, bond financing was utilized to construct certain on-site and
off-site infrastructure improvements, including major roadways, lakes,
other waterways and pump stations, which the Partnership would otherwise be
obligated to finance and construct as a condition to obtain certain
approvals for the project. This bond financing was obtained by the Indian
Trace Community Development District ("District"), a local government
district that operated in accordance with Chapter 190 of the Florida
Statutes and the predecessor to the City of Weston. Under this program,
the Partnership is not obligated directly to repay the bonds. Rather, the
bonds are expected to be fully serviced by special assessment taxes levied
on the property, which effectively collateralizes the obligation to pay
such assessments until land parcels are sold. At such point, the liability
for the assessments related to parcels sold is borne by the purchasers
through a tax assessment on their property. These special assessment taxes
are designed to cover debt service on the bonds, including principal and
interest payments, as well as the operating and maintenance budgets of the
District. The use of this type of bond financing is a common practice for
major land developers in South Florida.

During March and December 1995, the District issued approximately $99
million and $13.3 million of bonds, respectively, at fixed rates ranging
from 4.0% to 8.25% per annum with maturities commencing in May 1995 through
May 2011. In July 1997, the District issued another approximate $41.6
million of fixed rate bonds. These bonds bear interest ranging from 4.0%
to 5.0% (payable in May and November each year until maturity or prior
redemption), with maturities commencing in May 1999 through May 2027. At
December 31, 2003, the amount of bonds issued and outstanding totaled
approximately $101 million. For the years ended December 31, 2003, 2002
and 2001, the Partnership paid special assessments related to the bonds of
approximately $25,000, $1.2 million and $1.4 million, respectively. In
2003, the Partnership was billed for assessments in excess of these
amounts, however, the Partnership has contested the amount of these
assessments and also believes that such assessments are not the
responsibility of the Partnership.

(11) FAIR VALUE OF FINANCIAL INSTRUMENTS

SFAS No. 107 requires the disclosure of the fair values of all
financial assets and liabilities for which it is practicable to estimate
such values. Value is defined in SFAS No. 107 as the amount at which the
instrument could be exchanged in a current transaction between willing
parties, other than in a forced or liquidation sale. The Partnership
believes the carrying amounts of its Cash and cash equivalents, Restricted
cash, Trade and other accounts receivable, Investments in and advances to
joint ventures, Amounts due from affiliates, Prepaid expenses and other
assets, Assets held for sale and Liabilities related to assets held for
sale approximate their fair values at December 31, 2003 and 2002.

(12) PARTNERSHIP AGREEMENT

Pursuant to the terms of the Partnership Agreement (and subject to
Section 4.2F which allocates Profits, as defined, to the General Partner
and Associate Limited Partners), profits or losses of the Partnership will
be allocated as follows: (i) profits will be allocated such that the
General Partner and the Associate Limited Partners will be allocated
profits equal to the amount of cash flow distributed to them for such
fiscal period and the amount of cash flow anticipated to be distributed to
them in future periods, with the remainder of the profits allocated to the
Holders of Interests, except that in all events, the General Partner shall
be allocated at least 1% of profits and (ii) losses will be allocated 1% to
the General Partner, 1% to the Associate Limited Partners and 98% to the
Holders of Interests.

In the event profits to be allocated in any given year do not equal or
exceed cash distributed to the General Partner and the Associate Limited
Partners for such year, the allocation of profits will be as follows: The
General Partner and the Associate Limited Partners will be allocated
profits equal to the amount of cash flow distributed to them for such year.

The Holders of Interests will be allocated losses such that the sum of
amounts allocated to the General Partner, Associate Limited Partners and
Holders of Interests equals the profits for the given year.

For the year ended December 31, 2003, the Partnership had a net loss
for financial reporting and Federal income tax purposes. The amount of net
loss allocated, collectively, to the General and Associate Limited Partners
for financial reporting purposes for the year ended December 31, 2003 was
approximately $13,900. The amount of the net loss allocated, collectively,
to the General and Associated Limited Partners for federal income tax
purposes for the year ended December 31, 2003 was approximately $68,200.
These allocations are based on losses incurred, 1% to both the General
Partner and the Associate Limited Partners, in accordance with Section 4.2A
of the Partnership Agreement.

For the years ended December 31, 2002 and 2001, the Partnership had
net income for financial reporting and Federal income tax purposes. The
amount of net income allocated, collectively, to the General and Associate
Limited Partners for financial reporting and Federal income tax purposes
for the year ended December 31, 2002 was approximately $17,355,000. The
amount of net income allocated, collectively, to the General and Associate
Limited Partners for both financial reporting and Federal income tax
purposes for the year ended December 31, 2001 was approximately
$13,472,000. These allocations are based on cash distributions made and,
for 2002 anticipated to be made, to the General Partner and the Associate
Limited Partners with an allocation of at least 1% of profits to the
General Partner in accordance with Section 4.2A of the Partnership
Agreement.

In general, the distribution of Cash Flow (as defined) is allocated
90% to the Holders of Interests and 10% to the General Partner and the
Associate Limited Partners (collectively).

(13) IMPAIRMENT OF LONG-LIVED ASSETS

At December 31, 2003, the Partnership recorded an asset impairment of
$523,721 to the carrying value of the furniture and equipment remaining at
the corporate office in Boca Raton, Florida. This loss was determined
based upon an analysis by an unaffiliated appraiser and recorded based upon
the difference between the carrying value of the assets as compared to
their appraised fair value.

In September 2001, the Partnership recorded an asset impairment of
$2.5 million to the carrying value of the Weston Athletic Club (the "Weston
Club"). The loss was recorded based upon the difference between the
carrying value of the Weston Club and its fair value less costs to sell as
determined by an agreement to purchase signed by the Partnership and an
unaffiliated third party purchaser during September 2001. During October
2001, the Partnership closed on the sale of the Weston Club to the
unaffiliated third party for a total sale price of $4.25 million.

(14) QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

Three Months Ended
-----------------------------------------------------
March 31, June 30, September 30, December 31,
2002 2002 2002 2002
----------- ---------- ------------- ------------
Total revenues . . . $89,649,677 81,856,386 66,084,043 77,160
Gross operating
profit (loss). . . 23,749,085 18,793,760 14,588,174 (2,773,071)
Net income . . . . . 21,922,350 17,581,758 12,736,738 1,502,582
Net income (loss)
per Limited
Partnership
Interest . . . . . 53.72 35.58 31.21 (30.44)

Three Months Ended
-----------------------------------------------------
March 31, June 30, September 30, December 31,
2003 2003 2003 2003
----------- ---------- ------------- ------------
Total revenues . . . $11,895,796 11,960,343 151,404 158,527
Gross operating
profit (loss). . . 1,015,613 893,132 (811,643) 410,861
Net income
(loss) . . . . . . 823,329 (577,503) (1,458,212) 515,830
Net income (loss)
per Limited
Partnership
Interest . . . . . 2.02 (1.42) (3.54) 1.25

Total revenues and gross operating profit (loss) for the three months
ended September 30, 2003 differ from the amounts reflected in the
September 30, 2003 Form 10-Q due to the reclassification of $231,118
reflected as Land and property revenues in the third quarter filing which
are more appropriately classified as a component of Gain on sale of assets
held for sale.

Total revenues for the third and fourth quarter 2003 as compared to
the previous quarterly periods for that year were affected by closings on
the sale of all 128 of the Partnership's remaining townhomes during the
first two quarters of 2003. The fluctuations in Gross operating profit
(loss) and Net income (loss) for 2003 are attributable to the following:
The sale of the Shoppes in the first quarter for a gain of approximately
$2.0 million, a loss on the sale of two commercial office building units in
Weston during the second quarter, a change in the estimate for future
warranty costs resulting in an increase in the estimated warranty reserve
and additional costing of construction overheads incurred which exceeded
previously used estimates during the third quarter, and the recognition of
approximately $1.3 million in gain relating to two small land parcels each
containing a billboard monument sign during the fourth quarter.

The Gross operating profit (loss), Net income (loss) and Net income
(loss) per Limited Partnership Interest for the fourth quarter of 2002, as
compared to the previous quarterly periods for that year, was adversely
affected by (i) a significant decline in revenues from continuing
operations attributable to the Partnership's continuing liquidation of its
assets, and (ii) an accrual of approximately $2.4 million relating to
certain contingent liabilities for Housing cost of revenues. The adverse
effect of such items on the Net income (loss) was partially offset by the
recognition of approximately $7.7 million in Gain on sale of assets held
for sale relating to the Country Club, the Waterways II Parcel and the
Ocala Parcel. The Net income (loss) per Limited Partnership Interest was
also affected by the allocation of income to the General Partner and
Associate Limited Partners equal to the amount of cash flow distributions
made and anticipated to be made to the General Partner and Associate
Limited Partners for 2002 and future periods. Reference is made to note 12
for a discussion of the allocations of profits and losses to the General
Partner and Associate Limited Partners, collectively, and the Holders of
Interests.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

ITEM 9A. CONTROLS AND PROCEDURES

Pursuant to Section 302 of the Sarbanes-Oxley Act and Rule 13a-15 of
the Securities Exchange Act of 1934 (the "Exchange Act") promulgated
thereunder, the principal executive officer and the principal financial
officer of the Partnership have evaluated the effectiveness of the
Partnership's disclosure controls and procedures as of the end of the
period covered by this report. Based on such evaluation, the principal
executive officer and the principal financial officer have concluded that
the Partnership's disclosure controls and procedures were effective as of
the end of the period covered by this report to ensure that information
required to be disclosed in this report was recorded, processed, summarized
and reported within the time period specified in the applicable rules and
form of the Securities and Exchange Commission for this report.

PART III

ITEM 10. DIRECTOR AND EXECUTIVE OFFICERS OF THE REGISTRANT

The General Partner of the Partnership is Arvida/JMB Managers, Inc., a
Delaware corporation, all of the outstanding shares of stock of which are
owned by JMB Investment Holdings-I, Inc., a Delaware corporation.
Substantially all of the outstanding shares of stock of JMB Investment
Holdings-I, Inc. are owned indirectly by JMB Realty Corporation, a Delaware
corporation ("JMB") that is in the business of real estate investment.
Substantially all of the outstanding shares of stock of JMB are owned by
certain of its officers, directors, members of their families and their
affiliates. The General Partner has responsibility for all aspects of the
Partnership's operations. The Associate Limited Partners of the
Partnership are Arvida/JMB Associates, an Illinois general partnership, of
which JMB and certain of its current and former officers and directors and
their affiliates are, indirectly, partners, and Arvida/JMB Limited
Partnership, an Illinois limited partnership, of which Arvida/JMB
Associates is the general partner. An affiliate of Merrill Lynch, Pierce,
Fenner & Smith Incorporated is the limited partner of Arvida/JMB Limited
Partnership. Certain relationships of the Partnership to the General
Partner and its affiliates are described under the captions "Determinations
by the General Partner," "Relationships of Affiliates to Partnership,"
"Remuneration of JMB, Arvida and Affiliates" and "Fiduciary Responsibility
of the General Partner" in the section "Conflicts of Interest" at pages 21
and 23-24 of the Prospectus of the Partnership, dated September 16, 1987,
which descriptions are hereby incorporated herein by reference to
Exhibit 99 to this report.

The Partnership is subject to certain conflicts of interest arising
out of its relationships with the General Partner, St. Joe/Arvida and their
affiliates. Various services have been and, to some extent, will continue
to be provided to the Partnership by the General Partner, St. Joe/Arvida
and their affiliates, including development and management supervisory and
advisory services, insurance brokerage and administrative services such as
legal, accounting and treasury services. In addition, the timing and
amount of cash distributions and cash reserves and allocations of profits
and losses for tax purposes, as well as the amount of expenses charged to
the Partnership for services, are or may be affected by determinations made
by the General Partner. Because the General Partner and/or its affiliates
have interests in the cash distributions and the profits or losses for tax
purposes of the Partnership or in the amount of payments or reimbursements
made for services rendered to the Partnership, the General Partner has a
conflict of interest in making the determinations affecting these matters.

The director and executive officers of the General Partner of the
Partnership are as follows:

SERVED IN
NAME OFFICE OFFICE SINCE
---- ------ ------------

H. Rigel Barber Vice President 04/08/87
Gailen J. Hull Vice President 04/09/87
Gary Nickele President 08/13/02
and Director 08/08/00
James D. Motta Vice President 04/09/87

There is no family relationship among any of the foregoing director or
officers. Mr. Nickele has been elected to serve a one-year term as
director until the annual meeting of the General Partner to be held on
August 10, 2004. All of the foregoing officers have been elected to serve
one-year terms until the first meeting of the Board of Directors held after
the annual meeting of the General Partner to be held on August 10, 2004.
There are no arrangements or understandings between or among any of said
director or officers and any other person pursuant to which the director or
any officer was selected as such.

The foregoing director and most of the officers are also officers
and/or directors of JMB. Most of the foregoing director and officers are
also officers and/or directors of various affiliated companies of JMB.

The business experience during the past five years of such director and
officers of the General Partner of the Partnership includes the following:

H. Rigel Barber (age 55) is Chief Executive Officer and Executive Vice
President of JMB and an officer of various JMB affiliates. Mr. Barber has
been associated with JMB since March, 1982. He received a J.D. degree from
the Northwestern Law School and is a member of the Bar of the State of
Illinois.

Gailen J. Hull (age 55), in addition to being a Vice President of
Arvida/JMB Managers, Inc., has acted as the Chief Financial Officer of the
Partnership since August 2002. He is also a Senior Vice President and,
since August 2002, Chief Financial Officer of JMB and an officer of various
JMB affiliates. Mr. Hull has been associated with JMB since March, 1982.
He holds a Masters degree in Business Administration from Northern Illinois
University and is a Certified Public Accountant.

Gary Nickele (age 51) is Executive Vice President and General Counsel
of JMB and an officer and/or director of various JMB affiliates. Prior to
becoming President of Arvida/JMB Managers, Inc., in August 2002, Mr.
Nickele had been a Vice President of that corporation since April 1987. He
has been associated with JMB since February, 1984. He holds a J.D. degree
from the University of Michigan Law School and is a member of the Bar of
the State of Illinois.

James D. Motta (age 48) has been, since November 1997, President and
Chief Executive Officer of St. Joe/Arvida Company, L.P. ("St. Joe/Arvida"),
which, prior to July 2003, was a joint venture among affiliates of The St.
Joe Company and of JMB, and, since July 2003, has been a joint venture
between subsidiaries of The St. Joe Company, for real estate development,
ownership and management. Mr. Motta has tendered his resignation as
President and Chief Executive Officer of St. Joe/Arvida effective March 31,
2004 and will also resign as Vice President of Arvida/JMB Managers, Inc.
effective March 31, 2004. The Partnership expects to enter into a
consulting agreement with Mr. Motta for at least a one-year period
effective April 1, 2004. Mr. Motta is also a trustee of Gables Residential
Trust, an owner, operator and developer of multifamily apartment
communities, and a director of Correctional Properties Trust, an owner and
lessor of correctional and detention facilities.

Gary Nickele is President and Manager of KLC Land Company, LLC, which
was formerly known as Amfac Hawaii, LLC ("KLC"). On February 27, 2002, KLC
and certain of its subsidiaries and affiliates filed voluntary petitions
under Chapter 11 of the United States Bankruptcy Code. KLC, together with
its subsidiaries, principally owns and develops real estate in the State of
Hawaii, and it and certain subsidiaries filed the Chapter 11 proceedings in
part to enable them to achieve an orderly reorganization of their debt to
serviceable levels. In November 2002, the United States Bankruptcy Court
for the Northern District of Illinois entered an order confirming a plan of
reorganization for KLC and the other debtors in the Chapter 11 proceedings.

The Partnership is a limited partnership organized under the laws of
the State of Delaware, and the rights of its partners and Holders of
Interests are governed by its Partnership Agreement, the Assignment
Agreement and the Delaware Revised Uniform Limited Partnership Act, as
amended. Moreover, the Interests are not publicly traded. In view of
these facts, as well as the limited business activity of the Partnership,
the General Partner has determined that it is not necessary for the
Partnership to have either an "audit committee financial expert" or a "code
of ethics" as those terms are defined in the rules and regulations of the
Securities and Exchange Commission.

ITEM 11. EXECUTIVE COMPENSATION

The officers and the director of the General Partner receive no direct
remuneration in such capacities from the Partnership. The General Partner
and the Associate Limited Partners are entitled to receive a share of cash
distributions, when and as cash distributions are made to the Holders of
Interests, and a share of profits or losses. Reference is made to notes 1
and 12 for a description of such distributions and allocations. The
General Partner and the Associate Limited Partners, collectively, received
cash distributions in 2003 totaling $4,488,889. Pursuant to the
Partnership Agreement, the General Partner and Associate Limited Partners
were allocated net losses for Federal income tax purposes for 2003 of
$68,000. Reference is made to note 12 for further discussion of this
allocation. Such losses benefit the General Partner and the partners in
the Associate Limited Partners to the extent that such losses may be used
to offset their taxable income from the Partnership or other sources.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED SECURITY HOLDER MATTERS

(a) The following have reported beneficial ownership of more than 5%
of the outstanding Interests of the Partnership.

NAME AND ADDRESS AMOUNT AND NATURE
OF BENEFICIAL OF BENEFICIAL PERCENT
TITLE OF CLASS OWNER OWNERSHIP OF CLASS
- -------------- ---------------- ----------------- --------

Limited Partnership The St. Joe Company 106,200.4399 26.3%
Interests and Interests
Assignee Interests (1)
therein

Limited Partnership Alfred I. duPont 106,200.4399 26.3%
Interests and Testamentary Trust Interests
Assignee Interests (2)
therein

Limited Partnership The Nemours 106,200.4399 26.3%
Interests and Foundation Interests
Assignee Interests (2)
therein

Limited Partnership Winfred L. Thornton 106,200.4399 26.3%
Interests and Interests
Assignee Interests (2)
therein

Limited Partnership William T. 106,200.4399 26.3%
Interests and Thompson III Interests
Assignee Interests (2)
therein

Limited Partnership Hugh M. Durden 106,200.4399 26.3%
Interests and Interests
Assignee Interests (2)
therein

Limited Partnership John F. Porter III 106,200.4399 26.3%
Interests and Interests
Assignee Interests (2)
therein

Limited Partnership Herbert H. Peyton 106,200.4399 26.3%
Interests and Interests
Assignee Interests (2)
therein

(1) Reflects beneficial ownership of Interests held directly by The St.
Joe Company, for which it has been reported that it has shared voting
and dispositive power. The address for The St. Joe Company is 1650
Prudential Drive, Suite 400, Jacksonville, Florida 32207. Wholly-
owned subsidiaries of The St. Joe Company are the partners, and
collectively own all of the partnership interests, in St. Joe/Arvida.

(2) Reflects indirect beneficial ownership of Interests held directly by
The St. Joe Company. Messrs. Thornton, Thompson, Durden, Porter and
Peyton are trustees and directors of the Alfred I. duPont
Testamentary Trust (the "Trust") and The Nemours Foundation (the
"Foundation"), respectively. As a result of the Trust's and the
Foundation's respective direct and beneficial ownerships of
outstanding shares of common stock of The St. Joe Company, the Trust,

Foundation and Messrs. Thornton, Thompson, Durden, Porter and Peyton
are or may be deemed to be indirect beneficial owners of 106,200.4399
Interests owned directly by The St. Joe Company, for which they each
have or may be deemed to have shared voting and dispositive power.
See note (1) above. The address for each of the Trust, Foundation
and Messrs. Thornton, Thompson, Durden, Porter and Peyton is 4600
Touchton Road, East Building 200, Suite 500, Jacksonville, Florida
32246.

(b) The General Partner and its executive officers and director
beneficially own the following Interests of the Partnership:

NAME OF AMOUNT AND NATURE
BENEFICIAL OF BENEFICIAL PERCENT
TITLE OF CLASS OWNER OWNERSHIP OF CLASS
- -------------- ---------- ----------------- --------

Limited Partnership General Partner None --
Interests and and its executive
Assignee Interests officers and
therein director as
a group
- ---------------

No executive officer or director of the General Partner of the
Partnership possesses a right to acquire beneficial ownership of Interests
of the Partnership.

(c) There exists no arrangement, known to the Partnership, the
operation of which may at a subsequent date result in a change in control
of the Partnership.

(d) The Partnership has no compensation plans or individual
compensation arrangements under which equity securities of the Partnership
are authorized for issuance to any person.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Pursuant to the Partnership Agreement, the Partnership is permitted to
engage in various transactions involving the General Partner, St.
Joe/Arvida and their respective affiliates. Such transactions involve
conflicts of interest for the General Partner or its affiliates. Certain
relationships of the General Partner (and its director and executive
officers) and its affiliates to the Partnership are set forth above in
Item 10.

The Partnership and its affiliate, Arvida Company ("Arvida"), entered
into an information systems sharing agreement that sets forth (i) the
Partnership's and Arvida's mutual ownership rights with respect to certain
proprietary computer software jointly developed by the Partnership and
Arvida, and (ii) the arrangement for the sharing by Arvida of certain
computer hardware and software owned, leased or licensed by the Partnership
and its affiliates and various related information systems services
(collectively, the "Information Resources"), provided that Arvida pays its
allocable share of the costs of using such Information Resources.

In November 1997, St. Joe/Arvida Company, L.P. ("St. Joe/Arvida")
acquired the major assets of Arvida, including the Arvida name and service
marks with respect to the Arvida name. Pursuant to a license agreement
with Arvida, the Partnership has a non-exclusive right to use the Arvida
name and service marks with respect to the Arvida name. In connection with
the acquisition of Arvida's assets, St. Joe/Arvida was assigned Arvida's
rights and obligations under the license agreement with the Partnership.
In addition, St. Joe/Arvida was assigned Arvida's rights and obligations
under the information systems sharing agreement discussed above.

St. Joe/Arvida also entered into a sub-management agreement with
Arvida, effective January 1, 1998, whereby St. Joe/Arvida provides a
substantial portion of the development and management supervisory and
advisory services (and the personnel therefor) to the Partnership that
Arvida would otherwise provide pursuant to its management agreement with
the Partnership. St. Joe/Arvida is reimbursed for such services and
personnel on the same basis as Arvida under its management agreement, and
such reimbursements are made directly to St. Joe/Arvida by the Partnership.

The Partnership also receives reimbursement from St. Joe/Arvida for certain
general and administrative costs including, and without limitation, salary
and salary-related costs relating to work performed by employees of the
Partnership on behalf of St. Joe/Arvida. Charges and related
reimbursements between the Partnership and St. Joe/Arvida are determined on
a consistent basis using various methodologies depending upon the nature of
the services provided. Such charges, whether incurred directly by the
Partnership or St. Joe/Arvida, may include salaries and salary-related
costs, as well as burdens for administrative and office overheads.
Methodologies used to apportion costs between entities include, but are not
limited to, charges based upon percentages of (i) time spent on each entity
relative to total hours worked; (ii) cash expenditures by entity relative
to total expenditures; and (iii) real estate sales and closings by entity
relative to total sales and closings. The total reimbursements made to St.
Joe/Arvida during the year ended December 31, 2003, was approximately
$7,073,000. Such reimbursement included amounts owing in connection with
the Partnership's achievement of certain profit and cash flow levels prior
to 2003. On January 1, 2003, certain employees of the Partnership became
employees of St. Joe/Arvida. Therefore, a significant portion of the
expense related to this reimbursement to St. Joe/Arvida in 2003 was a
direct operating expense of the Partnership in prior years. In addition,
at December 31, 2003, the Partnership owed St. Joe/Arvida approximately
$20,800 for general and administrative costs pursuant to the sub-management
agreement, all of which was paid as of March 1, 2004. For the year ended
December 31, 2003, the Partnership received approximately $5,154,000 from
St. Joe/Arvida or its affiliates. In addition, $326,700 was owed to the
Partnership at December 31, 2003, all of which was received as of March 1,
2004.

In August 2002, the Partnership entered into an agreement for the
prospective assignment to and assumption by St. Joe/Arvida of the
Partnership's rights and obligations under the lease for its offices
(approximately 19,100 rentable square feet of space) in Boca Raton,
Florida. The assignment and assumption was effective January 1, 2004.
From and after the effective date, St. Joe/Arvida will charge to the
Partnership an allocable portion of the monthly base rent (which ranges
from approximately $27,000 to $29,000 through January 31, 2005), operating
expenses and tenant improvement costs, if any, incurred by St. Joe/Arvida
pursuant to the lease. The allocation method for such costs is discussed
in the preceding paragraph and is similar to the allocation method
previously used by the Partnership to charge to St. Joe/Arvida a portion of
the lease costs.

The Partnership received reimbursement from St. Joe/Arvida and its
affiliates for the use of certain equipment and property owned or leased by
the Partnership. In addition, in July 2003, the Partnership assigned its
rights as licensee in certain software licenses to The St. Joe Company in
consideration of a payment for the assignment. The Partnership remains
contingently liable to the software licensor for performance of the
obligations under the software licenses and retains certain rights to use
the software licenses. The net reimbursement and payment received for
these items by the Partnership for the year ended December 31, 2003 was
approximately $194,000.

Based upon discussions held in the first quarter of 2004, the
Partnership anticipates selling the furniture and equipment remaining in
its Boca Raton office to the St. Joe Company in the second quarter of 2004
for its fair market value as determined by an independent appraisal.

JMB Insurance Agency, Inc., an affiliate of the General Partner,
earned and received insurance brokerage commissions in 2003 of
approximately $104,500 in connection with providing insurance coverage for
certain of the properties of the Partnership, all of which was paid as of
December 31, 2003. Such commissions are at rates set by insurance
companies for the classes of coverage provided.

The General Partner of the Partnership or its affiliates are entitled
to reimbursement for their direct expenses or out-of-pocket expenses
relating to the administration of the Partnership and the acquisition,
development, ownership, supervision, and operation of the Partnership
assets. In 2003, the General Partner and its affiliates were entitled to
reimbursements for legal, accounting and treasury services. Such costs for
2003 were approximately $343,400, all of which were paid as of December 31,
2003.

The Partnership was also entitled to receive reimbursements from
affiliates of the General Partner for certain general and administrative
expenses including, and without limitation, salary and salary-related
expenses relating to work performed by employees of the Partnership and
certain out-of-pocket expenditures incurred on behalf of such affiliates.
For the year ended December 31, 2003, the total of such costs incurred was
approximately $46,900. Approximately $630 was outstanding as of
December 31, 2003, all of which was received as of March 1, 2004.

Amounts payable to or by the General Partner, St. Joe/Arvida or their
affiliates do not bear interest.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Ernst & Young LLP audited the accompanying consolidated financial
statements for the years ended December 31, 2003 and 2002. The fees billed
by Ernst & Young LLP for all professional services for each of those years
were as follows:

(1) AUDIT FEES

The aggregate fees billed for each of the years ended December 31,
2003 and 2002 for professional services rendered by Ernst & Young LLP for
the audit of the Partnership's annual financial statements and review of
financial statements included in the Partnership's Form 10-Q filings were
approximately $150,500 and $199,800, respectively.

(2) AUDIT-RELATED FEES

None

(3) TAX FEES

The aggregate fees billed for each of the years ended December 31,
2003 and 2002, for professional services rendered by Ernst & Young LLP for
tax planning, tax compliance and tax return preparation were approximately
$10,000 and $20,000, respectively.

(4) ALL OTHER FEES

None

The Partnership has not adopted any pre-approval policies and
procedures for its audit, audit-related and permitted non-audit services.
All such services are approved by the sole director of the General Partner
before the services are rendered.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K

(a) The following documents are filed as part of this report:

1. Financial Statements. (See Index to Financial
Statements filed with this annual report on Form 10-K).

2. Exhibits.

3.1 Amended and Restated Agreement of Limited
Partnership.*

3.2 Acknowledgment and Amendment of Partnership
Agreement.*

3.3 Amendment to the Amended and Restated
Agreement of Limited Partnership, effective
October 29, 2002, is incorporated herein by
reference to Exhibit 3.3 to the Partnership's
Report for the year ended December 31, 2002 on
Form 10-K (File No. 0-16976) dated March 24,
2003.

3.4 Assignment Agreement by and among the General
Partner, the Initial Limited Partner and the
Partnership.*

10.1 Agreement between the Partnership and The Walt
Disney Company dated January 29, 1987 is
incorporated herein by reference to Exhibit
10.1 to the Partnership's Report for the year
ended December 31, 2002 on Form 10-K (File No.
0-16976) dated March 24, 2003.

10.2 Letter Agreement, dated as of September 10,
1987, between the Partnership and The Walt
Disney Company, is incorporated herein by
reference to Exhibit 10.2 to the Partnership's
Report for the year ended December 31, 2002 on
Form 10-K (File No. 0-16976) dated March 24,
2003.

10.3 Management, Advisory and Supervisory
Agreement, including the License Agreement for
the use of the Arvida name as exhibit A
thereto, is incorporated herein by reference
to Exhibit 10.3 to the Partnership's Report
for the year ended December 31, 2002 on Form
10-K (File No. 0-16976) dated March 24, 2003.

10.4 Fourth Amended and Restated Agreement of
Partnership of Arvida/JMB Partners, together
with Amendment No. 1 thereto, is incorporated
herein by reference to Exhibit 10.4 to the
Partnership's Report for the year ended
December 31, 2002 on Form 10-K (File No.
0-16976) dated March 24, 2003.

10.5 Information Systems Sharing Agreement dated
November 6, 1997 between Arvida/JMB Partners,
L.P. and Arvida Company is hereby incorporated
herein by reference to Exhibit 10.15 to the
Partnership's Report for the year ended
December 31, 1997 on Form 10-K (File No.
0-16976) dated March 25, 1998.

10.6 Sale and Purchase Agreement dated as of
September 6, 2002, by and between Weston Town
Center, LLC and Belmont Investment Corp., as
amended by the First, Second and Third
Amendments to Sale and Purchase Agreement,
dated January 17, 2003, February 7, 2003 and
February 7, 2003, respectively, for the sale
of the Weston Town Center, also known as The
Shoppes of Town Center located in Weston,
Florida is hereby incorporated by reference to
Exhibit 10.1 to the Partnership's Report on
Form 8-K (File No. 0-16976) filed on
February 24, 2003.

21 Subsidiaries of the Registrant is filed
herewith.

31.1 Certification of Principal Executive Officer
Pursuant to Rule 13a-14(a)/Rule 15d-14(a) of
the Securities Exchange Act of 1934, as
amended, is filed herewith.

31.2 Certification of Principal Financial Officer
Pursuant to Rule 13a-14(a)/Rule 15d-14(a) of
the Securities Exchange Act of 1934, as
amended, is filed herewith.

32. Certifications of Chief Executive Officer and
Chief Financial Officer Pursuant to 18 U.S.C.
Section 1850, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 are
filed herewith.

99 Certain portions of the Prospectus of the
Partnership dated September 16, 1987, from the
Section entitled "Conflicts of Interest" are
filed herewith.

* Previously filed with the Securities and Exchange Commission
as Exhibits 3.1, 3.2 and 3.3, respectively, to the Partnership's
Form 10-Q/A Report (File No. 0-16976) filed on June 6, 2002, and
incorporated herein by reference.

(b) Reports on Form 8-K:

No reports on Form 8-K were filed during the last
quarter of the period covered by this report.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Partnership has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

ARVIDA/JMB PARTNERS, L.P.

BY: Arvida/JMB Managers, Inc.
(The General Partner)

GAILEN J. HULL
By: Gailen J. Hull
Vice President
Date: March 30, 2004

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

GAILEN J. HULL
By: Gailen J. Hull, Vice President
Principal Accounting Officer
and Principal Financial Officer
Date: March 30, 2004

GARY NICKELE
By: Gary Nickele, President and Sole Director
Principal Executive Officer
Date: March 30, 2004

ARVIDA/JMB PARTNERS, L.P.

EXHIBIT INDEX

DOCUMENT SEQUENTIALLY
EXHIBIT INCORPORATED NUMBERED
NO. EXHIBIT BY REFERENCE PAGE
- ------- ------- ------------ ------------

3.1. Amended and Restated Agreement
of Limited Partnership. Yes

3.2 Acknowledgment and Amendment of
Partnership Agreement. Yes

3.3 Amendment to the Amended and
Restated Agreement of Limited
Partnership, effective October 29,
2002. Yes

3.4. Assignment Agreement by and
among the General Partner, the
Initial Limited Partner and the
Partnership. Yes

10.1 Agreement between the Partnership
and The Walt Disney Company dated
January 29, 1987 Yes

10.2 Letter Agreement, dated as of
September 10, 1987, between the
Partnership and The Walt Disney
Company Yes

10.3 Management, Advisory and Supervisory
Agreement, including the License
Agreement for the use of the Arvida
name as exhibit A thereto Yes

10.4 Fourth Amended and Restated Agreement
of Partnership of Arvida/JMB Partners,
together with Amendment No. 1 thereto Yes

10.5 Information Systems Sharing Agreement
dated November 6, 1997 between
Arvida/JMB Partners, L.P. and Arvida
Company Yes

10.6 Sale and Purchase Agreement dated as
of September 6, 2002, by and between
Weston Town Center, LLC and Belmont
Investment Corp., as amended by the
First, Second and Third Amendments to
Sale and Purchase Agreement, dated
January 17, 2003, February 7, 2003
and February 7, 2003, respectively,
for the sale of the Weston Town
Center, also known as The Shoppes of
Town Center located in Weston, Florida Yes

21 Subsidiaries of the Registrant. No

DOCUMENT SEQUENTIALLY
EXHIBIT INCORPORATED NUMBERED
NO. EXHIBIT BY REFERENCE PAGE
- ------- ------- ------------ ------------

31.1 Certification of Principal
Executive Officer pursuant to
Rule 13a-14(a)/Rule 15d-14(a)
of the Securities Exchange Act,
as amended. No

31.2 Certification of Principal
Financial Officer pursuant to
Rule 13a-14(a)/Rule 15d-14(a)
of the Securities Exchange Act,
as amended. No

32. Certifications of Chief Executive
Officer and Chief Financial
Officer Pursuant to 18 U.S.C.
Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley
Act of 2002. No

99 Certain portions of the Prospectus
of the Partnership dated September 16,
1987, from the Section entitled
"Conflicts of Interest" No