UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended ~~April~~July 3031, 2003

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From to __________to __________

Commission File Number 0-17517

SEA PINES ASSOCIATES, INC.

(Exact name of registrant as specified in its charter)


South Carolina (State or other jurisdiction of incorporation or organization)		57-0845789 (I.R.S. Employer Identification No.)

32 Greenwood Drive, Hilton Head Island, South Carolina ~~29928~~ (Address of principal executive offices) 29928 (Zip Code)

Registrant’s telephone number, including area code (843) 785-3333

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 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 o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12B-2 of the Act.)

Yes o No x

The number of shares outstanding of the registrant’s common stock as of ~~April~~July 3031, 2003 was 3,~~573~~587,400.

INDEX TO FORM 10-Q
FOR SEA PINES ASSOCIATES, INC.

		Page	~~Page~~
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Condensed Consolidated Balance Sheets as of April 30, 2003 and October 31, 2002				4
	Condensed Consolidated Balance Sheets as of July 31, 2003 and October 31, 2002		4
Condensed Consolidated Statements of Operations for the Three and Six Months Ended April 30, 2003 and 2002				6
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended July 31, 2003 and 2002		6
Condensed Consolidated Statements of Cash Flows for the Six Months ended April 30, 2003 and 2002				7
	Condensed Consolidated Statements of Cash Flows for the Nine Months ended July 31, 2003 and 2002		7
~~Notes to Condensed Consolidated Financial Statements~~	Notes to Condensed Consolidated Financial Statements		8	8
Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations			15	14
Item 3 - Quantitative and Qualitative Disclosures About Market Risk			23	22
Item 4 - Controls and Procedures				22
Item 4 – Controls and Procedures			24
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings			24	22
Item 2 - Changes in Securities and Use of Proceeds			24	22
Item 3 - Defaults Upon Senior Securities			25	23
Item 4 - Submission of Matters To A Vote of Security Holders			25	23
Item 5 - Other Information			25	23
Item 6 - Exhibits and Reports on Form 8-K			25	23
Signatures			26	24
Certifications				25
Exhibit Index			27
Exhibit Index				28

PART I

THIS REPORT ON FORM 10-Q AND OTHER STATEMENTS ISSUED OR MADE FROM TIME TO TIME BY THE COMPANY OR ITS REPRESENTATIVES CONTAIN STATEMENTS WHICH MAY CONSTITUTE “FORWARD-LOOKING STATEMENTS” WITHIN THE MEANING OF THE SECURITIES ACT OF 1933, AS AMENDED, AND THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THOSE STATEMENTS INCLUDE STATEMENTS REGARDING THE INTENT, BELIEF OR CURRENT EXPECTATIONS OF THE COMPANY AND MEMBERS OF ITS MANAGEMENT TEAM, AS WELL AS THE ASSUMPTIONS ON WHICH SUCH STATEMENTS ARE BASED. THE INVESTMENT COMMUNITY IS CAUTIONED THAT ANY SUCH FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES, AND THAT ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY SUCH FORWARD-LOOKING STATEMENTS. IMPORTANT FACTORS CURRENTLY KNOWN TO MANAGEMENT THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN FORWARD-LOOKING STATEMENTS INCLUDE THOSE SET FORTH IN THIS REPORT, AND THOSE CONTAINED IN THE SAFE HARBOR COMPLIANCE STATEMENT FOR FORWARD-LOOKING STATEMENTS INCLUDED AS EXHIBIT 99.1 TO THIS REPORT ON FORM 10-Q, WHICH FACTORS ARE HEREBY INCORPORATED HEREIN BY REFERENCE. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE FORWARD-LOOKING STATEMENTS TO REFLECT CHANGED ASSUMPTIONS, THE OCCURRENCE OF UNANTICIPATED EVENTS OR CHANGES TO FUTURE OPERATING RESULTS OVER TIME.

Item 1. Financial Statements

Sea Pines Associates, Inc.
Condensed Consolidated Balance Sheets
(In thousands)

			April 30,		October 31,
			July 31,		October 31,
			2003		2002
			(Unaudited)		(Note)
Assets
Current assets:
	Cash and cash equivalents:
		Unrestricted	$	~~604~~546	$	574
		Restricted		43,~~550~~656		2,488
				5,154		3,062
				4,202		3,062
	Accounts receivable, less allowance for doubtful accounts of $31 and $115 at April 30, 2003 and October 31, 2002, respectively			1,544		1,290
	Accounts receivable, less allowance for doubtful accounts of $31 and $115 at July 31, 2003 and October 31, 2002, respectively			941		1,290
	Current portion of notes receivable			9193		88
	Income tax receivable			~~217~~54		217
	Inventories			~~995~~845		859
	Prepaid expenses			~~639~~595		378
Total current assets				86,~~640~~730		5,894
Notes receivable, less current portion				~~955~~931		1,002
Deferred loan fees, net				~~212~~232		139
Other assets, net				60		60
				1,227		1,201
				1,223		1,201
Real estate assets:
	Operating properties, net			43,~~786~~225		44,197
	Properties held for future development			3,~~203~~186		3,219
				46,989		47,416
				46,411		47,416
Total assets			$	5654,~~856~~364	$	54,511

Note:

The condensed consolidated balance sheet at October 31, 2002 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

See accompanying notes.

Sea Pines Associates, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share amounts)

		April 30,			October 31,
		July 31,			October 31,
		2003			2002
		(Unaudited)			(Note)
Liabilities and shareholders’ equity
Current liabilities:
	Accounts payable and accrued expenses	$	3,~~531~~444		$	3,298
	Accrued litigation		8,~~000~~129			—
	Advance deposits		43,~~370~~588			2,410
	Line of credit		1,387			—
	Current portion of deferred revenue and other long-term liabilities		287			373
	Current portion of deferred revenue and other long-term liabilities		460			373
	Current portion of long-term debt		1,186			1,142
	Current portion of long-term debt		34,240			1,142
	Total current liabilities		16,634			7,223
	Total current liabilities		51,988			7,223
Long-term debt, less current portion			31,983			32,398
Long-term debt, less current portion			—			32,398
Interest rate swap agreement			1,897			2,277
Interest rate swap agreement			2,253			2,277
Deferred revenue and other long-term liabilities			618			793
Deferred revenue and other long-term liabilities			676			793
Trust preferred securities			2,480			2,480
Total liabilities			5753,~~397~~612			45,171
Commitments and contingencies
Shareholders’ equity (accumulated deficit):
Shareholders’ equity:
	Series A cumulative preferred stock, no par value, 2,000,000 shares authorized; 220,900 shares issued and outstanding at April 30, 2003 and October 31, 2002, respectively (liquidation preference of $1,679 at April 30, 2003 and October 31, 2002, respectively)		1,294			1,294
	Series A cumulative preferred stock, no par value, 2,000,000 shares authorized; 220,900 shares issued and outstanding at July 31, 2003 and October 31, 2002, respectively (liquidation preference of $1,679 at July 31, 2003 and October 31, 2002, respectively)		1,294			1,294
	Series B junior cumulative preferred stock, no par value, 20,000 shares authorized; none issued or outstanding		—			—
	Common stock, 23,000,000 shares authorized; no par value; 3,573,400 shares issued and outstanding at April 30, 2003 and October 31, 2002, respectively		7,860			7,759
	Common stock, 23,000,000 shares authorized; no par value; 3,587,400 and 3,573,400 shares issued and outstanding at July 31, 2003 and October 31, 2002, respectively		7,916			7,759
	Unearned stock compensation		(~~266~~286	)		(235	)
	Retained earnings (deficit)		(9,429	)		522
	Retained (deficit) earnings		(8,172	)		522
Total shareholders’ equity (accumulated deficit)			(541	)		9,340
Total shareholders’ equity			752			9,340
Total liabilities and shareholders’ equity (accumulated deficit)		$	56,856		$	54,511
Total liabilities and shareholders’ equity		$	54,364		$	54,511

Note:

See accompanying notes.

Sea Pines Associates, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)

		Three Months Ended						~~Six~~Nine Months Ended
		April 30,						April 30,
		July 31,						July 31,
		2003			2002			2003			2002
Revenues		$	1317,~~614~~545		$	1418,~~085~~038		$	2038,~~773~~318		$	2038,~~622~~660
Costs and expenses:
	Cost of revenues		812,~~977~~659			812,~~796~~593			1528,~~497~~156			1426,~~322~~916
	Sales and marketing expenses		~~890~~825			~~890~~677			12,~~710~~535			12,~~565~~242
	General and administrative expenses		1,~~707~~594			1,~~524~~512			34,~~117~~711			34,~~151~~663
	Litigation expenses		~~8,000~~450			—			8,~~000~~450			—
	Depreciation and amortization		~~646~~645			~~648~~647			1,~~294~~939			1,~~296~~943
			20,220			11,858			29,618			20,334
			16,173			15,429			45,791			35,764
(Loss) income from operations			(6,606	)		2,227			(8,845	)		288
Income (loss) from operations			1,372			2,609			(7,473	)		2,896
Other income (expenses):
	(Loss) gain on sale of assets, net		(6	)		4			(4	)		4
	Gain on sale of assets, net		58			—			54			4
	Interest income		2825			3230			~~156~~181			5888
	Interest rate swap agreement		~~(70~~356	)		44(563	)		24380			~~577~~14
	Interest expense, net of amounts capitalized		(~~558~~554	)		(~~609~~588	)		(1,~~122~~676	)		(1,~~237~~824	)
			(606	)		(529	)		(946	)		(598	)
			(115	)		(1,121	)		(1,061	)		(1,718	)
(Loss) income before income taxes			(7,212	)		1,698			(9,791	)		(310	)
Income (loss) before income taxes			1,257			1,488			(8,534	)		1,178
(Provision) benefit from income taxes			~~(696~~—	)		(~~620~~793	)		—			~~325~~(468	)
Net (loss) income			(7,908	)		1,078			(9,791	)		15
Net income (loss)			1,257			695			(8,534	)		710
Preferred stock dividend requirements			(40	)		(40	)		(80120	)		(80120	)
Net (loss) income attributable to common stock		($	7,948	)	$	1,038		($	9,871	)	($	65	)
Net income (loss) attributable to common stock		$	1,217		$	655		($	8,654	)	$	590
Net (loss) income per share of common stock, basic and diluted		($	2.22	)	$	0.29		($	2.76	)	($	0.02	)
Net income (loss) per share of common stock, basic and diluted		$	0.34		$	0.18		($	2.42	)	$	0.17
Weighted average shares outstanding			3,~~573~~585			3,~~564~~561			3,~~573~~577			3,~~561~~566

See accompanying notes.

Sea Pines Associates, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

		Six Months EndedApril 30,
		Nine Months Ended
		July 31,
		2003			2002
Cash flows from operating activities:
Net (loss) income		($	98,~~791~~534	)	$	15710
Adjustments to reconcile net (loss) income to net cash
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
	used in operating activities:
	Depreciation and amortization		1,939			1,943
	Depreciation and amortization		1,294			1,296
	Allowance for doubtful accounts		(84	)		92
	Allowance for doubtful accounts		(84	)		(4	)
	Gain on sale of asset		(54	)		(4	)
	Loss (gain) on sale of asset		4			(4	)
	Amortization of stock compensation		106			90
	Amortization of stock compensation		70			55
	Interest rate swap agreement		(380	)		(14	)
	Interest rate swap agreement		(24	)		(577	)
	Deferred income taxes		—			(324	)
Changes in current assets and liabilities:
	Restricted cash		(21,~~062~~168	)		(32,~~734~~791	)
	Accounts and notes receivable		~~(126~~499	)		~~(575~~323	)
	Inventories		~~(136~~14	)		~~(132~~30	)
	Prepaid expenses		(~~261~~217	)		(~~308~~244	)
	Accounts payable and accrued expenses		~~153~~106			~~115~~20
	Accrued litigation		8,~~000~~129			—
	Advance deposits		1,~~960~~178			32,~~759~~807
	Deferred revenue		(30261	)		(~~171~~93	)
	Income taxes payable		—			455
	Income tax receivable/payable		163			923
Net cash used in operating activities			(1,033	)		(134	)
Net cash provided by operating activities			1,436			3,792
Cash flows from investing activities:
	Proceeds from sale of assets		28103			4
	Capital expenditures and property acquisitions		(~~877~~952	)		(~~195~~249	)
Net cash used in investing activities			(849	)		(~~191~~245	)
Cash flows from financing activities:
	Payment of deferred loan fees		(95124	)		(11	)
	Additional borrowing on revolving loan		700			750
	Principal repayments of debt		(371	)		(3,279	)
	Additional borrowing on line of credit		1,387			—
	Preferred stock dividends paid		(120	)		(120	)
	Principal repayments of debt		—			(534	)
Net cash used in financing activities			(615	)		(3,410	)
	Preferred stock dividends paid		(80	)		(80	)
Net (decrease) increase in unrestricted cash and cash equivalents			(28	)		137
Net cash provided by financing activities			1,912			125
Net increase (decrease) in unrestricted cash and cash equivalents			30			(200	)
Unrestricted cash and cash equivalents at beginning of period			574			360
Unrestricted cash and cash equivalents at end of period		$	~~604~~546		$	~~160~~497

See accompanying notes.

SEA PINES ASSOCIATES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~APRIL~~JULY 3031, 2003 ~~AND 2002~~ (Unaudited)

NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements for Sea Pines Associates, Inc. (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Certain amounts for the year ended October 31, 2002 have been reclassified to conform with the quarter ended ~~April~~July 3031, 2003 presentation. Operating results for the ~~six~~nine-month period ended ~~April~~July 3031, 2003 are not necessarily indicative of the results that may be expected for the year ending October 31, 2003. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended October 31, 2002.

The Company’s financial results from its resort operations and real estate brokerage activities experience fluctuations by season. The period from November through February has historically been the Company’s lowest resort revenue and real estate sales season, and the period from March through October has historically been the Company’s highest season.

NOTE 2 - INVENTORIES

Inventories consist of the following (in thousands of dollars):

	April 30,		October 31,
	July 31,		October 31,
	2003		2002
Merchandise	$	~~754~~638	$	667
Supplies, parts and accessories		35		35
Food and beverage		~~161~~130		115
Other		4542		42
	$	~~995~~845	$	859

NOTE 3 - REAL ESTATE ASSETS

Operating properties consist of the following (in thousands of dollars):

	April 30,			October 31,
	July 31,			October 31,
	2003			2002
Land and improvements	$	26,~~758~~802		$	26,487
Buildings		23,~~641~~491			23,265
Machinery and equipment		11,~~738~~917			11,642
		62,137			61,394
		62,210			61,394
Less accumulated depreciation		(18,~~351~~985	)		(17,197	)
	$	43,~~786~~225		$	44,197

Properties held for future development of $3,~~203~~186,000 and $3,219,000 at ~~April 30~~July 31, 2003 and October 31, 2002, respectively, consist primarily of land and certain ~~future~~ future development rights.

NOTE 4 - LITIGATION

On April 30, 2003, a jury verdict of approximately $7.8 million was rendered against a wholly owned subsidiary of the Company in Grey Point Associates, et. al. vs. Sea Pines Company, Inc. (“Sea Pines”). The plaintiffs have also made a motion for prejudgment interest of approximately $~~832~~1,584,000, which Sea Pines ~~intends~~ ~~to contest~~is contesting. The lawsuit involved alleged breach of contract by Sea ~~Pines~~ Pines related to the development of the TidePointe retirement community.

Sea Pines has filed post-trial motions, seeking, among other things, to overturn the verdict. A hearing on the motions ~~has~~was ~~been~~held ~~scheduled~~on ~~for~~ July 1, 2003. If Sea Pines is unsuccessful on these motions, it intends to appeal. The Company cannot predict the outcome of any of the post-trial motions or any appeal.

~~The~~Litigation ~~Company recorded litigation~~ expense of $8,000,000 was recorded during the second quarter as a result of the jury verdict. The ~~corresponding~~Company ~~litigation~~recorded ~~accrual~~an ~~has~~additional ~~been~~litigation ~~recorded~~expense onof ~~the~~$450,000 ~~consolidated~~during ~~balance~~the ~~sheet~~third quarter. The accrual as of July 31, 2003 includes approximately $7,~~800~~789,000 for the jury verdict, ~~and~~ $~~200~~275,000 for ~~unpaid~~accrued post-judgment ~~legal~~interest ~~fees incurred~~ through ~~April~~July 3031, 2003, and an estimate of legal fees incurred.

On September 8, 2003, the Company deposited $8,177,109 with the Beaufort County Court of Common Pleas in order to stop the running of post-judgment interest and to act as an appeal bond should there be an appeal. These funds are being held in an interest-bearing escrow account pending resolution of the legal proceedings.

NOTE 5 - LONG-TERM DEBT AND LINE OF CREDIT AGREEMENTS

Long-term debt consists of the following (in thousands of dollars):

	April 30,			October 31,
	July 31,			October 31,
	2003			2002
Term loan payable to bank, bearing interest at various London Interbank Offered Rates (LIBOR) (1.31% at April 30, 2003), plus 1.40% to 1.65%, collateralized by substantially all assets of the Company. Principal is payable monthly from May through October each year in amounts ranging from $190,333 in 2003 to $276,667 in 2008. Interest is payable monthly. The loan matures November 1, 2008.	$	15,940		$	15,940
Term loan payable to bank, bearing interest at various London Interbank Offered Rates (LIBOR) (1.12% at July 31, 2003), plus 1.40% to 1.85%, collateralized by substantially all assets of the Company. Principal is payable monthly from May through October each year in amounts ranging from $190,333 in 2003 to $276,667 in 2008. Interest is payable monthly. The loan matures November 1, 2008.	$	15,369		$	15,940
$18.3 million revolving line of credit to bank, bearing interest at various London Interbank Offered Rates (LIBOR) (1.31% at April 30, 2003), plus 1.40% to 1.65% collateralized by substantially all assets of the Company. Interest is payable monthly. The line matures November 1, 2007.		18,300			17,600
$18.3 million revolving line of credit to bank, bearing interest at various London Interbank Offered Rates (LIBOR) (1.12% at July 31, 2003), plus 1.40% to 1.85% collateralized by substantially all assets of the Company. Interest is payable monthly. The line matures November 1, 2007.		17,800			17,600
		34,240			33,540
		33,169			33,540
Less current portion of long-term debt		(341,~~240~~186	)		(1,142	)
Total long-term debt	$	—31,983		$	32,398

The ~~loan~~master credit agreement relating to the debt described above contains provisions and covenants which impose certain restrictions on the use of the Company’s assets, including limitations as to new indebtedness, the sale or disposal of certain assets, capital contributions and investments, and new lines of business.

The ~~loan~~master credit agreement also contains representations and warranties which ~~are~~ are required to be ~~continually~~maintained ~~accurate~~ and covenants with which the Company is ~~required~~ required to comply. As a result of the litigation described in Note 4, the Company was, as of April 30, 2003, in breach of certain of such representations ~~and~~ and warranties and in violation of certain of such covenants. In June 2003, ~~the~~ the bank signed a waiver in which the bank waived retroactively to the filing of of the complaint in the litigation all events of default arising under the loan agreement as a result of the litigation, including the rendering of the verdict and any judgment that may be entered thereon. ~~The waiver is effective until~~ ~~June 30, 2003. Because the waiver is only until June 30, 2003,~~ the Company has reclassified amounts owed under the loan agreement as current liabilities as of April 30, 2003. The Company is currently in the process of negotiating a commitment for the bank to provide for a new credit facility to be used for the purpose of paying any judgment which may be rendered in the litigation or depositing into escrow the amount of any such judgment in order to stop the running of post judgment interest thereon. The waiver provides that if on or before June 30, 2003, the Company accepts a loan commitment from the bank on terms mutually agreeable to the bank and the Company, the waiver shall continue until the expiration of such loan commitment It is contemplated that the new facility, if obtained, would modify the terms of the existing loan agreement to revise any representations and warranties breached or covenants violated as a result of the existence of the litigation so as to eliminate the breach or violation and to modify certain financial covenants sufficiently that the Company would expect to be able to meet their requirements during subsequent quarters. Any loan commitment would be on terms satisfactory to the bank and there can be no assurance that the Company will enter into such a commitment or as to the terms thereof. Furthermore, if the commitment is entered into, there can be no assurance that the facility contemplated thereby will close or as to the terms of any such facility. If the waiver expires without the necessary modifications to the loan agreement being made, the Company will be in default thereunder and the bank may exercise any remedies it has under the loan agreement, including accelerating the debt outstanding thereunder.

In ~~addition~~July ~~to the term loan and the revolving line of credit~~2003, the ~~loan~~Company ~~agreement~~completed ~~includes~~ a ~~$4,500,000~~modification ~~seasonal~~to ~~line~~its ofmaster credit ~~(the “Seasonal~~ ~~Line”) with the same bank~~agreement. ~~Interest is payable monthly at LIBOR plus 1.50%.~~ The ~~Seasonal~~modification ~~Line~~included ~~expires~~revisions onto ~~November 1,~~certain ~~2007.~~loan ~~Borrowings~~covenants ~~under the Seasonal~~and ~~Line~~representations ~~are~~and ~~also~~waived ~~collateralized~~certain byloan ~~substantially~~covenants ~~all~~for of the ~~assets~~year ofending ~~the Company.~~October ~~As of April 30~~31, 2003~~, the Seasonal Line had an outstanding balance of $1,387,000~~. ~~As of October 31,~~

~~2002~~The modification provided for a Judgment Loan Facility (the “Judgment Loan”) in the amount of up to $8,000,000. This loan facility may only be used to pay for expenses related to the ~~Seasonal~~litigation ~~Line~~described in Note 4. Interest on the facility is payable monthly at various London Interbank Offered Rates (LIBOR) plus 2.35%. Borrowings under the Judgment Loan are collateralized by substantially all assets of the Company. If amounts advanced under the Judgment Loan are $4,000,000 or more, the Company will be required to cease the payment of dividends on its preferred stock (except the previously declared dividends are scheduled to be paid on October 15, 2003) and interest on its junior subordinated debentures. The facility matures on July 30, 2005. As of July 31, 2003, the Judgment Loan had no outstanding balance. On September 8, 2003, $8,000,000 was drawn on the loan facility and that amount was part of the $8,177,109 in funds that were deposited with the Beaufort County Court of Common Pleas (see Note 4).

In addition to the term loan, the revolving line of credit and the Judgment Loan, the master credit agreement includes a $4,500,000 seasonal line of credit (the “Seasonal Line”). Interest is payable monthly at LIBOR plus 1.50%. The Seasonal Line expires on November 1, 2007. Borrowings under the Seasonal Line are also collateralized by substantially all of the assets of the Company. As of July 31, 2003 and October 31, 2002, the Seasonal Line had no outstanding balance.

The Company has two interest rate swap agreements. The first interest rate swap agreement effectively fixes the interest rate on an $18,000,000 notional principal amount at 5.24% plus a credit margin ranging from 1.40% to 1.65% until the maturity date of the agreement, November 10, 2005. The lender has the option of calling the swap agreement on November 10, 2003. The second interest rate swap agreement effectively fixes the interest rate on a $6,000,000 notional principal amount at 6.58% plus a credit margin ranging from 1.40% to 1.65% until the maturity date of the agreement, November 1, 2005 (see Note 7).

NOTE 6 - EARNINGS PER SHARE

Income (loss) per share of common stock is calculated by dividing net income or loss after preferred stock dividend requirements by the weighted average number of outstanding shares of common stock. Basic and diluted earnings per share are identical for all periods presented. Potentially dilutive securities consist of additional shares of common stock issuable when stock rights become exercisable. These contingently issuable shares have not been included in basic or diluted earnings per share as the stock rights are not yet exercisable.

NOTE 7 - INTEREST RATE SWAP AGREEMENTS

In accordance with Statement of Financial Accounting Standard No. 133, Accounting for Derivative Instruments and Hedging Activities (“SFAS 133”), the Company records the fair market value of the interest rate swaps on its consolidated balance sheet. On an ongoing basis, the Company adjusts the balance sheet to reflect the current fair market value of the interest rate swap agreements. The interest rate swap agreements do not qualify for hedge accounting as defined by SFAS 133, and accordingly, the change in the fair value of the derivative is immediately recognized in the consolidated statement of operations. The Company recorded $70356,000 of ~~expense~~income and $44563,000 of ~~income~~expense in the consolidated statement of operations for the change in fair value of the interest rate swap agreement for the quarters ended ~~April~~July 3031, 2003 and 2002, respectively.

NOTE 8 - PROPERTY TAX

The Company was involved in an administrative law proceeding involving the valuation of the three golf courses owned by the Company for property tax purposes. The Company previously accrued its property tax expense based on the valuation originally assessed for the properties. During the third quarter 2002, the court issued a final order and decision, ultimately lowering the property taxes owed for the years 1998 through 2002. Based on this ruling and the Company’s estimate of its property tax liability, the Company lowered its property tax accrual in the third quarter 2002 by $322,000. This amount was included as a reduction to general and administrative expenses. In February 2003, the Company received a refund of property taxes paid of $304,000 plus accrued interest of $104,000. These amounts were reflected in earnings in the first quarter 2003. The property tax refund of $304,000 is reflected within general and administrative expenses, and interest income of $104,000 is reflected in interest income, in the consolidated statements of operations for the six months ended April 30, 2003.

NOTE 8 - PROPERTY TAX

NOTE 9 - INCOME TAXES

As a result of the jury verdict described in Note 4, the Company anticipates a taxable loss for fiscal 2003. The Company has not recognized any benefit for the ~~six~~nine months ended ~~April~~July 3031, 2003 related to this net operating loss since the ~~Company is uncertain whether there will be sufficient taxable income in future periods to allow for~~ utilization of this net operating loss. ~~The Company’s~~will ~~income~~depend ~~tax~~on ~~expense of $696,000 in~~ the ~~second~~amounts ~~quarter 2003 results~~of ~~from~~taxable ~~its~~income ~~reversal~~generated ofin ~~the~~future ~~income~~periods, ~~tax~~and ~~benefit~~those ~~previously~~amounts ~~recognized~~are ~~during the~~not ~~first~~predictable ~~quarter 2003 based on the net loss to date~~ at ~~that~~this time.

NOTE 10 - COMMITMENTS AND CONTINGENCIES

The Company is subject to claims and suits in the ordinary course of business. In management’s opinion, except for the litigation described in Note 4, such currently pending claims and suits against the Company will not, in the aggregate, have a material adverse effect on the Company.

NOTE 11 - RECENT ACCOUNTING PRONOUNCEMENTS

In August 2001, the Financial Accounting Standards Board (“FASB”) issued SFAS 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”). SFAS 144 replaces SFAS No. 121, (“Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.)” SFAS 144 requires that long-lived assets to be disposed of by sale, including those of ~~discontinued~~ discontinued operations, be measured at the lower of carrying amount or fair value less cost to sell, whether reported in continuing operations or in ~~discontinued~~ discontinued operations. Discontinued operations will no longer be measured at ~~net~~ net realizable value or include amounts for operating losses that have not yet ~~been~~ been incurred. SFAS 144 also broadens the reporting of discontinued operations to to include all components of an entity with operations that can be ~~distinguished~~ distinguished from the rest of the entity and that will be eliminated from the ~~ongoing~~ ongoing operations of the entity in a disposal transaction. The adoption of ~~this~~ this standard on November 1, 2002 had no material impact on the Company’s consolidated financial statements.

In April 2002, the FASB issued SFAS 145, “Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement 13 and Technical Corrections” (“SFAS 145”). SFAS 145 rescinds SFAS 4, “Reporting Gains and Losses from Extinguishment of Debt,” and an amendment of SFAS 64, “Extinguishments of Debt Made to Satisfy Sinking-Fund

Requirements.” SFAS 145 also amends other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. SFAS 145 is effective for fiscal years beginning after May 15, 2002. Any gain or loss on extinguishment of debt that was classified as an extraordinary item in prior periods presented that does not meet the criteria in Accounting Principles Board Opinion No. 30, “Reporting the Results of Operations — Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual, and Infrequently Occurring Events and Transactions,” for classification as an extraordinary item will be reclassified. The Company adopted SFAS 145 as of November 1, 2002, and adoption of SFAS 145 did not have any impact on the Company’s financial position, results of operations or disclosures.

In July 2002, the FASB issued SFAS 146, “Accounting for the Cost Associated with Exit or Disposal Activities.” This statement applies to all exit or disposal activities initiated after December 31, 2002 and requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. Examples of costs covered by the standard include lease termination costs and certain employee severance costs that are associated with a restructuring, discontinued operation, plant closing, or other exit or disposal activity. The Company will apply this accounting standard for all exit or disposal activities initiated after December 31, 2002; there has been no impact on the Company’s financial statements through July 31, 2003.

In November 2002, the FASB issued FASB Interpretation 45 (“FIN 45”), “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” FIN 45 currently requires that a liability be recorded in the guarantor’s balance sheet upon issuance of a guarantee. In addition, as of December 31, 2002, FIN 45 requires disclosures about the guarantees that an entity has issued, including a roll-forward of the entity’s product warranty liabilities. The adoption of FIN 45 did not have any impact on the Company’s financial position, results of operations or disclosures.

In December 2002, the FASB issued SFAS 148, “Accounting for Stock-Based Compensation, Transition and Disclosure.” SFAS 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS 148 amends the disclosure provisions of SFAS 123, “Accounting for Stock Based Compensation,” to currently require disclosure of the effects of an entity’s accounting policy with respect to stock-based employee compensation on reported net income and earnings per share in annual and interim financial statements. SFAS 148 does not amend SFAS 123 to require companies to account for their employee stock-based awards using the fair value method. However, the disclosure provisions are required for all companies with stock-based employee compensation, regardless of whether they utilize the fair value method of accounting described in SFAS 123 or the intrinsic value method described in APB Opinion No. 25, “Accounting for Stock Issued to Employees.” Adoption of SFAS 148 did not have any impact on the Company’s financial position, results of operations or disclosures.

In January 2003, the FASB issued FASB Interpretation 46 (“FIN 46”), “Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51.” FIN 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated

financial support from other parties. FIN 46 is effective for all new variable interest entities created or acquired after January 31, 2003. For variable interest entities created or acquired prior to February 1, 2003, the provisions of FIN 46 must be applied for the first interim or annual period beginning after June 15, 2003. There has been no impact on the Company’s financial position or results of operations for the first six months of 2003 under FIN 46. The Company is in the process of evaluating FIN 46, and its prospective impact on the financial position and results of operations, for variable interest entities created or acquired prior to February 1, 2003. The Company does not anticipate the adoption of FIN 46 to have any significant impact to the Company’s financial position, results of operations or disclosures.

In April 2003, the FASB issued SFAS 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities”. SFAS 149 requires that contracts with comparable characteristics be accounted for similarly. In particular, SFAS 149 clarifies under what circumstances a contract with an initial net investment meets the characteristic of a derivative, clarifies when a derivative contains a financing component, amends the definition of an underlying derivative to conform it to language used in FIN 45, and amends certain other existing pronouncements. SFAS 149 is effective for contracts entered into or modified after June 30, 2003, and for hedging relationships designated after June 30, 2003. In addition, provisions of SFAS 149 should be applied prospectively. The Company does not expect the application of SFAS 149 to have a significant impact on its financial position or results of operations.

In May 2003, the FASB issued SFAS 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity”. SFAS 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). Many of those instruments were previously classified as equity. SFAS 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. It is to be implemented by reporting the cumulative effect of a change in an accounting principle for financial instruments created before the issuance date of SFAS 150 and still existing at the beginning of the interim period of adoption. Restatement is not permitted. The Company does not expect the application of SFAS 150 to have a significant impact on its financial position or results of operations.

NOTE 12 - BUSINESS SEGMENT INFORMATION

The Company has two reportable business segments. The Company’s reportable segments are organized by the type of operations and include: (1) resort activities, including home and villa rental management operations, golf course operations, food and beverage operations, inn and conference facility operations, and various other recreational activities; and (2) real estate brokerage for buyers and sellers of real estate in the Hilton Head Island, South Carolina area.

~~All inter-company transactions between segments have been eliminated upon~~14 ~~consolidation. Segment information as of and for the quarter and six months~~ ~~ended April 30, 2003 and 2002 are as follows (in thousands of dollars):~~

		Quarter Ended					Six Months Ended
		April 30,					April 30,
		2003			2002		2003			2002
		(Unaudited)			(Unaudited)		(Unaudited)			(Unaudited)
Revenues:
	Resort	$	9,926		$	10,687	$	13,390		$	14,496
	Real estate brokerage		3,688			3,398		7,383			6,126
		$	13,614		$	14,085	$	20,773		$	20,622
Cost of revenues:
	Resort	$	6,446		$	6,519	$	10,163		$	10,113
	Real estate brokerage		2,531			2,277		5,334			4,209
		$	8,977		$	8,796	$	15,497		$	14,322
Interest expense:
	Resort	$	558		$	609	$	1,122		$	1,237
Depreciation and amortization expense:
	Resort	$	630		$	631	$	1,262		$	1,262
	Real estate brokerage		16			17		32			34
		$	646		$	648	$	1,294		$	1,296
Segment (loss) income before income taxes:
	Resort	($	7,483	)	$	1,429	($	10,125	)	($	636	)
	Real estate brokerage		271			269		334			326
		($	7,212	)	$	1,698	($	9,791	)	($	310	)

All inter-company transactions between segments have been eliminated upon consolidation. Segment information as of and for the quarter and nine months ended July 31, 2003 and 2002 are as follows (in thousands of dollars):

		As of			As of
		Quarter Ended						Nine Months Ended
		April 30, 2003			October 31, 2002
		July 31,						July 31,
		(Unaudited)			(Audited)
		2003			2002			2003			2002
Identifiable assets:
		(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
	Resort	$	54,542		$	51,859
Revenues:
	Real estate brokerage		2,314			2,652
	Resort	$	11,730		$	12,348		$	25,120		$	26,844
		$	56,856		$	54,511
	Real estate brokerage		5,815			5,690			13,198			11,816
		$	17,545		$	18,038		$	38,318		$	38,660
Cost of revenues:
	Resort	$	8,368		$	8,520		$	18,531		$	18,633
	Real estate brokerage		4,291			4,073			9,625			8,283
		$	12,659		$	12,593		$	28,156		$	26,916
Interest expense:
	Resort	$	(554	)	$	(588	)	$	(1,676	)	$	(1,824	)
Depreciation and amortization expense:
	Resort	$	624		$	630		$	1,885		$	1,892
	Real estate brokerage		21			17			54			51
		$	645		$	647		$	1,939		$	1,943
Segment (loss) income before income taxes:
	Resort	$	656		$	731		($	9,469	)	$	95
	Real estate brokerage		601			757			935			1,083
		$	1,257		$	1,488		($	8,534	)	$	1,178


		As of		As of
		July 31,		October 31,
		2003		2002
		(Unaudited)		(Audited)

Identifiable assets:
	Resort	$	51,891	$	51,859
	Real estate brokerage		2,473		2,652

		$	54,364	$	54,511

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The Company’s operations are conducted primarily through two wholly owned subsidiaries. Sea Pines Company, Inc. operates all of the resort assets, including three resort golf courses, a tennis center, a home and villa rental management business, two conference facilities, a 60-room inn, retail sales outlets, food service operations and other resort recreational facilities. Sea Pines Real ~~Estate Company, Inc. is a real estate brokerage firm with 15 offices~~ ~~serving Hilton Head Island and its neighboring communities.~~

Estate Company, Inc. is a real estate brokerage firm with 15 offices serving Hilton Head Island and its neighboring communities.

Application of Critical Accounting Policies

The Company’s accounting policies have been established to conform to accounting principles generally accepted in the United States. The preparation of financial statements in conformity with such principles requires management to use judgment in the application of accounting policies, including making estimates and assumptions. These judgments affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. If management’s judgment or interpretation of the facts and circumstances relating to various transactions had been different, it is possible that different accounting policies would have been applied. This would result in a different presentation of the financial statements. Additionally, other companies may utilize different estimates that may impact comparability of the Company’s results of operations to those of companies in similar businesses. Below is a discussion of the accounting policies that management considers to be critical in that they may require judgment in their application or require estimates with respect to matters that are inherently uncertain.

Revenue Recognition

Revenue from resort operations is recognized as goods are sold and services are provided and revenue from real estate brokerage is recognized when the title passes to the buyer. As a result, the Company’s revenue recognition process does not involve significant judgments or estimates.

Investment in Real Estate Assets

The Company’s management is required to make subjective assessments as to the useful lives of its depreciable assets. The Company considers the period of future benefit of the asset to determine the appropriate useful life. These assessments have a direct impact on net income. The estimated useful lives of the Company’s assets by class are as follows:


Land improvements		15 years
Buildings		39 years
Machinery and equipment		5 – 7 years

In the event that management uses inappropriate useful lives or methods for depreciation, the Company’s net income would be misstated.

Valuation of Real Estate Assets

Management continually monitors events and changes in circumstances that could indicate that the carrying amounts of the real estate assets, both operating properties and properties held for future development, may not be recoverable. When there are indicators that the carrying amounts of real estate assets may not be recoverable, management assesses the recoverability of the assets by determining whether the carrying value of the real estate assets will be recovered through the undiscounted future operating cash flows expected from the use of the asset and its eventual ~~disposition. In the event that such~~ ~~expected undiscounted future cash flows do not exceed the carrying value,~~ management adjusts the real estate assets to the fair value and the Company recognizes an impairment loss. Management has determined that there has been no impairment in the carrying value of real estate assets held by the Company at April 30, 2003 or October 31, 2002. A projection of expected future cash flows requires management to make certain estimates. If management uses inappropriate assumptions in the future cash flow analysis, resulting in an incorrect assessment of the property’s future cash flows and fair value, it could result in the overstatement of the carrying value of real estate assets and net income of the Company.

~~Results of Operations for~~16 ~~2nd Quarter 2003 as Compared with 2nd Quarter 2002~~

disposition. In the event that such expected undiscounted future cash flows do not exceed the carrying value, management adjusts the real estate assets to fair value and the Company recognizes an impairment loss. Management has determined that there has been no impairment in the carrying value of real estate assets held by the Company at July 31, 2003 or October 31, 2002. A projection of expected future cash flows requires management to make certain estimates. If management uses inappropriate assumptions in the future cash flow analysis, resulting in an incorrect assessment of the property’s future cash flows and fair value, it could result in the overstatement of the carrying value of real estate assets and net income of the Company.

Results of Operations for 3^rd Quarter 2003 as Compared with 3^rd Quarter 2002

Revenues

Revenues for the ~~second~~third quarter 2003 totaled $1317,~~614~~545,000, a 32.37% decrease from ~~second~~third quarter 2002 revenues. Resort revenues declined during the ~~second quarter~~third quarter 2003 by $~~761~~618,000, or 75.10%. Real estate brokerage revenues increased during the third ~~second~~ quarter 2003 by $~~290~~125,000, or 82.52%. The resort revenue decline is attributable to the current downturn in the United States economy and a general decline in domestic travel. Revenue changes are summarized as follows (in thousands of dollars):

		Three Months Ended
		April 30,
		July 31,
		2003		2002		Change			% Change
Resort
	Golf	$	3,~~339~~402	$	3,~~603~~600	$	(~~264~~198	)		(75.35	)%
	Rental management		24,~~809~~776		35,~~071~~379		(~~262~~603	)		(811.52	)
	Food and beverage		1,~~292~~537		1,~~425~~439		~~(133~~98	)		(96.38	)
	Inn at Harbour Town		~~675~~702		~~811~~867		(~~136~~165	)		(1619.80	)
	Other recreation revenues		~~1,583~~980		~~1,414~~864		~~169~~116			1213.04
	Other		~~228~~333		~~363~~199		~~(135~~134	)		~~(37~~67.23	)
		$	911,~~926~~730	$	1012,~~687~~348	$	(~~761~~618	)		(75.10	)
Real estate brokerage			35,~~688~~815		35,~~398~~690		~~290~~125			82.52
Total revenues		$	1317,~~614~~545	$	1418,~~085~~038	$	(~~471~~493	)		(32.37	)%

Golf revenues decreased by $~~264~~198,000, or 75.35%, during the ~~second~~third quarter 2003 as compared with the ~~second~~third quarter 2002. The number of resort golf rounds played at Harbour Town Golf Links during the ~~second~~third quarter 2003 decreased by ~~199~~1,098 rounds, or 214%, from the same period in 2002. The number of resort golf rounds played at the Ocean and Sea Marsh golf courses during the third quarter 2003 decreased by 1,822 rounds, or 9%, from the same period in 2002. This decrease was slightly offset by a $1.82, or 3%, increase in average resort rate paid per round in the third quarter 2003, over the third quarter 2002.

15Rental management revenues decreased by $603,000, or 11.2%, during the third quarter 2003 as compared with the third quarter 2002. Total guest occupied nights during the third quarter of 2003 were 18,833 as compared to 20,762 during the third quarter of 2002. The average daily rate was $244.11 in the third quarter 2003, a decrease of $6.49, or 2.6%, from the same period in 2002.

~~The number of resort golf rounds played at the Ocean and Sea Marsh golf courses~~17 ~~during the second quarter 2003 decreased by 4,460 rounds, or 21.2%, from the~~ ~~same period in 2002. This decrease was slightly offset by a $3.56, or 5.3%, increase in average resort rate paid per round in the second quarter 2003, over the second quarter 2002.~~

~~Rental~~Food ~~management~~and beverage revenues ~~decreased~~increased by $~~262~~98,000, or 86.58%, during the ~~second~~third quarter 2003 as compared with the ~~second~~third quarter 2002. ~~Total~~This ~~guest~~increase ~~occupied~~was ~~nights~~primarily ~~during~~due ~~the~~to ~~second~~a ~~quarter~~$228,000, ofor ~~2003 were 13~~56.7%,~~993~~ asincrease ~~compared~~in torevenue ~~15,983 during~~from the ~~second~~Sea ~~quarter~~Pines Beach ~~of 2002~~Club. ~~The~~This ~~average~~increase ~~daily rate~~ was ~~$192.37~~offset inby ~~the second~~a ~~quarter 2003, an increase of~~ $~~8.44~~130,000, or 427.6%, ~~from~~decline ~~the~~in revenue ~~same~~from ~~period~~catering ~~in 2002~~operations.

~~Food~~The ~~and~~Inn ~~beverage~~at Harbour Town revenues decreased by $~~133~~165,000, or 919.30%, during the ~~second~~ third quarter 2003 as compared with the ~~second~~third quarter 2002. ~~This~~Paid ~~decrease was~~occupancy ~~primarily~~during ~~due~~the tothird aquarter ~~$77,000,~~2003 orwas 1061.79%, ~~decline~~as incompared ~~revenue~~to ~~from catering operations and a $36,000, or 18~~74.29%, ~~decline~~during inthe ~~revenue from golf food and~~third ~~beverage~~quarter ~~operations~~2002. ~~These~~The ~~decreases~~average ~~were~~daily ~~slightly~~rate ~~offset~~was ~~by a~~ $~~14,000, or 16~~189.~~5%,~~98 ~~increase~~ in ~~revenue from~~ the ~~Sea~~third ~~Pines~~quarter ~~Beach Club and a $10~~2003,~~000,~~ ~~or 11%,~~as ~~increase~~compared into ~~revenue~~$200.87 ~~from~~for the ~~Harbour~~same ~~Town~~period ~~Bakery~~in 2002.

~~The~~Other ~~Inn~~recreation atservices ~~Harbour~~revenue ~~Town~~increased ~~revenues decreased~~ by $~~136~~116,000, or 1613.84%, during the ~~second~~third quarter 2003 as compared with the ~~second~~third quarter 2002. ~~Paid~~This ~~occupancy~~increase is ~~during~~primarily the ~~second~~result ~~quarter~~of ~~2003~~increased ~~was~~revenue ~~56.9%~~from astennis ~~compared~~operations related to ~~72.2% during~~ the ~~second~~ ~~quarter~~Smith/Stearns ~~2002~~Tennis Academy. ~~The~~This ~~average~~new ~~daily~~academy ~~rate~~opened ~~was~~in ~~$200.48~~2002 inat the ~~second~~Sea ~~quarter 2003,~~Pines asRacquet ~~compared~~Club to ~~$192.97~~provide ~~for~~world-class ~~the~~tennis ~~same period in 2002~~instruction.

Other ~~recreation~~revenues ~~services revenue~~ increased by $~~169~~134,000, or 67.3%, during the ~~second~~ third quarter 2003 as compared with the ~~second~~third quarter 2002. This increase is primarily ~~the~~due ~~result of increased revenue from tennis operations related~~ to the ~~Smith/Stearns~~sale ~~Tennis~~of ~~Academy.~~Company-owned ~~This~~memberships ~~new academy opened~~ in ~~2002 at~~ the Sea Pines ~~Racquet~~ ~~Club~~Country ~~to provide world-class tennis instruction~~Club.

~~Other~~Real estate brokerage revenues ~~decreased~~increased by $~~135~~125,000, or 2.2%, during the ~~second~~ third quarter 2003 as compared with the ~~second~~third quarter 2002. This ~~decrease~~increase is was primarily ~~from~~the ~~decreased membership~~result of a 5.6% increase in sales ~~revenue~~volume ~~related~~in tothe third quarter 2003, as compared with the ~~Sea~~third ~~Pines~~quarter ~~Country~~2002. ~~Club~~This improvement is attributable to low mortgage interest rates and a favorable second home and real estate market.

Real estate brokerage revenues increased by $290,000, or 8.5%, during the second quarter 2003 as compared with the second quarter 2002. This increase was primarily the result of an 8.0% increase in sales volume in the second quarter 2003, as compared with the second quarter 2002. This improvement is attributable to low mortgage interest rates and a favorable second home and real estate market.

Cost of Revenues

Cost of revenues totaled $812,~~977~~659,000 in the ~~second~~third quarter 2003, an increase of $~~181~~66,000, ~~or 2.1%,~~ as compared to the same period in 2002. This increase was ~~primarily~~ primarily due to increased real estate brokerage revenues which had a 6873.68% cost of revenues percentage, and decreased resort revenues which had a 6471.93% cost of revenues ~~revenue~~ percentage.

Expenses

Sales and marketing expenses ~~remained~~totaled ~~constant at~~ $~~890~~825,000 ~~during~~in the ~~second~~ third quarter 2003, an increase of $148,000, or 21.9%, as compared to the same period in 2002. This increase was primarily due to increased real estate marketing costs and conference sales costs.

16General and administrative expenses increased by $82,000, or 5.4%, during the third quarter 2003 as compared with the third quarter 2002. This increase is primarily the result of an adjustment that reduced property tax expense by $322,000 during the third quarter 2002 as discussed in Note 8 of the financial statements. The property tax increase was offset by reduced bad debt expense and employee benefit costs during the third quarter 2003 as compared with the same period of 2002.

~~compared~~Litigation ~~with~~expenses ~~the~~of ~~second~~$450,000 were accrued in third quarter ~~2002~~2003 as discussed in Note 4 of the financial statements.

~~General~~Depreciation and ~~administrative~~amortization ~~expenses~~costs ~~increased~~were bycomparable ~~$183,000,~~between ~~or 12.0%, during~~ the ~~second~~ ~~quarter~~third quarter 2003 as compared with the ~~second~~same ~~quarter~~period ~~2002. This increase is the result~~ of ~~increases in medical claims paid by the Company’s self-funded medical plan and building repair and maintenance expenses~~2002.

~~Litigation expenses of $8,000,000 were accrued in April 2003 as discussed under~~18 ~~Recent Developments.~~

Depreciation and amortization costs were comparable between the second quarter 2003 as compared with the same period of 2002.

Other income (expense)

Interest income was ~~comparable~~$25,000 ~~between~~for the ~~second~~third quarter 2003 as compared with $30,000 for the same period of 2002.

Interest rate swap agreement ~~expense~~income totaled $70356,000 during the ~~second~~third quarter 2003. This ~~expense~~income is attributable to changes in the fair value of the ~~interest~~ interest rate swap agreements as discussed in Note 7 of the financial statements. The Company recorded ~~income~~expense of $44563,000 from the interest rate swap ~~agreements~~ agreements during the ~~second~~third quarter 2002.

Interest expense decreased by $5134,000, or 85.48%, during the ~~second~~third quarter 2003 as compared with the same period of 2002. This decrease is attributable to lower interest rates during the ~~second~~third quarter 2003.

Income taxes

As a result of the jury verdict described in Note 4 of the financial statements, the Company anticipates a taxable loss for fiscal 2003. The Company has not recognized any benefit for the ~~six~~quarter ~~months~~ ended ~~April~~July 3031, 2003 related to this net operating loss since the Company is uncertain whether there will be sufficient taxable income in future periods to allow for utilization of this net operating loss. ~~The Company’s income tax expense of $696,000 in the~~ ~~second quarter 2003 results from its reversal of the income tax benefit~~ ~~previously recognized during first quarter 2003 based on the net loss to date at that time.~~

Results of Operations for First ~~Six~~Nine Months 2003 as Compared with First ~~Six~~Nine Months 2002

Revenues

Revenues for the first ~~six~~nine months 2003 totaled $2038,~~773~~318,000, a 0.79% ~~increase~~decrease from the first ~~six~~nine months 2002 revenues. Resort revenues declined during the first ~~six~~nine months 2003 by $1,~~106~~724,000, or 7.6.5%. Real estate brokerage revenues increased during the first ~~six~~nine months 2003 by $1,~~257~~382,000, or 2011.57%. The ~~resort~~ resort revenue decline is attributable to the current downturn in the United ~~States~~ States economy and a general decline in domestic travel.

1719

Revenue changes are summarized as follows (in thousands of dollars):

		Six Months Ended
		Nine Months Ended
		April 30,
		July 31,
		2003		2002		Change			% Change
Resort
	Golf	$	58,~~053~~455	$	59,~~519~~119	$	(~~466~~664	)		(87.43	)%
	Rental management		38,~~315~~091		39,~~671~~050		(~~356~~959	)		(910.76	)
	Food and beverage		13,~~665~~202		13,~~930~~369		(~~265~~167	)		(135.70	)
	Inn at Harbour Town		~~984~~1,686		12,~~136~~003		(~~152~~317	)		(1315.48	)
	Other recreation revenues		12,~~954~~934		12,~~707~~570		~~247~~364			414.52
	Other		~~419~~752		~~533~~733		~~(114~~19	)		(212.56	)
		$	1325,~~390~~120	$	1426,~~496~~844	$	(1,~~106~~724	)		(7.6.5	)
Real estate brokerage			713,~~383~~198		611,~~126~~816		1,~~257~~382			2011.57
Total revenues		$	2038,~~773~~318	$	2038,~~622~~660	$	~~151~~(342	)		(0.79	)%

Golf revenues decreased by $~~466~~664,000, or 87.43%, during the first ~~six~~nine months 2003 as compared with the first ~~six~~nine months 2002. The number of resort golf rounds played at Harbour Town Golf Links during the first ~~six~~nine months 2003 decreased by ~~799~~by 1,877 rounds, or 69.9%, from the same period in 2002. This decrease in rounds played was slightly offset by a $4.4732, or 3.20%, increase in average resort rate paid per round in the first ~~six~~nine months 2003, over the first ~~six~~nine months 2002. The number of resort golf rounds played at the Ocean and Sea Marsh golf courses during the first ~~six~~nine months 2003 decreased by 68,~~544~~366 rounds, or 2015.18%, from the same period in 2002. This decrease was slightly offset by a $32.0858, or 54.24%, increase in average resort rate paid per round in the first ~~six~~nine months 2003, over the first ~~six~~nine months 2002.

Rental management revenues decreased by $~~356~~959,000, or 910.76%, during the first ~~six~~ nine months 2003 as compared with the first ~~six~~nine months 2002. Total guest ~~occupied~~ occupied nights during the first ~~six~~nine months 2003 were 1736,~~666~~499 as compared to ~~20,578~~ 41,340 during the first ~~six~~nine months 2002. The average daily rate was $~~179~~212.41 79 in the first ~~six~~nine months 2003, an increase of $92.2423, or 51.41%, from the same period in 2002.

Food and beverage revenues decreased by $~~265~~167,000, or 135.70%, during the first ~~six~~nine months 2003 as compared with the first ~~six~~nine months 2002. This decrease ~~was~~ was primarily due to a $~~190~~357,000, or 1922.79%, decline in revenue from catering operations and a $4857,000, or 1813.14%, decline in revenue from golf food and beverage operations. These decreases were ~~slightly~~ offset by a $20237,000, or ~~15.5%,~~ ~~increase in revenue from the Harbour Town Bakery and a $15,000, or 17~~48.68%, increase in revenue from the Sea Pines Beach Club.

The Inn at Harbour Town revenues decreased by $~~152~~317,000, or 1315.48%, during the first ~~six~~nine months 2003 as compared with the first ~~six~~nine months 2002. Paid occupancy during the first ~~six~~nine months 2003 was 4651.36% as compared to 5562.40% during the first ~~six~~nine months 2002. The average daily rate was $~~174~~186.0004 in the first ~~six~~nine months 2003, as compared to $~~171~~188.5342 for the same period in 2002.

Other recreation services revenue increased by $~~247~~364,000, or 14.2%, during the first ~~six~~ nine months 2003 as compared with the first nine months 2002. As mentioned above, this increase is primarily

1820

~~compared with~~ the ~~first six months 2002. As mentioned above, this increase is primarily the~~ result of increased revenue from tennis operations related to the Smith/Stearns Tennis Academy. This new academy opened in 2002 at the Sea Pines Racquet Club to provide world-class tennis instruction.

~~Other~~Real estate brokerage revenues ~~decreased~~increased by $~~114~~1,382,000, or 11.7%, during the first ~~six~~nine months 2003 as compared with the first nine months 2002. This increase was primarily the result of a 13.9% increase in sales volume in the first nine months 2003, as compared with the first ~~six~~nine months 2002. As mentioned above, this ~~decrease~~improvement is ~~primarily~~ ~~from~~attributable ~~decreased~~to ~~membership~~low ~~sales~~mortgage ~~revenue~~interest rates ~~related~~and toa ~~the~~favorable ~~Sea~~second ~~Pines Country~~home ~~Club~~and real estate market.

Real estate brokerage revenues increased by $1,257,000, or 20.5%, during the first six months 2003 as compared with the first six months 2002. This increase was primarily the result of a 21.7% increase in sales volume in the first six months 2003, as compared with the first six months 2002. As mentioned above, this improvement is attributable to low mortgage interest rates and a favorable second home and real estate market.

Cost of Revenues

Cost of revenues totaled $1528,~~497~~156,000 in the first ~~six~~nine months 2003, an increase of $1,~~175~~240,000, or 84.26%, as compared to the same period in 2002. As mentioned above, this increase was primarily the result of increased real estate brokerage revenues ~~partially~~which ~~offset~~have bya ~~decreased~~slightly ~~resort~~higher ~~revenues~~cost ~~during~~of ~~the~~revenues percentage ~~first~~than ~~six~~resort ~~months 2003, as compared with the first six months 2002~~revenues.

Expenses

Sales and marketing expenses increased by $~~145~~293,000, or 913.31%, during the first ~~six~~nine months 2003 as compared with the first ~~six~~nine months 2002. This increase is the result of increased ~~resort~~real estate marketing ~~promotions~~ and ~~real~~resort ~~estate~~ marketing promotions during the first ~~six~~nine months 2003.

General and administrative expenses ~~decreased~~increased by $3448,000, or 1.10%, during the first ~~six~~nine months 2003 as compared with the first ~~six~~nine months 2002. ~~Excluding~~This increase is the ~~effect~~result of ~~the~~a ~~property~~$139,000 ~~tax~~increase ~~refund~~in ofmedical claims paid by the Company’s self-funded medical plan, $~~304~~93,000, ~~general~~increase ~~and~~in ~~administrative~~ insurance expenses ~~increased~~and a by $~~270~~46,000, orincrease 8in bank service fees.~~6%.~~ ~~This~~These ~~increase~~increases iswere ~~the~~offset ~~result~~by ofa ~~increases~~$115,000 decrease in ~~medical~~bad ~~claims~~debt ~~paid~~expense, by$56,000 ~~the~~decrease ~~Company’s~~in ~~self-funded~~property ~~medical~~tax ~~plan and~~expense ~~increased computer~~ and ~~telephone~~a ~~expenses~~$62,000 decrease in ~~the~~employee ~~Company’s~~benefit ~~technology group~~costs.

Litigation expenses oftotaling $8,~~000~~450,000 were accrued induring ~~April~~the ~~2003~~first nine months as discussed in ~~Recent~~ ~~Developments~~Note 4 of the financial statements.

Depreciation and amortization costs were comparable between the first ~~six~~nine months 2003 as compared with the same period of 2002.

Other income (expense)

Interest income increased by $9893,000 during the first ~~six~~nine months 2003 as compared with the same period of 2002. The Company received interest of $104,000 during the first quarter 2003 on a refund of excess property taxes paid during 1998 through 2001.

Interest rate swap agreement income totaled $24380,000 during the first ~~six months~~nine months 2003. This income is attributable to changes in the fair value of the ~~interest~~ interest rate swap agreements as discussed in Note 7 of the financial statements. The Company recorded income of $14,000 from the interest rate swap agreements during the first nine months 2002.

19Interest expense decreased by $148,000, or 8.1%, during the first nine months 2003 as compared

~~6 of the financial statements. The~~21 ~~Company recorded income of $577,000 from the interest rate swap agreements~~ ~~during the first six months 2002.~~

~~Interest expense decreased by $115,000, or 9.3%, during the first six months 2003 as compared~~ with the same period of 2002. This decrease is attributable to lower interest rates during the first ~~six~~nine months 2003.

Income taxes

As a result of the jury verdict described in Note 4 of the financial statements, the Company anticipates a taxable loss for fiscal 2003. The Company has not recognized any benefit for the ~~six~~nine months ended ~~April~~July 3031, 2003 related to this net operating loss since the Company is uncertain whether there will be sufficient taxable income in future periods to allow for utilization of this net operating loss. ~~The Company’s income tax expense of $696,000 in the~~ ~~second quarter 2003 results from its reversal of the income tax benefit~~ ~~previously recognized during first quarter 2003 based on the net loss to date at that time.~~

Financial Condition, Liquidity and Capital Resources

The Company’s financial results from its resort operations and real estate brokerage activities experience fluctuations by season. The period from November through February has historically been the Company’s ~~lowest~~lower resort revenue and real estate sales season, and the period from March through October has historically been the Company’s ~~highest~~higher season.

AsCash ~~discussed~~and incash ~~Recent~~equivalents ~~Developments~~increased ~~below~~by $1,140,000 asince ~~jury~~October 31, ~~verdict~~2002 ofand totaled approximately $74,~~800~~202,000 ~~has~~at ~~been~~July 31, ~~rendered~~2003, ~~against a subsidiary~~ of ~~the~~which ~~Company.~~$3,656,000 ~~Management~~was isrestricted. ~~currently~~Restricted ~~exploring~~cash ~~various~~includes ~~options~~cash toheld ~~meet~~in ~~the~~escrow ~~Company’s~~pending ~~potential~~real estate ~~liquidity~~closings, ~~needs~~advance ~~should~~deposits ~~the~~for ~~Company~~home beand ~~unsuccessful~~villa onrentals, ~~its~~and ~~post-trial~~rental ~~motions~~receipts to ~~overturn~~be ~~the~~paid ~~verdict~~to home and bevilla ~~required~~owners. toWorking ~~pay~~capital ~~the~~(current ~~judgment~~assets ~~during~~– ~~the~~current liabilities) ~~third~~decreased ~~quarter 2003.~~since ~~Such~~October 31, ~~options~~2002 ~~include~~by ~~obtaining~~$8,575,000, ~~additional~~resulting ~~credit~~in ~~facilities~~a working ~~and~~capital ~~the~~deficit ~~sale~~ of ~~assets.~~$9,904,000 ~~There~~at ~~can~~July 31, be2003. noThis ~~assurance~~decrease ~~that~~in working ~~the~~capital ~~Company~~is ~~would~~primarily bedue ~~able~~ to ~~obtain~~ the ~~required~~litigation ~~liquidity~~accrual onof ~~terms satisfactory to the Company~~$8,129,000.

~~Cash~~In ~~and~~July ~~cash equivalents increased by $2~~2003,~~092,000~~ ~~since~~the ~~October 31,~~Company ~~2002~~completed ~~and totaled~~a ~~approximately~~modification ~~$5,154,000~~to atits ~~April 30,~~master ~~2003, of which $4,550,000 was~~credit ~~restricted.~~agreement ~~Restricted~~with ~~cash~~its ~~includes~~principal ~~cash~~corporate ~~held~~lender. inThe ~~escrow~~modification ~~pending real estate~~included ~~closings,~~revisions ~~advance~~to ~~deposits~~certain ~~for~~loan ~~home~~covenants and ~~villa~~representations ~~rentals,~~ and ~~rental~~waived ~~receipts~~certain toloan becovenants ~~paid~~for tothe ~~home~~year ~~and~~ending ~~villa owners. Working capital (current assets – current liabilities) decreased since~~ October 31, ~~2002 by $42,019,000, resulting in a working capital deficit of $43,348,000 at April 30,~~ 2003. ~~This~~ ~~decrease in working capital is primarily due to reclassifying an~~ ~~additional $33,098,000 as current portion of long-term debt and the litigation accrual of $8,000,000.~~

~~Under~~The ~~the~~modification ~~Company’s~~also ~~loan~~provided ~~agreement~~for ~~with~~a ~~its~~Judgment ~~corporate~~Loan ~~lender,~~Facility (the ~~Company~~“Judgment ~~maintains~~Loan”) ~~three~~in ~~loan~~the ~~facilities:~~amount aof ~~term~~up ~~loan~~to $8,000,000. aThis ~~revolving~~loan ~~line~~facility ofmay ~~credit~~only ~~and~~be aused ~~seasonal~~to ~~line~~pay for expenses related to the litigation described in Note 4 of ~~credit~~the financial statements. ~~Available~~Interest ~~funds~~on ~~under~~the ~~these~~facility ~~three~~is ~~loan~~payable ~~facilities~~monthly at various ~~total~~London ~~$38~~Interbank Offered Rates (LIBOR) plus 2.35% collateralized by substantially all assets of the Company. The facility matures on July 30,~~740~~ 2005. As of July 31,~~000~~ 2003, ofthe ~~which~~Judgment Loan had no outstanding balance. On September 8, 2003, $358,~~627~~000,000 was ~~outstanding~~drawn aton ~~April 30~~the loan facility and that amount was part of the $8,177,109 ~~2003~~in funds that were deposited with the Beaufort County Court of Common Pleas.

~~The~~Under ~~term~~the ~~loan~~Company’s ~~had~~master ancredit ~~outstanding~~agreement ~~principal~~with ~~amount~~its ofcorporate ~~$15~~lender,~~940~~ the Company maintains four loan facilities: a term loan,~~000~~ asa ofrevolving ~~April~~line of 30credit, ~~2003~~the Judgment Loan and ~~matures~~a onseasonal ~~November 1,~~line ~~2008~~of credit. ~~The~~Available ~~revolving~~funds ~~line~~under these four loan facilities total $46,169,000, of ~~credit~~which ~~had~~$33,169,000 anwas outstanding ~~balance~~at ofJuly 31, 2003.

20The term loan had an outstanding principal amount of $15,369,000 as of July 31, 2003 and matures on November 1, 2008. The revolving line of credit had an outstanding balance of $17,800,000 as of July 31, 2003 and matures on November 1, 2007. The Judgment Loan had no outstanding balance on July 31, 2003 and matures on July 30, 2005. The available balance under the seasonal

~~$18,300,000 as of April 30, 2003 and matures on November~~22 ~~1, 2007. The available balance under the seasonal line of credit totals~~ $4,500,000 and is used to meet cash requirements during the Company’s off-season winter months. As of April 30, 2003, the seasonal line of credit had an outstanding balance of $1,387,000. The Seasonal Line expires on November 1, 2007.

~~The~~line ~~loan agreement contains representations and warranties which are required to be continually accurate and covenants with which the Company is required to comply. As a result~~ of ~~the~~credit ~~litigation~~totals ~~described in Note~~ $4, ~~the Company was~~500,000 ~~as of April 30, 2003, in breach of certain of such representations~~ and ~~warranties and~~is inused ~~violation of certain of such covenants. In June 2003, the bank signed a waiver in which the bank waived retroactively~~ to ~~the~~meet ~~filing~~cash ofrequirements ~~the complaint in~~during the ~~litigation~~Company’s ~~all~~off-season ~~events~~winter ofmonths. ~~default~~As ~~arising under the loan agreement as a result~~ of ~~the litigation, including the rendering of the verdict and any judgment that may be entered thereon. The waiver is effective until June~~July 3031, ~~2003.~~ ~~Because the waiver is only until June 30,~~ 2003, the ~~Company~~ ~~has~~seasonal ~~reclassified amounts owed under the loan agreement as~~line ~~current liabilities as~~ of ~~April 30, 2003. The Company is currently in the process of negotiating a commitment for the bank to provide for a new~~ credit ~~facility~~had tono beoutstanding used for the purpose of paying any judgment which may be rendered in the litigation or depositing into escrow the amount of any such judgment in order to stop the running of post judgment interest thereonbalance. The ~~waiver~~seasonal ~~provides~~line ~~that if on or before June 30, 2003, the Company accepts a loan commitment from the bank on terms mutually agreeable to the bank and the Company, the waiver shall continue until the expiration~~ of ~~such~~credit ~~loan~~expires commitment It is contemplated that the new facility, if obtained, would modify the terms of the existing loan agreement to revise any representations and warranties breached or covenants violated as a result of the existence of the litigation so as to eliminate the breach or violation and to modify certain financial covenants sufficiently that the Company would expect to be able to meet their requirements during subsequent quarters. Any loan commitment would be on ~~terms satisfactory to the bank and there can be no~~ ~~assurance that the Company will enter into such a commitment or as to the terms thereof. Furthermore~~November 1, ~~if the commitment is entered into, there can be no assurance that the facility contemplated thereby will close or as to the terms of any such facility~~2007. ~~If the waiver expires without the necessary~~ ~~modifications to the loan agreement being made, the Company will be in default~~ ~~thereunder and the bank may exercise any remedies it has under the loan agreement, including accelerating the debt outstanding thereunder.~~

The Company has two interest rate swap agreements which effectively fix the interest rate on a $24 million notional principal amount outstanding under the loan facilities described above. An amount of $18 million has been fixed at 5.24% per annum plus a credit margin ranging from 1.40% to 1.65%, and an amount of $6 million has been fixed at 6.58% plus a credit margin ranging from 1.40% to 1.65%.

Recent Developments

~~The~~Litigation ~~Company recorded litigation~~ expense of $8,000,000 was recorded during the second quarter as a result of the jury verdict. The ~~corresponding~~Company ~~litigation~~recorded ~~accrual~~additional ~~has~~litigation ~~been~~expense ~~recorded~~of on$450,000 during the ~~consolidated~~third ~~balance sheet~~quarter. The accrual includes approximately $7,~~800~~789,000 for the jury verdict, ~~and~~ $~~200~~275,000 for ~~unpaid~~accrued ~~legal~~post-judgment ~~fees~~interest ~~incurred~~on the jury verdict through ~~April~~July 3031, 2003, and an estimate of legal fees incurred.

In April 2003, the Heritage Classic Foundation (the “Foundation”), parent organization of the Heritage golf tournament, signed a contract with MCI to return as title sponsor of the Heritage golf tournament. The Company has a contract with the Foundation (which runs through 2006) that parallels the Foundation’s contract with the PGA Tour. The Company provides the tournament site and certain services necessary to the hosting of the tournament. In exchange, the Company receives a site fee and a course preparation fee to compensate for the loss of revenue resulting from the course closure and the additional expenses incurred in preparing the course for the tournament. Other financial benefits include increased pro shop apparel sales and increased lodging and catering revenue.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

During the ~~six~~nine months ended ~~April~~July 3031, 2003, there were no material changes to the quantitative and qualitative disclosures about market risks presented in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2002.

Item 4. Controls and Procedures

~~Within~~As ~~90 days~~ of ~~the~~July 31, ~~filing of this report~~2003, the Company’s Chief Executive Officer and Chief Financial Officer conducted an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-1415(e) and 15d-1415-(e)). Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that as of July 31, 2003 the Company’s disclosure controls and procedures ~~are~~were effective. toThere ~~make~~has ~~known~~been tono ~~them~~change in athe ~~timely~~Company’s ~~fashion~~internal ~~material~~control ~~information~~over ~~related~~financial toreporting during the ~~Company~~quarter ~~required~~ended toJuly 31, be2003 ~~filed~~that inhas ~~this~~materially affected ~~report.~~or ~~There~~is ~~have~~reasonably ~~been~~likely ~~no significant~~to ~~changes~~materially inaffect the Company’s internal ~~controls or in other factors that~~ ~~could~~control ~~significantly~~over ~~affect~~financial ~~internal controls subsequent to the date of their evaluation~~reporting.

PART II.			OTHER INFORMATION
Item 1.			Legal Proceedings

PART II. OTHER INFORMATION

~~On April~~Item ~~30, 2003, a jury verdict of approximately $7~~1.~~8 million~~ ~~was~~Legal ~~rendered~~Proceedings ~~against a wholly owned subsidiary of the Company in Thomas M. DiVenere, Irwin~~ (“Pete”) Pomranz, and Grey Point Associates, Inc., a South Carolina Corporation vs. Sea Pines Company, Inc., Sea Pines/TidePointe, Inc., and TidePointe Partners (“Sea Pines”). The case was tried in the Beaufort County, South Carolina, Court of Common Pleas. The case was instituted on November 27, 1995. The plaintiffs have also made a motion for prejudgment interest of approximately $832,000, which Sea Pines intends to contest. The lawsuit involved alleged breach of contract by Sea Pines related to the development of the TidePointe retirement community.

~~Sea~~On ~~Pines~~April 30, ~~has~~2003, ~~filed~~a ~~post-trial~~jury ~~motions~~verdict of approximately $7.8 million was rendered against a wholly owned subsidiary of the Company in Thomas M. DiVenere, ~~seeking~~Irwin (“Pete”) Pomranz, ~~among~~and ~~other~~Grey ~~things~~Point Associates, toInc., a South Carolina Corporation ~~overturn~~vs. ~~the~~Sea ~~verdict~~Pines Company, Inc., ASea ~~hearing~~Pines/TidePointe, onInc., and TidePointe Partners (“Sea Pines”). The case was tried in the ~~motions~~Beaufort ~~has~~County, ~~been~~South Carolina, ~~scheduled~~Court ~~for~~of ~~July~~Common Pleas. The case was instituted on November 127, ~~2003~~ 1995. The Ifplaintiffs ~~Sea~~have ~~Pines~~also ismade ~~unsuccessful~~a onmotion ~~these~~for ~~motions~~prejudgment interest of approximately $1,584,000, itwhich Sea Pines intends to ~~appeal~~contest. The ~~Company~~lawsuit involved ~~cannot~~alleged ~~predict~~breach ~~the~~of ~~outcome~~contract ofby ~~any~~Sea ofPines ~~the~~related ~~post-trial~~to ~~motions~~the ordevelopment ~~any~~of ~~appeal~~the TidePointe retirement community.

~~The~~Sea ~~Company~~Pines ~~recorded~~has ~~litigation~~filed ~~expense~~post-trial ofmotions, $8seeking,~~000,000~~ ~~during~~among ~~the~~other ~~second~~things, ~~quarter~~to asoverturn athe ~~result~~verdict. ofA ~~the~~hearing ~~jury~~on ~~verdict.~~the ~~The~~motions ~~corresponding~~was ~~litigation~~held ~~accrual~~July 1, ~~has~~2003. ~~been~~If Sea ~~recorded~~Pines is unsuccessful on ~~the~~these ~~Condensed~~motions, ~~Consolidated~~it ~~Balance~~intends ~~Sheet~~to appeal. The ~~accrual includes~~Company ~~approximately~~cannot ~~$7,800,000~~predict ~~for~~ the ~~jury~~outcome ~~verdict~~of ~~and~~any ~~$200,000~~of ~~for~~the ~~unpaid~~post-trial ~~legal fees~~motions ~~incurred~~or ~~through~~any ~~April 30, 2003~~appeal.

Litigation expense of $8,000,000 was recorded during the second quarter as a result of the jury verdict. The Company recorded additional litigation expense of $450,000 during the third quarter. The accrual includes approximately $7,789,000 for the jury verdict, $275,000 for accrued post-judgment interest on the jury verdict through July 31, 2003, and an estimate of legal fees incurred.

The Company is subject to claims and suits in the ordinary course of business. In management’s opinion, except as noted above, no currently pending claims and suits against the Company will have a material adverse effect on the Company.

Item 2. Changes in Securities and Use of Proceeds ~~None~~

22None

Item 3.			Defaults Upon Senior Securities
			The Company’s loan agreement with its corporate lender contains representations and warranties which are required to be continually accurate and covenants with which the Company is required to comply. As a result of the litigation described in Note 4 to the financial statements, the Company was, as of April 30, 2003, in breach of certain of such representations and warranties and in violation of certain of such covenants. In June 2003, the bank signed a waiver in which the bank waived retroactively to the filing of the complaint in the litigation all events of default arising under the loan agreement as a result of the litigation, including the rendering of the verdict and any judgment that may be entered thereon. The waiver is effective until June 30, 2003. Because the waiver is only until June 30, 2003, the Company has reclassified amounts owed under the loan agreement as current liabilities as of April 30, 2003. The Company is currently in the process of negotiating a commitment for the bank to provide for a new credit facility to be used for the purpose of paying any judgment which may be rendered in the litigation or depositing into escrow the amount of any such judgment in order to stop the running of post judgment interest thereon. The waiver provides that if on or before June 30, 2003, the Company accepts a loan commitment from the bank on terms mutually agreeable to the bank and the Company, the waiver shall continue until the expiration of such loan commitment It is contemplated that the new facility, if obtained, would modify the terms of the existing loan agreement to revise any representations and warranties breached or covenants violated as a result of the existence of the litigation so as to eliminate the breach or violation and to modify certain financial covenants sufficiently that the Company would expect to be able to meet their requirements during subsequent quarters. Any loan commitment would be on terms satisfactory to the bank and there can be no assurance that the Company will enter into such a commitment or as to the terms thereof. Furthermore, if the commitment is entered into, there can be no assurance that the facility contemplated thereby will close or as to the terms of any such facility. If the waiver expires without the necessary modifications to the loan agreement being made, the Company will be in default thereunder and the bank may exercise any remedies it has under the loan agreement, including accelerating the debt outstanding thereunder.
Item 4.			Submission of Matters To A Vote of Security Holders
			a) The Annual Meeting of Shareholders of the Company was held on March 26, 2003.
			b) The following Directors of the Company were elected during the Annual Meeting:

	Affirmatives		Withheld
	Votes		Votes
John F. Bard		2,969,865		7,000
Paul B. Barringer, II		2,972,365		4,500
Norman P. Harberger		2,927,615		49,250
Michael E. Lawrence		2,964,865		12,000
Thomas C. Morton		2,947,865		29,000
Robert W. Siler, Jr.		2,972,365		4,500

			The following Directors’ terms of office as Directors of the Company continued after the Annual Meeting:
			Ralph L. Dupps, Jr. P.R. Easterlin, Jr. John G. McGarty John A. Norlander David E. Pardue Perry M. Parrott, Jr. Marc Puntereri Kathleen B. Speer Arthur P. Sundry Joseph F. Vercellotti
Item 5.			Other Information None
Item 6.			Exhibits and Reports on Form 8-K
			(a) Exhibits: See attached Exhibit Index
			(b) Reports on Form 8-K None

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		SEA PINES ASSOCIATES, INC.
Date: June 16, 2003		/s/ Michael E. Lawrence Michael E. Lawrence
		Chief Executive Officer
Date: June 16, 2003		/s/ Steven P. Birdwell Steven P. Birdwell
		Chief Financial Officer

~~CERTIFICATIONS~~Item 3. Defaults Upon Senior Securities

~~I, Michael E. Lawrence, certify that:~~None

1Item 4. ISubmission ~~have reviewed this quarterly report on Form 10-Q~~ of ~~Sea~~Matters ~~Pines~~To ~~Associates,~~A ~~Inc.;~~Vote ~~2. Based on my knowledge, this quarterly report does not contain any untrue statement~~ of aSecurity material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:Holders

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;None

Item 5. ~~The~~Other registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):Information

Item 6. Exhibits and Reports on Form 8-K.

(a)		Exhibits: See attached Exhibit Index

(b)		Reports on Form 8-K were filed during the quarter ending July 31, 2003. The items reported, any financial statements filed, and the dates of any such reports are listed below.

(i) Sea Pines Associates, Inc., current report on Form 8-K filed on May 2, 2003, reporting as an exhibit under Item 5 the Company’s disclosure of a jury verdict rendered against a wholly owned subsidiary of Sea Pines Associates, Inc. in Grey Point Associates, et. al. vs. Sea Pines Company, Inc.

~~b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and~~SIGNATURES

6.Pursuant ~~The~~to ~~registrant’s~~the ~~other~~requirements ~~certifying~~of ~~officer~~the ~~and~~Securities IExchange ~~have~~Act ~~indicated~~of in1934, ~~this~~the registrant ~~quarterly~~has ~~report~~duly ~~whether~~caused ~~there~~this ~~were~~report ~~significant~~to ~~changes~~be insigned ~~internal~~on ~~controls~~its orbehalf inby ~~other factors that could significantly affect internal controls subsequent to~~ the undersigned ~~date~~thereunto ofduly ~~our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses~~authorized.

Date: June 16, 2003 /s/ Michael E. Lawrence Michael E. Lawrence Chief Executive Officer


				SEA PINES ASSOCIATES, INC.

Date: September 12, 2003				/s/Michael E. Lawrence

				Michael E. Lawrence
				Chief Executive Officer

Date: September 12, 2003				/s/Steven P. Birdwell

				Steven P. Birdwell
				Chief Financial Officer

I, Steven P. Birdwell, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Sea Pines Associates, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officer and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: June 16, 2003 /s/ Steven P. Birdwell Steven P. Birdwell Chief Financial Officer

EXHIBIT INDEX

Pursuant to Item 601 of Regulation S-K

Exhibit No.


Exhibit No.

3(a)		Articles of Incorporation of Registrant, as Amended (Incorporated by reference to Exhibit 3(a) to Form 10-K filed January 29, 2001)

3(b)		Amended Bylaws of Registrant as revised September 30, 2002 (Incorporated by reference to Exhibit 3(b) to Form 10-K filed January 17, 2003)

4(a)		Second Amended and Restated Rights Agreement between Sea Pines Associates, Inc. and Wachovia Bank, N.A. dated as of August 5, 2003 (Incorporated by reference to Form 8-A/A filed August 5, 2003)

4(b)		Amended and Restated Trust Agreement dated February 1, 2000 by Sea Pines Associates, Inc. (Incorporated by reference to Exhibit 4(f) to Form 10-Q filed June 14, 2000)

4(c)		Junior Subordinated Indenture dated February 1, 2000 between Sea Pines Associates, Inc. and First Union National Bank (Incorporated by reference to Exhibit 4(d) to Form 10-Q filed June 14, 2000)

4(d)		Guarantee Agreement dated February 1, 2000 between Sea Pines Associates, Inc. and First Union National Bank (Incorporated by reference to Exhibit 4(e) to Form 10-Q filed June 14, 2000)

3(a)		Articles of Incorporation of Registrant, as Amended
		(Incorporated by reference to Exhibit 3(a)
		to Form 10-K filed January 29, 2001)
3(b)		Amended Bylaws of Registrant as revised
		September 30, 2002 (Incorporated by reference
		to Exhibit 3(b) to Form 10-K filed January 17, 2003)
4(a)		First Amended and Restated Rights Agreement
		between Sea Pines Associates, Inc. and
		EquiServe Trust Company, N.A. dated as of
		August 23, 1993 and Amended and Restated
		as of July 20, 1999 (Incorporated by reference
		to Form 8A12G/A filed August 8, 1999)
4(b)		First Amendment to First Amended and Restated Rights
		Agreement between Sea Pines Associates, Inc. and
		EquiServe Trust Company, N.A. dated as of December 13,
		1999 (Incorporated by reference to Exhibit 4(b) to Form 10-K
		filed January 29, 2001)
4(c)		Amended and Restated Trust Agreement
		dated February 1, 2000 by
		Sea Pines Associates, Inc. (Incorporated by
		reference to Exhibit 4(f) to Form 10-Q filed June 14, 2000)
4(d)		Junior Subordinated Indenture dated
		February 1, 2000 between Sea Pines
		Associates, Inc. and First Union National Bank
		(Incorporated by reference to Exhibit 4(d) to Form 10-Q filed
		June 14, 2000)
4(e)		Guarantee Agreement dated February 1, 2000
		between Sea Pines Associates, Inc.
		and First Union National Bank (Incorporated by
		reference to Exhibit 4(e) to Form 10-Q filed June 14, 2000)


Exhibit No.

10(a)		Adjustable Rate Promissory Note between Sea Pines Company, Inc. and Carolina Center Building Corp. dated October 31, 1996 (Incorporated by reference to Exhibit 10(t) to Form 10-K filed January 29, 1997)

10(b)		Mortgage Assignment and Security Agreement between Sea Pines Company, Inc. and Carolina Center Building Corp. dated October 31, 1996 (Incorporated by reference to Exhibit 10(u) to Form 10-K filed January 29, 1997)

10(c)		Amended and Restated Master Credit Agreement dated as of October 31, 2002 between Sea Pines Associates, Inc. and Sea Pines Company, Inc. and Wachovia Bank, N.A. (Incorporated by reference to Exhibit 10(c) to Form 10-K filed January 17, 2003)

10(d)		Second Amended and Restated Term Note between Sea Pines Associates, Inc. and Sea Pines Company, Inc. and Wachovia Bank, N.A. dated October 31, 2002 with respect to the Credit Agreement in 10(c) above (Incorporated by reference to Exhibit 10(d) to Form 10-K filed January 17, 2003)

10(e)		Second Amended and Restated Revolving Line of Credit Note between Sea Pines Associates, Inc. and Sea Pines Company, Inc. and Wachovia Bank, N.A. dated October 31, 2002 with respect to the Credit Agreement in 10(c) above (Incorporated by reference to Exhibit 10(e) to Form 10-K filed January 17, 2003)

10(f)		Second Amended and Restated Seasonal Line of Credit Note between Sea Pines Associates, Inc. and Sea Pines Company, Inc. and Wachovia Bank, N.A. dated October 31, 2002 with respect to the Credit Agreement in 10(c) above (Incorporated by reference to Exhibit 10(f) to Form 10-K filed January 17, 2003)

10(g)		Second Mortgage Modification and Restatement Agreement dated October 31, 2002 between Sea Pines Associates, Inc. and Sea Pines Company, Inc. and Wachovia Bank, N.A. with respect to the Credit Agreement in 10(c) above (Incorporated by reference to Exhibit 10(g) to Form 10-K filed January 17, 2003)

Exhibit No.


Exhibit No.

10(h)		Second Mortgage Modification and Restatement Agreement dated October 31, 2002 between Sea Pines Associates, Inc. and Sea Pines Company, Inc. and Wachovia Bank, N.A. with respect to the Credit Agreement in 10(c) above (Incorporated by reference to Exhibit 10(h) to Form 10-K filed January 17, 2003)

10(i)		Second Mortgage Modification and Restatement Agreement dated October 31, 2002 between Sea Pines Associates, Inc. and Sea Pines Company, Inc. and Wachovia Bank, N.A. with respect to the Credit Agreement in 10(c) above (Incorporated by reference to Exhibit 10(i) to Form 10-K filed January 17, 2003)

10(j)		Second Master Amendment to Collateral Assignments dated October 31, 2002 between Sea Pines Associates, Inc. and Sea Pines Company, Inc. and Wachovia Bank, N.A. with respect to the Credit Agreement in 10(c) above (Incorporated by reference to Exhibit 10(j) to Form 10-K filed January 17, 2003)

10(k)		Swap Transaction confirmation between Sea Pines Company, Inc. and Wachovia Bank, N.A. dated September 30, 1998 (Incorporated by reference to Exhibit 10(s) to Form 10-K filed January 29, 1999)

10(l)		Swap Transaction confirmation between Sea Pines Company, Inc. and Wachovia Bank, N.A. dated May 4, 2000 (Incorporated by reference to Exhibit 10(l) to Form 10-K filed January 17, 2003)

10(m)		License and Use Agreement dated June 30, 1998 between Sea Pines Company, Inc. and CC-Hilton Head, Inc. (Incorporated by reference to Exhibit 10(t) to Form 10-K filed January 29, 1999)

10(n)		Sea Pines Associates, Inc. Director Stock Compensation Plan (Incorporated by reference to Exhibit 4.1 to Form S-8 filed June 18, 2001)*

10(o)		First Amendment to Sea Pines Associates, Inc. Director Stock Compensation Plan (Incorporated by reference to Exhibit 4.2 to Form S-8 filed June 18, 2001)*

10(a)		Adjustable Rate Promissory Note between Sea Pines
		Company, Inc. and Carolina Center Building
		Corp. dated October 31, 1996 (Incorporated by reference
		to Exhibit 10(t) to Form 10-K filed January 29, 1997)
10(b)		Mortgage Assignment and Security Agreement
		between Sea Pines Company, Inc. and
		Carolina Center Building Corp. dated
		October 31, 1996 (Incorporated by reference to
		Exhibit 10(u) to Form 10-K filed January 29, 1997)
10(c)		Amended and Restated Master Credit Agreement
		dated as of October 31, 2002 between
		Sea Pines Associates, Inc. and Sea Pines
		Company, Inc. and Wachovia Bank, N.A.
		(Incorporated by reference to Exhibit 10(c) to Form 10-K
		filed January 17, 2003)
10(d)		Second Amended and Restated Term Note between
		Sea Pines Associates, Inc. and Sea Pines Company, Inc.
		and Wachovia Bank, N.A. dated October 31, 2002
		with respect to the Credit Agreement in
		10(c) above (Incorporated by reference to Exhibit 10(d)
		to Form 10-K filed January 17, 2003)
10(e)		Second Amended and Restated Revolving Line of Credit Note between Sea Pines Associates, Inc. and Sea Pines Company, Inc.
		and Wachovia Bank, N.A. dated October 31, 2002 with respect
		to the Credit Agreement in 10(c) above (Incorporated by reference
		to Exhibit 10(e) to Form 10-K filed January 17, 2003)
10(f)		Second Amended and Restated Seasonal Line of Credit Note
		between Sea Pines Associates, Inc. and Sea Pines Company, Inc.
		and Wachovia Bank, N.A. dated October 31, 2002 with respect
		to the Credit Agreement in 10(c) above (Incorporated by reference
		to Exhibit 10(f) to Form 10-K filed January 17, 2003)
10(g)		Second Mortgage Modification and Restatement Agreement dated
		October 31, 2002 between Sea Pines Associates, Inc.
		and Sea Pines Company, Inc. and Wachovia Bank,
		N.A. with respect to the Credit Agreement in 10(c) above
		(Incorporated by reference to Exhibit 10(g) to Form 10-K filed
		January 17, 2003)

Exhibit No.


Exhibit No.

10(p)		Sea Pines Associates, Inc. Deferred Issuance Stock Plan (Incorporated by reference to Exhibit 4.3 to Form S-8 filed June 18, 2001)*

10(q)		Waiver with respect to the Credit Agreement in 10(c) above (Incorporated by reference to Exhibit 10(q) to Form 10-Q filed July 16, 2003)

10(r)		First Modification and Waiver Agreement to the Amended and Restated Master Credit Agreement between Sea Pines Associates, Inc. and Sea Pines Company, Inc. and Wachovia Bank, N.A. dated July 31, 2003 with Respect to the Credit Agreement in 10(c) above

10(s)		First Modification to the Second Mortgage Modification and Re-Statement Agreement between Sea Pines Associates, Inc. and Sea Pines Company, Inc. and Wachovia Bank, N.A. dated July 31, 2003 with respect to the agreement in 10(g) above

10(t)		First Modification to the Second Mortgage Modification and Re-Statement Agreement between Sea Pines Associates, Inc. and Sea Pines Company, Inc. and Wachovia Bank, N.A. dated July 31, 2003 with respect to the agreement in 10(h) above

10(u)		First Modification to the Second Mortgage Modification and Re-Statement Agreement between Sea Pines Associates, Inc. and Sea Pines Company, Inc. and Wachovia Bank, N.A. dated July 31, 2003 with respect to the agreement in 10(i) above

10(v)		Judgment Note between Sea Pines Associates, Inc. and Sea Pines Company, Inc. and Wachovia Bank, N.A. dated July 31, 2003 with respect to the First Modification and Waiver Agreement in 10(r) above

31(a)		Rule 13a – 14(a)/15d – 14(a) Certification of Chief Executive Officer

31(b)		Rule 13a – 14(a)/15d – 14(a) Certification of Chief Financial Officer

32(a)		Section 1350 Certification of Chief Executive Officer

32(b)		Section 1350 Certification of Chief Financial Officer

99.1		Safe Harbor Disclosure

*		Management Contract or Compensatory Plan or Arrangement

10(h)		Second Mortgage Modification and Restatement Agreement
		dated October 31, 2002 between Sea Pines Associates, Inc.
		and Sea Pines Company, Inc. and Wachovia Bank, N.A.
		with respect to the Credit Agreement in 10(c) above
		(Incorporated by reference to Exhibit 10(h) to Form 10-K
		filed January 17, 2003)
10(i)		Second Mortgage Modification and Restatement Agreement
		dated October 31, 2002 between Sea Pines Associates, Inc.
		and Sea Pines Company, Inc. and Wachovia Bank, N.A.
		with respect to the Credit Agreement in 10(c) above
		(Incorporated by reference to Exhibit 10(i) to Form 10-K
		filed January 17, 2003)
10(j)		Second Master Amendment to Collateral Assignments
		dated October 31, 2002 between Sea Pines Associates, Inc.
		and Sea Pines Company, Inc. and Wachovia Bank, N.A.
		with respect to the Credit Agreement in 10(c) above
		(Incorporated by reference to Exhibit 10(j) to Form 10-K
		filed January 17, 2003)
10(k)		Swap Transaction confirmation between Sea Pines Company,
		Inc. and Wachovia Bank, N.A. dated September 30, 1998
		(Incorporated by reference to Exhibit 10(s) to
		Form 10-K filed January 29, 1999)
10(l)		Swap Transaction confirmation between Sea Pines Company,
		Inc. and Wachovia Bank, N.A. dated May 4, 2000
		(Incorporated by reference to Exhibit 10(l) to Form 10-K
		filed January 17, 2003)
10(m)		License and Use Agreement dated June 30, 1998 between
		Sea Pines Company, Inc. and CC-Hilton Head, Inc.
		(Incorporated by reference to Exhibit 10(t) to
		Form 10-K filed January 29, 1999)
10(n)		Sea Pines Associates, Inc. Director Stock Compensation
		Plan (Incorporated by reference to Exhibit 4.1 to
		Form S-8 filed June 18, 2001)*
10(o)		First Amendment to Sea Pines Associates, Inc. Director
		Stock Compensation Plan (Incorporated by reference
		to Exhibit 4.2 to Form S-8 filed June 18, 2001)*

Exhibit No.

10(p)		Sea Pines Associates, Inc. Deferred Issuance Stock Plan
		(Incorporated by reference to Exhibit 4.3 to Form S-8
		filed June 18, 2001)*
10(q)		Waiver with respect to the Credit Agreement in 10(c) above
99.1		Safe Harbor Disclosure
99.2 (a)		Certification of Chief Executive Officer
99.2 (b)		Certification of Chief Financial Officer
*		Management Contract or Compensatory Plan or Arrangement

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